Supreme Court Opinions in Same-Sex Marriage Cases Could Impact Employers

Last week I wrote about the Supreme Court’s pending decision in Fisher v. University of Texas.  This week I’m discussing the implications for employers of the Supreme Court’s upcoming decisions on same-sex marriage.

The Court has heard arguments in two cases testing whether gay and lesbian couples have a fundamental right to wed. Those cases are Hollingsworth v. Perry (involving California’s definition of marriage and the Equal Protection Clause) and United States v. Windsor (involving the constitutionality of the federal Defense of Marriage Act, hereinafter “DOMA”).

Currently, many employers grant spousal benefits to same-sex partners, but many others do not. For employers that do permit gays and lesbians to add their partners to health benefits, those benefits must be tracked, because they are taxable under DOMA, whereas heterosexual spousal benefits are not taxable. DOMA differentiates between all other federal benefits as well – heterosexual and homosexual couples are treated differently. This is a significant issue for employers, and becoming a greater issue as more states permit same-sex marriage.

The Hollingsworth case deals with California’s Proposition 8, which amended the state’s constitution to make same-sex marriage impermissible. In Hollingsworth, the issues are (1) whether the petitioners had standing in the case, and (2) if the petitioners did have standing, whether the federal Equal Protection Clause prohibits California from defining marriage as the union of a man and a woman.

The SCOTUS Blog has outlined many possible outcomes in Hollingsworth.  The Court may decide not to decide, finding that the case was improvidently granted, because the petitioner before the Court does not have standing. Alternatively, the Court may decide the cases in such a way that only California is impacted – either permitting or denying marriage to same-sex couples in that state. Or it is possible the Court might remand the case to the California courts to reconsider in light of the Windsor decision. For a lengthy review of the options, see the SCOTUS Blog. 

It is possible that the Court will issue a broad opinion covering the laws of all states regarding marriage, but most commentators think that is unlikely.  Thus, only California employers are likely to face implications from Hollingsworth. (Of course, interstate employers with workers in California are included in this group.)

Moreover, the implications of Hollingsworth are also limited by California’s domestic partner statute. Under that statute, same-sex couples can enter into domestic partnerships that require these couples to be treated the same as heterosexual couples. Thus, Hollingsworth primarily differentiates between domestic partnerships and marriage, which will not have as big an impact on employers as Windsor.

In Windsor, the issues are (1) whether the House of Representatives had standing to pursue the case when the Administration chose not to, (2) whether the Supreme Court can even consider the case, since the Executive Branch agrees with the lower court that DOMA is unconstitutional, and (3) if the Court determines it should rule in the case, whether Section 3 of the Defense of Marriage Act (DOMA) violates the Fifth Amendment’s guarantee of equal protection of the laws as applied to persons of the same sex who are legally married under the laws of their state

As in Hollingsworth, the Court’s opinion in Windsor could go in a number of directions, according to Employee Benefit News. First, the Court could decide the parties didn’t have standing, and the case shouldn’t even be before the Court, which would leave DOMA as valid law. Second, the Court could uphold DOMA as meeting constitutional muster. This would have the same result as throwing the case out for lack of standing, in that DOMA would remain valid. With either of these rulings, federal law would be unchanged, and employers could continue administering their employee benefit plans as they do today.

Finally, the Court in Windsor could find DOMA to be unconstitutional, which would require that federal laws accept the marriage laws of all the states. In this case, couples validly married under state law, regardless of sexual orientation, would have to be treated the same. This would have significant impact on employee benefit plans, both retirement plans (such as pension plans and 401(k) plans) and health and other welfare benefit plans.

Both Hollingsworth and Windsor deal with the government’s response to same-sex marriages, rather than with private employers’ responses. In fact, most large employers are ahead of the federal government in developing benefit and leave policies to deal with these issues. The Supreme Court’s opinions in Hollingsworth and Windsor may force all employers to move in this direction.

Is your company ready for the Supreme Court’s decisions on same-sex marriage?



Filed under Benefits, Diversity, Human Resources, Law, Politics

2 responses to “Supreme Court Opinions in Same-Sex Marriage Cases Could Impact Employers

  1. The Hollingsworth decision on June 26, 2013, is unlikely to have much impact on employers, other than those with employees in California, where same-sex marriages will now be recognized.
    But the DOMA decision in Windsor will require employers with employees in state- recognized same-sex marriages to comply with federal law. As noted in the post, many employers were already covering same-sex spouses and domestic partners on their benefit plans, but now the tax implications will change.
    Employers need to stay on top of these developments.

  2. Pingback: Complex Impact of DOMA Decision on Employee Benefit Plans | Sara Rickover, Behind the Corporate Veil

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