Employer Quandaries On Same-Sex Marriage

Under the United States Constitution, a marriage that is valid in one state is recognized in all other states. Thus, under the federal Constitution, a same-sex couple married in Massachusetts ordinarily would be considered married under the laws of other states as well.

In 1996, however, Congress enacted the Defense of Marriage Act, which allows states to disregard same-sex marriages of couples who may be legally married in other states. Thirty-six states enacted a similar law. As a result, the federal government and over two-thirds of the states would not recognize the marriages of same-sex couples married in Massachusetts. These state and federal defense of marriage laws may well be challenged under the United States Constitution in the future, but presently the status and legal effect of same-sex marriages is far from clear.

In light of this, what should employers do regarding employee benefits if current federal law (and the law of many states) does not now recognize same-sex marriage, but anticipated Massachusetts law will enable same-sex couples to marry?

Employment Rights Regulated by Federal Law: Risks Under State Law

For federal purposes, marriage is defined as a legal union between one man and one woman, and “spouse” refers only to a person of the opposite sex who is a husband or a wife. Therefore, under current federal law, only opposite sex married couples may file joint federal tax returns, take marital deductions for federal estate tax purposes and invoke the federal rights of spouses under Social Security, COBRA, FMLA and other federal programs. However, given the anticipated difference between federal and state law, it is difficult to predict what entitlements Massachusetts will extend to same-sex married employees.

For example, even though a Massachusetts same-sex marriage may not be recognized under federal law, employers could run afoul of the Commonwealth’s fair employment practices statute, G.L. 151B, which prohibits discrimination on the basis of sexual orientation, if it provides, for example, certain FMLA rights to heterosexual married employees, but not to same-sex married employees. While it is arguable that federal law may preempt state law on this issue, this specific conflict between state and federal law has not been decided by the Massachusetts courts.

Massachusetts employers should keep in mind, however, that with respect to any benefit or policy that is not regulated by federal statute, the employer must treat same-sex married employees the same as opposite-sex married couples (e.g., relocation allowances; employer sponsored housing, maternity/paternity leave polices, etc. for employers not subject to the FMLA, but who offer such leave to employees.)

Retirement Plans

Under the federal laws that regulate private retirement plans, “spouses” are accorded certain rights to death benefits. If a married retirement plan participant dies, any death benefit is automatically paid to the participant’s surviving spouse, unless the spouse disclaimed or waived the benefit. Because, under federal law a “spouse” only refers to a married person of the opposite sex, there is no automatic death benefit under private retirement plans to the partner of a samesex couple, even if they were legitimately married in a state of the United States or a foreign country. Thus, if a Massachusetts employee with a same-sex spouse dies without a valid beneficiary designation, there will be no automatic spousal benefit. Therefore, if an employer wishes to provide automatic spousal death benefits to a same-sex married couple, it must amend its retirement plan.

Medical Plans

Employee benefits offered under insured plans are subject to state law. In light of the recent decision, the Massachusetts legislature may require insured medical plans covering Massachusetts employees to offer coverage to same-sex spouses of employees who elect that coverage. In that case, employers making family medical coverage available to their employees could have a larger group to insure. At this point, however, we do not know whether state insurance law will be changed to cover same-sex spouses.

Employers offering self-insured medical benefits may, however, have a choice as to whether to cover same-sex spouses or not because such plans are not typically regulated by state law, but failing to do so may violate G.L. 151B, which prohibits discrimination on the basis of sexual orientation, among other things.

Recommendation

Employers should review their policies to assess what potential changes may be necessary or advisable. Employers also should understand the risks, costs and benefits associated with policy changes. Because of the complexity of the conflicting laws involved, employers should begin developing an internal policy, amending their employee benefit plans, as necessary and appropriate, and communicating any policy changes to employees.

The Labor, Employment, and Employee Benefits Group provides compliance advice, drafts policies, conducts training, and defends employers against workplace claims and litigation. For more information please contact a member of Burns & Levinson’s Labor, Employment and Employee Benefits Group or email us at clientservices@burnslev.com.

If you have questions regarding this Update, please contact Renee Inomata at rinomata@burnslev.com or 617-345-3340.

If you would like to be added to or removed from the mailing list for B&L Employment Solutions Updates or other Burns & Levinson publications, please send your name, email address and notice to clientservices@burnslev.com or call Renee Bella at 617-345-3303.

This Client Update provides general information and does not constitute legal advice.