On June 26, 2013, the Supreme Court issued its long-awaited decision in Windsor v. United States, No. 12-307, a case challenging the section of the Defense of Marriage Act (DOMA) under which same-sex marriages validly entered into under applicable state law were not recognized for the purposes of federal laws. The Court ruled, in a 5-4 decision, that this section of DOMA is unconstitutional. The Supreme Court first determined that those defending the law, representatives of the United States Congress, actually had standing to defend the law, this giving the Supreme Court jurisdiction to hear the case. The majority, with Justice Kennedy writing for the Court, held that the equal protection clause of the Fourteenth Amendment prohibited the federal government from refusing to recognize same-sex marriages that have been entered into validly under the law of a state. A primary basis for this decision was that states have historically defined the parameters for those marriages they consider valid. In this specific case, since New York had chosen to protect same-sex relationships by allowing same-sex couples to marry, it was a violation of equal protection for the federal government to make unequal a subset of state-sanctioned marriages.
It is likely that the Windsor decision will impact the design and operation of private employer benefit plans, including 401(k) plans and other retirement plans, governed by ERISA, health benefit plans, and leave policies. At this immediate time, the specific impact on benefit plans remains unclear. It is likely that the IRS will issue some guidance regarding the impact of this decision. However, the Windsor decision raises questions that will need to be considered by employers as the federal government and employers adjust to the various definitions of marriage in state and federal law. Employers must consider these emerging issues in light of their own specific benefit plans and business needs. Employers should be in consultation with their benefits counsel to determine what approach may be best suited to their specific needs.
In the immediate aftermath of the Windsor decision, prudent employers and other plan sponsors should take the following steps:
- Send appropriate communications to employees about how the Windsor decision potentially impacts their benefits, describing what changes are being made to the benefit plans or policies in light of the decision;
- Review benefit plans and employee policies to determine the impact of Windsor, if any, on their plans and policies;
- Determine whether current plan eligibility rules, definitions and policies, specifically as related to the definition of spouse, need to be revised in light of Windsor and then revise applicable documents and forms, as necessary;
- Where the employer provides domestic partner/civil union partner health benefits, consider whether those benefits should be continued or revised, given that same-sex spouses will be recognized as spouses for purposes of federal law, considering carefully applicable state law requirements and risks; and
- Ensure that outside administrators, insurers and service providers are administering plans in a manner consistent with the employer's intent and the applicable legal requirements, including with respect to payroll and tax issues, in light of the decision in Windsor.