On June 26, 2013, in United States v. Windsor, the United States Supreme Court struck down Section 3 of DOMA, holding that it was unconstitutional to discriminate between same-sex and opposite-sex marriages for purposes of federal benefits and protections. DOMA, which was signed into law by President Clinton in 1996, had the practical effect of limiting federal rights and benefits based on marital status to opposite sex couples. Now, at a minimum, those federal rights and benefits will be extended to couples in a lawfully sanctioned same-sex marriage, provided those couples reside in a state where same-sex marriages are recognized. At present, same-sex marriages are recognized in California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, and the District of Columbia. We anticipate that the Obama administration will likely attempt to undertake regulatory action to require the federal government to recognize same-sex marriages even if the married couples do not live in one of these 13 states or the District of Columbia. We will update you with further details if and when that occurs. In the meantime, the impact of Windsor on employers from an employee benefits, immigration, family medical leave, and employment discrimination perspective is summarized below.
Employee Benefit Plans
Employers and their benefit plan administrators in states that do not recognize same-sex marriages are not impacted by Windsor and do not need to make any of the changes noted below. However, same-sex couples who are married under state law and now reside in a state that recognizes same-sex marriage generally will have the same rights to employee benefits as opposite-sex spouses. Accordingly, employers and their benefit plan administrators in states that recognize same-sex marriages will need to take the following steps regarding same-sex spouses:
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If benefits are insured, determine whether the insurance or annuity policy is governed by the laws of a state that recognize same-sex marriages, and consult with the carrier as to whether it will allow same-sex spouses full spousal rights under the insurance policy.
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Although we expect the IRS to issue further guidance on this matter, employers should determine whether employees are now entitled to elect to add their same-sex spouse to their health plan coverage mid-year as a "change of family status" event and whether the employee’s cost of that expanded coverage may be made on a pre-tax basis under a cafeteria or flexible spending account plan.
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Provide a general notice of COBRA rights to same-sex spouses who become newly covered under group health plans which are subject to COBRA (keep in mind that such spouses, as well as domestic partners and civil union members, already may have continuation coverage rights under some insured health plans through state insurance law apart from federal COBRA law).
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Allow employees to designate their same-sex spouse as their beneficiary under group-term life insurance plans and offer supplemental coverage to be purchased on the spouse’s life if that is allowed under the plan.
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Allow employees with same-sex spouses to replace any previous beneficiary designation in effect under a retirement plan, or to validate such prior designation with proper spousal consent now that the employee can be recognized as having a spouse.
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Allow HIPAA spousal enrollment rights to same-sex spouses who lose their health coverage under another employee’s health plan.
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Adjust payroll processing of health coverage for same-sex spouses so that the coverage will no longer be taxable to the employee and so the employee’s contributions towards the cost of covering the spouse are treated as pre-tax, where applicable.
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Review all new benefit elections and designations involving same-sex spouses to (i) verify the validity of the marriage; (ii) verify the address of residence; (iii) verify that the couple resides in a state that recognizes their marriage; and (iv) verify that any applicable insurance policy and carrier also will recognize the same-sex spouse’s status as a spouse for purposes of a particular benefit plan.
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If for any reason the same-sex spouse cannot be recognized as a spouse for purposes of a particular benefit plan, then explore whether that spouse nevertheless qualifies as a tax dependent of the employee for purposes of any benefits provided by the plan, keeping in mind that the definition of dependent could be different for different features of the plan (i.e., HIPAA special enrollment rights v. COBRA continuation coverage).
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Review existing employment agreements, handbooks, and fringe benefit plans or policies to identify what rights, if any, same-sex spouses may have (such as post-employment medical coverage for spouses of retiring executives) and consider whether any clarification or modification of those rights may be appropriate.
Family and Medical Leave Act
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The federal Family and Medical Leave Act (FMLA) provides an eligible employee with job-protected leave to care for a "spouse" with a serious health condition or who has been injured while serving in the military, or because of any qualifying exigency where the "spouse" has been called to active military duty in a foreign country. Under DOMA, the FMLA applied only to opposite-sex marriages.
