Same-Sex Marriage: New Developments & Impact on Employee Benefits

With over 1,100 federal statutory provisions in which marital status is a factor in determining access to statutory benefits, rights, or privileges, the outcome of the challenge to the constitutionality of laws adversely impacting same-sex marriages could have a significant effect on employee benefits.

Under the federal Defense of Marriage Act (DOMA), for purposes of federal law, the word “marriage” means only a legal union between a man and a woman, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.  This means that under current law, Federal benefits available to opposite-sex spouses are not available to same-sex spouses even when they are legally married under state law.

Later this month, the Supreme Court will hear oral arguments on two cases that could change this result.  Windsor v. United States is a constitutional challenge to Section 3 of DOMA, which defines marriage to exclude same-sex marriages.  Hollingsworth v. Perry is a constitutional challenge to Proposition 8, a California ballot initiative that amended the state constitution to ban same-sex marriage.

So far, over 300 employers including many of America’s top companies, e.g., Amazon.com, Apple, Citigroup, Ernst & Young, Google, Intel, Microsoft, Starbucks, Walt Disney, have signed a petition in a brief submitted to the Supreme Court urging that the Court declare Section 3 of DOMA unconstitutional.  Similar briefs have been filed to declare Proposition 8 unconstitutional.  Final decisions on the cases are expected this summer.

If the Supreme Court decides that Section 3 of DOMA is unconstitutional under Windsor, employee benefits and protection mandated under federal law would be extended to spouses of same-sex spouses.  For example, employee benefits, rights, or privileges required for opposite-sex spouses under FMLA, COBRA, HIPAA, qualified retirement plans (spousal and death benefits) would also be required for same-sex spouses.  And, same-sex spouses could receive nontaxable benefits under employer health plans.  However, overturning Section 3 alone would not equalize same-sex spouses and opposite-sex spouses; states would still be able to decide whether or not to recognize same-sex marriages/spouses for employee benefits governed by state laws.

The Supreme Court’s decision under Hollingsworth could have a much greater impact.  The Court could endorse the lower court’s narrow holding and limit Hollingsworth to California’s Proposition 8.  Alternatively, the court could take a broader view and rule generally that any state law prohibiting same-sex marriage violates the equal protection clause of the 14th Amendment, in effect legalizing same-sex marriage in the United States.

Employers are advised to follow the Supreme Court’s decisions in the upcoming months, and determine whether to amend their federally mandated benefits plans as well as their non-mandated plans accordingly.