Earlier today, the U.S. Supreme Court held that Section 3 of the Defense of Marriage Act (“DOMA”) is unconstitutional. Section 3 contained the definition of “marriage” for federal law purposes and restricted the definition to include only marriages between a man and a woman. [Additional background information may be found here.] Now, the federal government must look to state law to determine whether a couple is legally married for the purpose of more than 1,000 federal laws, including ERISA, the Internal Revenue Code, COBRA, and FMLA. The Court explained “DOMA’s unusual deviation from the usual tradition of recognizing and accepting state definitions of marriage here operates to deprive same-sex couples of the benefits and responsibilities that come with the federal recognition of their marriages.”
What Does This Mean for Employers? It means that in states that recognize same-sex marriages, same-sex spouses are immediately eligible for the same federal benefits as opposite-sex spouses, including laws related to retirement accounts, qualified pension plans, and tax return filings and withholding. For example, under a qualified retirement plan, the default beneficiary for death benefits is the employee’s spouse, unless the spouse consents. Until today, the definition of spouse excluded legally married same-sex couples.
What Next? The holding raises a number of issues that will need to be clarified in the upcoming months and possibly years. What happens if a same-sex couple is legally married in one state, but then moves to another state that does not recognize same-sex marriage – is the couple not married for federal law purposes? What if one spouse lives in a state that recognizes same-sex marriage and the other doesn’t – is one spouse married and the other is not? Can they file a federal joint tax return? In states where same-sex marriage is legal, will employers still be permitted to define marriage to exclude same-sex spouses for purposes of providing health and welfare benefits? If Section 2 of DOMA is also overturned, many of these questions will be answered, but what happens until then?
Employers need to familiarize themselves with the federal laws that provide benefits to spouses and stay on their toes since this decision will impact a number of benefit plans. We will provide further analysis on this topic and others in a series of posts over the coming days and weeks.
[Many thanks to our summer associate Michael Lanahan for his assistance in researching and drafting this post]