As most readers will already be aware, the Supreme Court's recent ruling in Obergefell mandates that same-sex marriage must now be licensed and recognized at the state level.  While the ruling is unambiguous that the right to same-sex marriage is protected under the Fourteenth Amendment, future litigation will almost certainly be required to resolve the interaction of that right with the equally important First Amendment right to the free exercise of religion.  In this client alert, we focus on the more technical but nonetheless necessary question of how employee benefit plan administration will be affected by Obergefell, particularly for employers in states that did not previously recognize same-sex marriage.

Although Obergefell does not change the recognition of same-sex marriage for purposes of federal laws, including the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 ("ERISA"), its practical impact may vary depending on an employer's current location.  Since the Supreme Court's 2013 ruling in United States v. Windsor, marital status at the federal level has been determined under the law of the state in which an employee was married. [1]   This uniform federal recognition notwithstanding, state recognition prior toObergefell varied by state.  Employers in states that did not previously recognize same-sex marriage may now need to review their administrative practices. 

In particular, employers may find that some administrative practices can be simplified as separate record keeping may no longer be required to distinguish federally-recognized from state-recognized marriages.  Also, the ruling may result in significant cost savings for employers who previously offered gross-ups in order to offset state-level taxation of benefits for same-sex spouses.   However, employers should understand that the speed and mechanics of implementation may vary by state.  Any review of benefits administration in light of Obergefell should be conducted by counsel licensed in the applicable state.