In one of the most highly anticipated rulings of the October 2014 term, a divided Supreme Court ruled that states must issue a license for a marriage between two people of the same sex and that state prohibitions against same-sex marriages violate the Fourteenth Amendment rights of same-sex couples. In a 5-4 decision, the Court found that statewide prohibitions on same-sex marriage violate the Equal Protection and Due Process clauses of the U.S. Constitution’s Fourteenth Amendment. Obergefell v. Hodges, No. 14-556 (June 26, 2015).
This decision has wide-ranging implications for employers and the application of certain workplace laws. For example, the Family and Medical Leave Act of 1993 requires covered private employers to grant qualifying employees time off to care for their sick spouses. The Obergefell decision will lend clarity and consistency to FMLA administration. Earlier in 2015, the Department of Labor issued a Final Rule revising the regulatory definition of spouse under the FMLA. (For details, see our article, New FMLA Regulations Expand Definition of Spouse and Include Same-Sex Spouses.) As a result of the Supreme Court’s decision, it appears any questions regarding the Final Rule have been all but eliminated, and employers should review and make necessary changes to their policies and practices to ensure FMLA compliance.
In 2013, the Internal Revenue Service and DOL issued guidance providing that same-sex spouses would be recognized for purposes of federal protections under the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) if they were legally recognized in the state where the marriage was celebrated, regardless of the law in their state of residence. These protections include:
- same-sex spousal entitlement under some pension plans;
- status as default beneficiary under 401(k) plans;
- ability to roll over a survivor benefit to another employer’s eligible retirement plan;
- entitlement to cafeteria plan and flexible spending account participation;
- entitlement to COBRA continuation elections; and
- ability to purchase health plan coverage for same-sex spouses on a pre-tax basis and exclude the cost of the coverage from gross income for federal income tax purposes.
Following the Obergefell decision, all 50 states must recognize same-sex marriages, eliminating any distinction between where a marriage is celebrated and where the spouses reside. Employers offering health insurance plans that include spousal coverage will have to offer same-sex spousal coverage as well. Furthermore, while the decision itself does not create a requirement that employers offer health plan coverage – health plan coverage remains a benefit that employers may provide, or not, in their sole discretion – employers with self-insured plans that offer only opposite-sex spousal coverage will risk sex discrimination claims under Title VII of the Civil Rights Act of 1964.
Another important change involves the “spousal privilege” protecting confidential communications between spouses during their marriage from testimonial disclosure. In federal proceedings (e.g., depositions and trials), this privilege now will include the confidential communications of legally married same-sex couples. Employers should consult counsel about the implications of this change with respect to any ongoing litigation.
Given the significant changes to FMLA entitlement, employee benefits, and other important workplace issues associated with the Obergefell decision, employers should consult employment counsel to ensure compliance in a manner consistent with the organization’s goals and applicable laws.