On June 26, 2013 the Supreme Court held in United States v. Windsor that Section 3 of the Defense of Marriage Act of 1996 ("DOMA") unconstitutionally encroached on states’ rights to regulate marriage.1 Section 3 of DOMA prohibited for purposes of federal law the recognition of same-sex marriages.2 Prior to the Windsor ruling, DOMA provided a uniform definition of "spouse" and "marriage" for federal law purposes (e.g., ERISA, Internal Revenue Code, COBRA, FMLA, etc.), allowing employers to treat same-sex couples (spouses and domestic partners) the same throughout the country. Now that the Court has struck down Section 3 of DOMA, employers must navigate a patchwork of state laws as they work to expand federally protected rights and benefits to treat same-sex spouses equally. The Windsor holding is effective July 21, 2013. Thus, employers should promptly act to address some aspects of this decision with respect to their benefit plans.

We recommend employers promptly communicate to their employees the following changes required by Windsor:

Click here to view table.

Implementation Challenges

There are a few things that employers should clearly do.

All Plans

  • Take an inventory of all plans that might be affected and review existing plan terms to determine areas impacted and alternatives available.
  • Allay employee concerns by promptly distributing a participant communication outlining the employer’s same-sex marriage game plan for employee benefits. This communication should clearly spell out what changes the employer knows it is making and the effective date of such changes. To address issues that require more analysis or guidance, the communication could indicate that other important legal matters are unclear, but that the employer is monitoring developments closely and will communicate future decisions to affected employees.
  • Decide how the plans should determine whether a same-sex marriage is lawful under state law (e.g., the participant’s state of residence or the state in which the marriage was performed). See the discussion below.
  • Review plan documents to determine whether an amendment is required to offer same-sex spousal coverage when desired or required. For example, if a spouse is defined as a participant’s lawfully married spouse as determined under state law, except as otherwise provided by federal law, then no amendment is necessary (except, possibly, with respect to defining the state law that will govern spouse determinations). On the other hand, if the plan defines a spouse as an opposite-sex spouse, then an amendment is needed to offer same-sex spouse coverage.
  • Decide whether to amend each plan individually, or whether an omnibus amendment is appropriate to address particular matters until future guidance clarifies all of Windsor’s impacts.#
  • Amend summary plan descriptions and issue summaries of material modifications as required.
  • Decide whether changes should be prospective or retroactive. Some commentators have suggested that Windsor will be retroactive and the government may weigh in on whether retroactivity will be required. In the meantime, employers considering retroactivity will need to carefully consider the administrative and financial consequences of their decision.

Welfare Plans

  • Decide whether to offer special mid-2013 same-sex spouse enrollment rights, or whether to wait for forthcoming government guidance.
  • Stop imputing income on employer-paid benefits provided to same-sex spouses residing in states that recognize same-sex marriage, if income imputation was not required for opposite-sex spouse coverage.4
  • Decide whether domestic partner and civil union coverage remains appropriate or if it needs refinement.
  • Stop providing unnecessary tax-gross ups for health coverage provided to such spouses (consider how to handle past gross-ups and imputed pay for 2013, and prior years).
  • Decide whether to file a refund claim for payroll taxes paid on account of previously imputed income (depending on the level of employer subsidy and the number of same-sex spouse participants, this could be a significant refund claim).

Qualified Plans

  • Implement required changes described in the chart above.

State Law Issues

Applying two separate benefit administration schemes – one for states that recognize same-sex marriage and one for states that do not – may seem easy at first blush. However, problems arise when an employee is married in a state that recognizes same-sex marriage but resides in a state that does not. Presently, thirteen states and the District of Columbia have enacted laws recognizing same-sex marriages. Section 2 of DOMA, however, permits states to refuse to recognize same-sex marriages performed in other states, and the Windsor decision did not address Section 2. In addition, the IRS5 and many other departments and agencies, determine whether an individual is married based on the laws of the state in which the individual resides. Other departments and agencies base their determination on the laws of the state in which the marriage ceremony was performed.

Using the state of residence is particularly problematic as today’s workforce is highly mobile. Under this rule, an employee who was legally married and resides in the District of Columbia would lose all of the benefits listed in the charts above if the employee moved only a few miles away to Virginia. Further, the burden of tracking an employee’s state of residence could be overwhelming, particularly for large, nationwide corporations. Of course, this issue already exists in some opposite-sex marriages (such as "common law" marriages).

The complexity of this analysis will demand careful attention, as any approach conceivably could be "wrong" from an IRS/DOL perspective. To address this issue, we believe the Departments should issue interim guidance providing for safe harbor determinations of whether a spouse is legally married.

Family Leave Issues

The Family and Medical Leave Act ("FMLA") and the California Family Rights Act ("CFRA") permit eligible employees to take leave to care for certain family members suffering from a serious health condition. FMLA spouse determinations are made by reference to the law of the state in which the employee resides.

See 29 C.F.R. § 825.122(b); comment to 29 C.F.R. § 825.113; Fed. Reg. Vol 60, No. 4 at 2191 (1995). Spouse determinations under the CFRA are made by reference to "marriage" as defined in California Family Code section 300. See 2 C.C.R. § 7297.0(p). The United States Supreme Court decision in Hollingsworth v. Perry,6 issued the same day as the Windsor decision, effectively laid the ground work for same-sex marriage recognition in California.7

After Perry and Windsor, employees now will be able to take leave: (1) to care for the serious health condition of a same-sex spouse; (2) to care for the serious health condition of a son or daughter of the same-sex spouse under the "stepchild" prong definition of "son or daughter"; (3) to care for the serious illness or injury of a qualifying same-sex military or veteran spouse; and (4) to attend to qualifying exigencies arising out of the call to military duty of a same-sex spouse.

Although many issues have been resolved by Perry and Windsor, employers still need to address a few anomalies in the law. For example, because the CFRA recognizes registered domestic partner leave rights, whereas the FMLA does not, registered domestic partners in California (and perhaps certain other states with similar leave laws) will continue to have greater leave rights than employees with spouses (same or opposite sex). California employees are entitled to take 12 weeks of CFRA leave to care for a registered domestic partner. But, because this leave does not count against the employee’s FMLA leave entitlement, those employees are entitled to take an additional 12 weeks of leave for any other FMLA qualifying circumstance (for a possible total of 24 weeks of protected leave). In contrast, employees with a spouse are entitled to 12 concurrent weeks of leave under the FMLA and CFRA.


There is no doubt that Windsor requires the benefit plan changes set forth in the chart above. Prompt employee communications should help allay employee concerns. As to the more challenging and unsettled issues, employers should begin to assess the options and make changes only after thoughtfully considering their impact.