The U.S. Supreme Court’s decision to accept two cases addressing same-sex marriage has raised questions about the potential consequences for employers, insurers, health care providers, and others.  In this post, we explore the range of possible outcomes, and the effects of each.

The Court accepted two cases.  In Windsor v. United States, the lower court found unconstitutional the provision of the federal Defense of Marriage Act (DOMA) that defines marriage, for purposes of federal government actions, as being between one man and one woman.  In Hollingsworth v. Perry, the lower court found unconstitutional California’s decision (by referendum) to amend its constitution to repeal the right to same-sex marriage while preserving for same-sex couples all the rights and responsibilities of marriage (sometimes called “civil unions” or “domestic partnerships”).

The Court is likely to decide these cases by the end of June 2013.

The DOMA Case

In Windsor, the Supreme Court will rule on whether the portion of DOMA that directs the U.S. government not to recognize any state’s same-sex marriages for purposes of federal laws and programs violates the U.S. Constitution.  The case does not address the portion of DOMA that permits states to deny recognition to same-sex marriages recognized by the states where the marriages are performed.  Additionally, there is a potential procedural problem in the case that might preclude the Court from reaching a decision on the main issue in the case.

If the Supreme Court finds this portion of DOMA unconstitutional, its decision will likely mean that the United States will recognize same-sex marriages that are sanctioned by the laws of the states where they take place.  The effects of such a decision would be wide-ranging.  A congressional study found 1,138 federal statutory provisions in which marital status is a factor in determining access to a benefit, right, or privilege. 

For private employers, the most significant impact may be on employee benefits governed by the federal Employee Retirement Income Security Act (ERISA).  Because of DOMA, the terms “spouse” and “marriage” in employee benefit plans currently apply only to opposite-sex couples, and employers are not required by law to extend benefits to same-sex couples that are otherwise available to opposite sex couples (though many do so voluntarily). If this portion of DOMA were invalidated by the Supreme Court, the ERISA references to “spouse” and “marriage” would likely apply to same-sex marriages recognized by the states in which they are performed.

Most of the other effects of invalidating DOMA would be on federal programs and federal agencies.  Two of the most significant areas of federal law where marital status is implicated are (1) social security and programs related to housing and food stamps and (2) taxation. Marital status is integral to eligibility and benefit levels for Social Security and similar programs. The laws governing taxation contain some of the most impactful provisions turning on the distinction between those who are legally married and those who are not legally married.  Whether one can file jointly, the marriage penalty, tax withholding and the taxability of employer-provided health care benefits all pivot on who qualifies as a spouse.  Employers would likely have to treat individuals in same-sex marriages recognized in their states as married for purposes of federal tax matters.

The California “Proposition 8? Case

This case arises from unusual circumstances.  In 2008, the California Supreme Court ruled that California law limiting marriage to opposite-sex couples violated the guarantee of equal protection in the California constitution, then later that year voters narrowly passed a referendum removing that constitutional protection.  Thus, same-sex couples lost a right that had been guaranteed by the state constitution.  Although same-sex couples cannot marry, California has a “domestic partnership” statute, giving same-sex couples all of the benefits and responsibilities of marriage.

Some believe that this case could be a vehicle for the Supreme Court to rule that the United States Constitution conveys – or does not convey – a right to same-sex marriage.  If the Court found a right to same-sex marriage in the Constitution, it would mean that all states would have to allow and recognize such marriages.  On the other hand, if the Court ruled that the Constitution does not contain a right to same-sex marriage, the decision would permit the status quo, under which some states allow same-sex marriage, others allow civil unions or domestic partnerships, and most allow neither.

But there are other ways the Court could decide this case that have implications for employers, insurers, and others, according to analysis by Professor Kenji Yoshino:

  • The Court could make a ruling that applies only in California, probably on the basis that there was no rational reason – other than impermissible discrimination – to eliminate the state constitutional right to same-sex marriage.  The result of this decision would be to re-instate the right to same-sex marriage in California only.
  • The Court could also rule that there is no rational basis for allowing same-sex couples to have all the rights and responsibilities of marriage (through “domestic partnership”) but not to marry.  The result of this decision would go beyond California.  It would likely extend the right to same-sex marriage to seven other states that recognize domestic partnerships and civil unions – Delaware (civil unions), Hawaii (civil unions), Illinois (civil unions), Nevada (domestic partnerships), New Jersey (civil unions), Oregon (domestic partnerships), and Rhode Island (civil unions). 
  • Like the DOMA case, there also is a potential procedural problem in Hollingsworth that could preclude the Court from reaching any decision on the merits.

Employers, insurers, and health care providers should watch carefully for the Supreme Court’s decision in these two cases, which, depending on the decision, could have wide-ranging impact.  The Court will hear oral argument in these cases on March 26 and 27, 2013, and we will provide an update following the argument.