June 26, 2015. From that day on, same-sex marriage has and will have the same recognition and protection as marriage between opposite-sex partners. While not an employment law case, it does have tremendous implications for employers. So we here at The EmpLAWyerologist are going to take a good look. This week we will look specifically at the impact on employee benefits plans. Ready to get started? Join The EmpLAWyerologist after the jump…
I am not going to discuss the reasoning behind the actual ruling. There are plenty of other articles or posts you can read if you want that information. You can also find the actual opinion here. I will, however, give you the actual name of the case — Obergefell et al v Hodges. OK, I digress. The ruling re-defines “marriage” and that definition impacts a few key areas of concern to employers, particularly benefit plans.
Most employer-sponsored benefit plans making at least some benefits available to an employee’s spouse. Some of you may be thinking that Obergefell is not such a big change, because the US Supreme Court already recognized same-sex marriages in US v. Windsor. (Click here if you want to read that opinion.) That is only partially true. US v. Windsor. recognized same-sex spouses for federal tax purposes and in the context of the federal government’s regulation of benefit plans. In other words, US v Windsor only impacted rights arising out of federal law. It did not require state taxing authorities, insurance departments or domestic courts to recognize same-sex marriages. Whichever side of the legal/constitutional argument you might be on, US v Windsor created a lot of confusion for a lot of employers.
The good news is that Obergefell goes a long way toward providing employers much-needed clarity: Same-sex spouses are entitled to the same treatment as opposite-sex spouses. Therefore, if up until now you have offered benefits to opposite-sex spouses or have allowed employees to designate opposite-sex spouses as beneficiaries of life insurance, pensions and the like, you must now do the same with respect to same-sex spouses. If your plans have all been regulated by federal laws, and federal government agencies you would have already had to do so; but if they were regulated in any way by state laws or government agencies, then it would have depended on the laws of the state(s) in which you employed people. So, if you employed people in more than one state, you would have had to be aware of laws in each of those states. You see where that could have been confusing?
OK, we get it. State (and local) and federal agencies must recognize same-sex marriages in the same way they recognize opposite sex marriages. Employers must also do so–and so must employee benefits plans. Let’s look at some specific ways in which this ruling either definitely or most likely impacts employers and employees with respect to benefits. Here are some important ones:
- While the Affordable Care Act does not require employers to offer benefits to employees’ spouses, many states require insurers to offer health benefits to spouses. Such an offer must now include same-sex spouses.
- Self-funded medical plans are not always covered by state insurance laws. However, if they are covered by non-discrimination laws and the plan covers opposite-sex spouses, those plans may also have to cover same-sex spouses;
- The Affordable Care Act does require employers to offer coverage to an employee’s children, which includes adopted children. In many cases, same-sex couples could not adopt a child as a couple; rather one or the other partner could adopt the child individually. At best, the non-adopting partner’s ability to get employer-sponsored health insurance coverage for the child was questionable. Now, same-sex couples should be allowed as a couple to adopt a child, and either spouse should be able to get employer-sponsored coverage for that child. At the very least, children of one same-sex spouse would probably be step-children of the other spouse and employers covered under the Affordable Care Act have to offer coverage to step children.
- State laws affecting administration of a deceased’s estate will need to recognize same-sex spouses administrators and default heirs (in the event the deceased did not have a will), which in turn will impact benefit plan beneficiaries of plans that incorporate state law.
- State-conferred benefits for spouses will likely be extended to same-sex spouses.
- State tax laws regarding employee benefits of same-sex spouses and those of opposite-sex spouses should receive the same tax treatment, which should also mean that federal and state tax law will be in sync — at least in this respect.
- Same-sex spouses should now have the ability to file domestic relations proceedings (e.g. divorce, custody, etc.), which in turn should allow same-sex spouses to obtain Qualified Domestic Relations Orders (QDRO’s). A QDRO generally assigns portions of an employees retirement benefits to a current or former spouse or a couple’s children.
There is another, perhaps overlooked impact of Obergefell: It does not require recognition of domestic partnerships. Does that matter in light of the fact that now both same-sex and opposite-sex couples can marry and will be legally recognized as such? Yes, Not all couples marry. Couples who are not married and who, through one of the partners currently have employer-sponsored benefits could see those benefits disappear if an employer decides to rescind those benefits. Employers considering such rescission should make sure to do so with respect to all employees in a domestic partnership and not necessarily only to those in same-sex partnerships. While there is currently no explicit federal law prohibiting discrimination based on sexual orientation (Click here, here and here for more on that topic) many states do have such laws.
We will be seeing and feeling the impact of Obergefell on employee benefits for quite some time. Employers should wait for further guidance from their states — and reach out to competent employment counsel with any questions that cannot wait. In the meantime, we’ll look at Obergefell’s impact on family leave laws next week. See you then.
Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent employment counsel on any issues discussed here.
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