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.
On September 18, 2013, the Department of Labor (“DOL”) released Technical Release No. 2013-04 in order to provide guidance to employee benefit plans regarding the definition of "spouse" and "marriage" under ERISA in light of the Supreme Court's decision in Windsor. The Internal Revenue Service (”IRS”) previously issued identical guidance to taxpayers in Revenue Ruling 2013-17.
The guidance issued by both the DOL and the IRS provides the following:
- "Spouse" refers to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex.
- "Marriage" includes a same-sex marriage that is legally recognized as a marriage under any state law.
- Marriages between same-sex individuals that were validly entered into in a state whose laws authorize the marriage of two individuals of the same sex will be recognized even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages.
- "Spouse" and "marriage" do not include individuals in a formal relationship recognized by a state that is not called a marriage under state law, such as domestic partnerships and civil unions.
Under the DOL analysis, the state of celebration rule, recognizing marriages that are valid in the state in which they were celebrated, regardless of the married couple’s state of domicile, provides for uniformity. The DOL reasoned that the application of this rule provides a uniform rule of recognition that can be applied by employers, plan administrators, participants and beneficiaries. According to the DOL, to adopt a rule based on the state of domicile, as opposed to the state of celebration, would create much confusion for employers who operate or have employees (or former employees) in more than one state or whose employees move to another state while entitled to benefits. The net effect of the adoption of such a rule, according to the DOL would be a substantial burden on employers, both financial and administrative.
While the DOL release does not provide an effective date or indicate whether this new guidance will apply retroactively, the DOL does make it clear that it will offer further guidance dealing with specific benefit plan issues under ERISA.
Given these continuing developments in the aftermath of the Windsor decision, prudent employers and other plan sponsors should take the following steps, in consultation with their benefits counsel and plan administrators:
- 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.