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The FMLA regulations define "spouse" as "a husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides." Therefore, in light of Windsor, marriage-based FMLA rights will now be extended to "spouses" of the same-sex but only if the employees currently live in states which recognize same-sex marriages. Unless impacted by regulatory action, if an employee lives in a state that does not recognize same-sex marriage, but works in a state that does, the employee will not be entitled to FMLA rights. For example, if an employee in a same-sex marriage works in New York (which recognizes same-sex marriage) and lives in New Jersey (which does not recognize same-sex marriage), the employee would not be, under current regulations, entitled to marriage-based FMLA rights. Conversely, if the same employee lives in New York but works in New Jersey, the employee would be eligible for federal FMLA leave, which would have the effect of requiring an employer in a state that does not recognize same-sex marriage to grant employees in a same-sex marriage federal FMLA rights.
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Employers should be mindful that many states and the District of Columbia have passed family leave laws which expressly provide for job-protected leaves of absence to same-sex domestic partners and/or married couples, including California, Connecticut, Maine, New Jersey, Oregon, Rhode Island, Vermont, Washington, and Wisconsin. Windsor does not affect these state laws. Thus, employers who operate in a state that has its own FMLA law may be obligated to provide state-law based FMLA rights to same-sex married couples or those in civil unions or domestic partnerships.
Immigration
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U.S. Citizens and Lawful Permanent Residents in a same-sex marriage with a foreign national can now sponsor their spouses for family-based immigrant visas, otherwise known as "green cards," by filing a Form I-130 and any applicable accompanying applications. U.S. Citizens can also file fiancé visa applications if their future spouse lives abroad and does not currently have a visa. According to the U.S. Citizenship and Immigration Services (USCIS), such family-based applications will be determined according to applicable immigration law and the same-sex nature of the marriage will not be an automatic basis for denial of the green card or fiancé visa application.
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Same-sex couples who were married in a U.S. state that recognizes same-sex marriage yet live in a state that does not can still file a family-based immigrant visa application. Contrary to the FMLA, for example, the USCIS looks to the law of the state where the marriage took place when determining whether the marriage is valid for immigration law purposes.
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On June 26, 2013, Secretary of State John Kerry and Secretary of Homeland Security Janet Napolitano both issued statements indicating that the Department of State and the Department of Homeland Security (DHS), respectively, are working with the Department of Justice to review all relevant federal statutes and regulations that affect visa processing and applications for immigration benefits both with the USCIS and at U.S. Consulates abroad. Secretary Napolitano stated that DHS will implement the DOMA decision so that same-sex and opposite-sex married couples are treated equally for purposes of federal immigration laws.
Employment Discrimination
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The Windsor decision does not change the landscape with respect to federal employment discrimination laws. Title VII of the Civil Rights Act of 1964 protects against discrimination based on "race, color, religion, sex and national origin," but it does not expressly protect against discrimination based on sexual orientation or gender identity. Guaranteed federal protection from sexual orientation or gender identity discrimination still requires passage of the Employment Non-Discrimination Act, which would expressly prohibit discrimination in hiring, firing and other employment matters on the basis of sexual orientation or gender identity.
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Even without the Employment Non-Discrimination Act, however, the U.S. Equal Employment Opportunity Commission (EEOC) has begun to broaden its interpretation of sex discrimination. The EEOC recently issued an opinion finding that a transgender woman’s claim of discrimination was recognized under Title VII’s prohibition against sex discrimination. Windsor -- and its’ forceful opinion critical of discriminating against same-sex married couples with respect to federal benefits and protections -- may further energize the EEOC’s regulatory expansion of Title VII’s prohibition against sex discrimination to effectively cover sexual orientation discrimination. Moreover, even without an express change to, or a regulation-based expansion of, Title VII, employers should be mindful that 21 states have passed legislation to protect against discrimination based on sexual orientation and gender identity, and several other state legislatures are considering similar legislative changes.
Conclusion
In summary, Windsor has an immediate practical impact on employers with operations in the 13 states that currently recognize same-sex marriage as well as the District of Columbia, particularly in the areas of employee benefits, the federal Family and Medical Leave Act, and employment-based immigration. Employers directly impacted by the decision should immediately begin taking the necessary compliance steps noted above. In addition, we anticipate regulatory attempts to expand the reach of federal employment rights to same-sex married couples, regardless of where the couples reside within the United States. This is a dynamic issue, and we will keep you informed as developments warrant.
