Overview

In a historic decision, the Supreme Court today struck down the Defense of Marriage Act (DOMA) as a violation of the U.S. Constitution. DOMA, which passed both houses of Congress by large majorities and was signed into law by President Bill Clinton on September 21, 1996, defines "marriage" as "only a legal union between one man and one woman as husband and wife" for all federal purposes.

The case was brought by Edie Windsor, who lived with her partner Thea Spyer in New York City for 44 years. They were married in Canada in 2007. In 2008, New York began recognizing same-sex marriages performed elsewhere. When Ms. Spyer died in 2009, leaving an inheritance to Ms. Windsor, the federal government, citing DOMA, refused to recognize their marriage and taxed the inheritance. Under DOMA, only opposite-sex spouses can leave their assets, including the family home, to the other spouse without incurring estate taxes. Ms. Windsor paid the estate tax, then brought this lawsuit.

More than 1,100 federal laws give rights and benefits to married couples. Because of today's ruling, married same-sex couples in states that recognize gay marriage will now have these same benefits, including the rights to file joint tax returns, apply for Social Security survivor benefits if one spouse dies and take up to 12 weeks off work to care for a sick family member without fear of losing their job under the Family and Medical Leave Act.

The Supreme Court's decision will have a significant impact on ERISA governed and other federally governed employee benefit plans. In the retirement plan context, employers with pension and 401(k) plans will be required to recognize same-sex spouses for purposes of determining surviving spouse annuities or death benefits. The same-sex spouse of an employee will also be able to elect spousal rollovers to his or her own individual retirement account (IRA) upon the employee's death, enabling the surviving spouse to receive payments over his or her lifetime. In addition, an employee with a same-sex spouse will have to obtain spousal consent to change the beneficiary of his or her retirement benefit, which protects the non-employee spouse from unknowingly losing retirement benefits upon the employee's death. If a same-sex couple divorces, benefits in qualified retirement plans may be split pursuant to a qualified domestic relations order (QDRO).

In the welfare plan context, the decision will simplify life for employers who currently provide welfare benefits to same-sex couples by eliminating the current situation in which employers provide tax-free benefits to opposite-sex partners, but must tax benefits to same-sex partners. In addition, an employee with a same-sex spouse will now be able to contribute to health savings and flexible spending accounts at the same levels as an employee with an opposite-sex spouse. COBRA will apply to same-sex spouses. While federal law does not require employers to provide any, employers who do provide spousal coverage must either begin providing same-sex spousal coverage or face legal challenges.

The Supreme Court's decision leaves many questions to be resolved by subsequent regulation and undoubtedly litigation. Conspicuously unresolved is the interplay between the states that recognize same-sex marriage and those that do not. How will a same-sex couple legally married in a state or country that recognizes same-sex marriages be treated if they move to a state that does not? Likewise, it is unclear how an employee with a same-sex spouse who lives in a state that recognizes same-sex marriage but works in a state that does not will be treated.

The details of the DOMA decision will take time to be worked out.