This post was originally published on April 12, 2013. In light of the recent Supreme Court Decision on DOMA, McLane wanted to share this post again.
For at least the next few months, DOMA is the law of the land, and the United States government will continue to define “marriage” as a “legal union between one man and one woman as husband and wife,” and “spouse” as a “person of the opposite sex who is a husband or a wife.” DOMA, however, appears to be on its last leg. The demise of DOMA will likely trigger significant policy and benefit changes for employers. Here is a list of four potential issues to keep in mind in the coming months as DOMA’s fate continues to unfold.
- Health Insurance – Many employers provide health insurance benefits to their employees, and their employees’ federally-recognized spouses and children. These benefits are considered a non-taxable fringe benefit under the Internal Revenue Code and exempt from income tax liability. Health insurance benefits for an employee’s domestic partner or same-sex spouse, however, while still a fringe benefit, is not exempt from income tax liability, and instead imputed to the employee as income. If DOMA is overturned, insurance benefits provided to same-sex spouses will no longer be imputed as income, and will instead be exempt from income tax liability.
- Title VII of the Civil Rights Act – While New Hampshire and Massachusetts recognize sexual orientation as a protected class and therefore afford some protections to employees against discrimination based on sexual orientation, the Civil Rights Act does not. It does, however, prohibit discrimination based on gender. If the DOMA-definitions of “marriage” and “spouse” are overturned, some experts argue that employers could potentially be held liable for gender discrimination if they deny benefits to an employee simply because he or she is in a same-sex marriage. Employers should therefore take active steps to ensure that all existing policies and procedures provide equal treatment, benefits, and opportunities to employees regardless of the gender of their spouse.
- FMLA – Employers are not presently required to provide employees twelve weeks of unpaid leave in order to care for a sick same-sex spouse. In fact, should employers elect to provide employees with such leave, it does not count toward that employee’s twelve weeks. If DOMA is struck down, all employees will be allowed to take leave under FMLA to care for a same-sex spouse.
- 401(k) and 403(b) Plans – Employees with same-sex spouses participating in 401(k) and 403(b) plans that require spousal consent to name a non-spousal beneficiary are currently free to name anyone other than their spouse as the beneficiary. If DOMA is overturned, employees with same-sex spouses will gain the same spousal protects provided to all other employees. This raises questions regarding the status of non-spousal beneficiaries designated before DOMA was overturned. Will these designations stand? Will the newly-recognized same-sex-spouse automatically undo the prior designation and become the new beneficiary? Employers should therefore encourage employees with same-sex spouses to revisit their beneficiary designations to ensure their beneficiary designations are as they intended.