On June 26, 2013, the United States Supreme Court, in United States v. Windsor, held that Section 3 of the Defense of Marriage Act (“DOMA”) is unconstitutional as a deprivation of the equal liberty of persons that is protected by the due process clause of the Fifth Amendment of the United States Constitution. Before it was struck down, Section 3 of DOMA had provided that for purposes of federal law, “marriage” means only a legal union between one man and one woman as husband and wife.
The Windsor ruling affects nearly every employee benefit plan. As a result of Windsor, the DOMA definition no longer applies. When Section 3 of DOMA was the law, employers could not provide many employee benefits and protections to
In response to the Supreme Court’s ruling in Windsor, the Internal Revenue Service (the “IRS”), the Department of Treasury (“Treasury”) and the Department of Labor (the “DOL”) have released new guidance on the treatment of
IRS and Treasury Ruling for Purposes of Federal Tax Law and Employee Benefits
On August 30, 2013, in Revenue Ruling 2013-17, the IRS and Treasury ruled that
The guidance also provides that these terms do “not include individuals who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as marriage under the laws of that state.”
The guidance is effective starting September 16, 2013, and will apply prospectively. The IRS has indicated that it will publish further guidance on any retroactive application of the Supreme Court’s opinion in Windsor to employee benefit plans. The IRS anticipates that “future guidance will provide sufficient time for plan amendments and any necessary corrections so that plans and benefits will retain favorable tax treatment for which they otherwise qualify.”
Required Changes to Qualified Retirement Plans
In order to maintain their qualified tax status, retirement plans are required to offer several spousal benefits and protections. Based on Windsor and the IRS guidance discussed above, employers are now required to offer certain benefits and protections to
defined benefit pension plans must offer qualified joint and survivor annuities (“QJSAs”) and qualified pre-retirement survivor annuities (“QPSAs”) to
qualified plans must require
same-sexspouses to consent to beneficiary designations in favor of anyone other than the same-sexspouse;
qualified plans must honor qualified domestic relations orders (“QDROs”) in favor of
qualified plans must treat
same-sexspouses as spouses for purposes of the required minimum distribution provisions.
The application of these protections to
Health and Welfare Plans
While many spousal protections are federally mandated, there is no federal law that requires employers to offer health or welfare benefits to spouses. This leaves open the possibility that some employers may continue to distinguish between
Most employers will probably conclude, for administrative reasons, that it is easier to treat all employees and spouses the same rather than operate a plan with two separate benefit schemes. One reason to do so is that many states and cities have laws that prohibit employers from discriminating based on sexual orientation, gender identity or marital status. There are arguments that such anti-discrimination laws are preempted by the Employee Retirement Income Security Act of 1974, as amended, but preemption can be hard to predict. Providing uniform benefits to all employees obviates the need to make such arguments.
Based on Windsor and the IRS guidance discussed above, employers who offer health coverage to
- COBRA coverage upon the occurrence of a qualifying event (such as divorce or the employee’s termination of employment);
special enrollment rights when a participant marries a
- favorable tax treatment of benefits, at least on federal basis.
DOL Guidance on the Family Medical Leave Act
The DOL has updated guidance on the Family and Medical Leave Act (“FMLA”) to include
However, in order to be eligible for FMLA leave to care for a sick spouse, the current guidance requires employees to reside in a state that legally recognizes their marriage, whether
Although the DOL has clarified that the state of residency standard applies for purposes of FMLA, a comment by Labor Secretary Thomas E. Perez that this revision of the DOL guidance is only “one of many steps the Department will be taking over the coming months to implement the Supreme Court’s decision” as well as the IRS’s recent decision to use a state of celebration standard for federal tax purposes, as discussed above, lead many to believe that status as a “spouse” for purposes of FMLA will ultimately be based on a state of celebration standard as well. However, for the time being, employers are only required to offer FMLA leave to employees to care for their
Many employers may decide to grant 12 weeks of unpaid, job-protected leave, similar to FMLA leave, to all
It currently appears that employees residing in California, Connecticut, Delaware, Iowa, Massachusetts, Maryland, Maine, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington and the District of Columbia must be granted FMLA leave to care for a
Although we expect the regulators to issue additional guidance on these issues, employers should start moving forward with their compliance efforts. For example, with Revenue Ruling 2013-17 taking effect September 16, 2013, employers should, not later than such date, start allowing legally married
Employers might also start amending plans, summary plan descriptions and employee handbooks to reflect the recent guidance.
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