On August 4, 2010, Chief Judge Vaughn Walker of the U.S. District Court for the Northern District of California issued an order in Perry v. Schwarzenegger et. al., No. C092292 (N.D. Cal. Aug. 4, 2010), permanently enjoining enforcement of Proposition 8, a voter initiative that amended the California Constitution that stated, “[o]nly marriage between a man and a woman is valid or recognized in California.” The court's order followed a trial in a case brought by two same-sex couples who claimed that Proposition 8 violated the U.S. Constitution. The district court agreed, ruling that Proposition 8 violates the Due Process and Equal Protection Clauses of the Fourteenth Amendment of the United States Constitution.

The court’s ruling is likely to have limited effect on employer benefits plans. California law already extends the same rights and obligations to registered domestic partners as to spouses, including, for example, the right to take family leave due to the serious illness of a domestic partner. In addition, California Assembly Bill No. 2208, which became effective in 2005, already requires all individual and group health, dental, vision, disability, accident, and life insurance plans to provide domestic partners with coverage that is equal to what spouses receive. Accordingly, same-sex couples who did not already have coverage as domestic partners under insured plans may now choose the alternative to marry and seek coverage as spouses.

However, self-insured health plans and retirement plans that are subject to federal law would not be required to extend benefits to same-sex spouses so long as the federal Defense of Marriage Act (DOMA) limits federally recognized marriage to the union of one man and one woman. The Employee Retirement Income Security Act of 1974 (ERISA) generally, but with some exceptions, preempts state laws affecting employee benefits, including, for example, self-insured or self-funded employee health and welfare plans. Accordingly, employers who have chosen to limit spousal benefits to traditional opposite-sex spouses under ERISA-covered plans have under some circumstances been allowed to do so, even where state law recognizes same-sex marriages. Continuation coverage for employees may be similarly affected under Cal-COBRA and federal COBRA. Cal-COBRA requires continuation coverage for registered domestic partners, and in light of the recent decision, new same-sex spouses should be entitled to the same continuation coverage. For federal COBRA purposes, however, same sex spouses and domestic partners will not be considered qualified beneficiaries unless the plan provides for it.

Although the biggest impact from the decision will be in the area of benefits, employers have other legal requirements to consider with regard to state employment laws governing legal entitlements for employees with “spouses.” For instance, the ruling permits employees in newly recognized same-sex marriages to assert a claim for “marital status” discrimination prohibited under California’s Fair Employment and Housing Act. There are various other state labor and employment laws that provide benefits to employees with “spouses.” Employers will need to take note of such requirements when dealing with employees who have entered into a same-sex marriage and who are not also registered domestic partners.

Currently, the Ninth Circuit Court of Appeals has granted a stay, thus delaying same-sex marriages in California at least until the week of December 6, 2010, when the case has been calendared for a hearing. The Ninth Circuit has specifically requested that the proponents of Proposition 8 demonstrate why they have standing to pursue an appeal, expressing doubt that the proponents even have standing under Article III of the Constitution to appeal because standing requires a showing that the proponents have suffered an injury as a result of the court’s injunction against Proposition 8. In the meantime, Proposition 8 will remain effective during the stay.