This is Utah SHRM Legal-mail no. 2013-12 prepared for Salt Lake SHRM, the Human Resources Association of Central Utah (HRACU), the Northern Utah Human Resources Association (NUHRA), the Color Country Human Resources Association (CCHRA), the Bridgerland Society for Human Resource Management and Utah at-large members of the national Society for Human Resource Management (SHRM).
SUPREME COURT SPEAKS (SORT OF) TO ISSUE OF SAME SEX MARRIAGE: Now that the Supreme Court has effectively allowed same sex marriages to go forward in California and ruled in United States v. Windsor that a key portion of the Defense of Marriage Act (DOMA) is unconstitutional, employers must consider the implications of that decision on their employee benefit plans.
The Windsor decision made clear that same-sex couples who are recognized as validly married under state law are recognized as spouses under federal law. However, the Court did not address which state law governs (i.e., the state in which the couples currently reside or the state in which the same-sex marriage was performed). Accordingly, further regulatory guidance, legislation and/or judicial action is required to make clear the full impact of the Windsor decision.
Employers of employees residing and working in states which recognize same-sex marriages are required by federal laws governing employee benefit plans to treat same-sex spouses and opposite-sex spouses equally for purposes of the benefits that the employers extend to spouses. Those equal benefits and rights required under federal laws include, for example, automatic designation as beneficiary under 401(k) and other retirement plans, unless the same-sex spouse consents to designation of another beneficiary; spousal survivor annuities under retirement plans; COBRA continuation coverage; FMLA leave to care for a same-sex spouse; and tax-free spousal coverage under employer-provided group medical, dental or vision plans (i.e., income will no longer be imputed to same-sex spouses when same-sex spouse coverage is provided). Note: if the repeal of DOMA is determined to be retroactive, tax refunds may be available to employees and employers if same-sex spouse spouses paid income and employment taxes in prior years on health care coverage.
Notably, the Supreme Court confined the Windsor opinion and holding to lawful same-sex marriages in those states that recognize them and did not address the portion of DOMA which allows individual states to not recognize same-sex marriages performed in other states. As a result, employers in states which do not recognize same-sex marriages are not required by Windsor to extend benefits to same-sex spouses. However, issue almost certainly will be the subject of future administrative guidance, litigation and/or legislation -- employers in those states should watch for that future guidance. It is possible that same-sex spouses residing in states which do not recognize same-sex marriages will be classified differently for different purposes. For example, the IRS may choose to recognize lawful same-sex marriages for purpose of income tax filing status regardless of the state in which the couples currently reside while, conversely, the employers of couples who work and reside in a state which does not recognize same-sex marriages may not be required to recognize the marriages for benefit plan purposes. It is likely that employers with employees in multiple states will have to treat same-sex couples differently in different states.
Self-insured medical and other welfare benefit plans governed by ERISA are not required by Windsor to make benefits available to same-sex spouses because there is currently no federal law requiring them to do so and state insurance law mandates are preempted by ERISA. Commentators warn, however, that employers which continue to limit benefit coverage to opposite-sex spouses risk legal challenges claiming discrimination under federal laws.
Employers should review their retirement and welfare benefit plan documents, particularly the definition of “spouse,” to determine that they are consistent with Windsor (i.e., the plan should not reference DOMA) but should hold off making plan amendments without further guidance which will be forthcoming – hopefully soon.
*Note from Mike O’Brien: thanks to my friend and partner Bruce Babcock for preparing this summary. Bruce is a tax and employment benefits lawyer at my firm, Jones Waldo.