Yesterday, the U.S. Supreme Court struck down a key provision of the Defense of Marriage Act. The SCOTUSBlog has done an admirable job with the recaps and if you want more information about that decision, you should really go there first.
But the immediate impact of the decision is that it changes all the 1000+ places in federal law where “marriage” or “spouse” was used. In other words, if a state recognizes a same-sex couple as married (like Connecticut), then federal law must do the same.
Employers in Connecticut have already had to address same-sex marriages several years ago when they became legal in the state. Thus, for employers, items like health benefits or Connecticut FMLA leave have already changed. Yesterday’s ruling won’t change that.
The problem for employers, is how to address these items on a nationwide basis and how to address the federal changes that will now occur. The ruling provides some clarity but not all answers are clear cut yesterday.
For employers in Connecticut and elsewhere where same-sex marriages are approved, you can probably expect several impacts.
For example, you should anticipate that employees who are legally married to same-sex partners will want to update their W-4 forms to change their tax filing status to “married”. You should not stop them.
But the tax consequences are a little messier in states that don’t recognize same-sex marriages.
As highlighted in a Workplace Resource Center post: If an employee’s same-sex partner is considered a “spouse” under state law, the partner’s benefits are not to be considered part of the employee’s gross income and the IRS will not tax that partner’s health benefits. Consequently, the employee’s net income will decrease, resulting in a decrease in the amount of payroll taxes the employer and employee will be required to pay.
The federal FMLA is also anticipated to undergo some pretty big changes in states that approve same-sex marriages. Already in 2010, the FMLA regulations suggested that married same-sex couples could take time off to care for a newborn child; now FMLA policies will have to be tweaked to make it plain that employees can take time off to care for a same-sex spouse where it is legal.
But as Jeff Nowak noted on the FMLA Insights blog this morning, all is not clear in states that don’t permit same sex marriages. In other words, the extent of the changes to the FMLA is still being determined. But at least in Connecticut, federal FMLA would now seem to apply to same-sex spouses.
Employers should also anticipate significant changes to the way health benefits should be covered as well as retirement benefits. Moreover, if a same-sex married couple gets a divorce, there may be ERISA implications (such as a Qualified Domestic Relations Order – QDRO) that need to be addressed.
Employers will also have to deal with another strange result of the court’s decision: Employees may be deemed “married” in one state, and ostensibly, “not married” if they get transferred to another state. What then? That question remains open but is one in a series of open questions that courts will continue to struggle with over the next several years.
Over the upcoming weeks, we will no doubt be exploring all the ways that employers may be impacted. So stay updated on these developments and correct any existing policies or practices to reflect this new reality.