Open Issues Remain for Same-Sex Couples' Employee Benefits Post-Windsor1
Employee benefits issues affecting employees in same-sex marriages changed dramatically in June 2013 with the Supreme Court's momentous decisions in United States v. Windsor and Hollingsworth v. Perry. Unless you've been in hibernation, you know that in Windsor, the Court struck down as unconstitutional Section 3 of the federal Defense of Marriage Act (DOMA), which for the purposes of federal statutes and regulations defined "marriage" to mean only an opposite-sex marriage and "spouse" to mean only an opposite-sex spouse. The Supreme Court held in a 5-4 opinion that Section 3 deprives couples in state-recognized same-sex marriages of equal protection under federal law, in violation of the Fifth Amendment to the United States Constitution.
Following Windsor, there has been much discussion about its implications for employee benefits plans. This article focuses on five issues that remain open following Windsor: (1) issues regarding the interpretation of plan terms; (2) retroactivity issues arising from the invalidity of DOMA and the incremental recognition of same-sex marriage in the states; (3) interjurisdictional issues regarding marriage recognition under federal law and plan terms; (4) the status of spousal-equivalent relationships, such as domestic partnerships and civil unions; and (5) the application of federal antidiscrimination laws, particularly Title VII of the Civil Rights Act of 1964 and the proposed Employment Non-Discrimination Act (ENDA).
Plan Interpretation Issues: Plan language generally falls into three categories, each of which presents interpretation issues post-Windsor. The first category involves plans that do not define "spouse" with reference to sex or with reference to any state's law. Particularly after Windsor, there is a strong argument that these plans provide benefits to all legally married spouses regardless of the law of the state where they live or work. The second category involves plans that define spouse by specific reference to DOMA. There is an argument that invalidity of DOMA means that these plans provide benefits to all legally married spouses. The third category involves plans that define spouse as "opposite-sex spouse." Although the plan terms are clear, pension plans will be required to provide some benefits to same-sex spouses despite plan terms, and these plans may be subject to sex discrimination claims, as discussed below.
Retroactivity Issues:The invalidity of DOMA raises the question of whether same-sex married spouses are entitled to be treated as married under federal law retroactive to the dates of their marriages. For example, if a same-sex married participant retired prior to Windsor and was treated as ineligible to elect a joint and survivor annuity, is that participant now entitled to make that election? If the participant is entitled to make that election, must he or she repay benefits to the plan that were paid as a single life annuity? Guidance is anticipated on these issues from federal agencies, but for now, remains a major area of uncertainty.
Interjurisdictional Issues: While the Windsor decision established equal treatment for same-sex married couples who were married in a jurisdiction that recognizes same-sex marriage and who also reside in such a jurisdiction, it is not yet clear how federal law will treat the two other possible categories of couples: those who were married while residing in a state that recognizes same-sex marriage, but later moved to a state that does not recognize same-sex marriage; and those who reside in a state that does not recognize same-sex marriage, but traveled to a state that does recognize same-sex marriage to get married. Early indications are that for purposes of federal law, the government will likely adopt a rule of nationwide validity of same-sex marriages entered into in states that make civil marriage available to same-sex couples. President Obama has been quoted as stating that in his view, a marriage entered in a same-sex marriage state should be valid nationwide for federal law purposes.2 Early guidance from the Office of Personnel Management similarly indicates that all legally married federal employees will be entitled to the same spousal benefits.3
Domestic Partner Issues: DOMA's invalidity leaves open the question of whether couples will be treated as spouses for purposes of federal law in the eight states that make a status available to same-sex couples, such as civil union or registered domestic partnership, that carries the same rights and obligations as marriage under state law (CA, DE, HI, IL, NJ, NV, OR, RI).4 Legislative history in these states is often clear that the intent of the domestic partnership statute is to treat same-sex couples as married.5
The significance of this question likely depends on the scope of recognition of same-sex marriages for federal law purposes. That is, if a same-sex married couple is recognized as such for federal law purposes even if they reside in a non-same-sex marriage state, then it is unlikely to be significant for federal law purposes whether the state where they reside recognizes them as domestic partners--although it may be significant for state law purposes. However, if federal law does not recognize a same-sex marriage if the couple resides in a state that does not recognize their marriage as a marriage, but they reside in a state that recognizes their marriage as a marriage-equivalent domestic partnership, then the question of federal law treatment of the domestic partnership could become quite important.
Title VII and ENDA Issues: While plans will remain free to define "spouse" as "opposite-sex spouse" for many purposes post-Windsor, recent developments in Title VII law--which has historically deemed claims of sexual orientation discrimination as not cognizable under Title VII--may nonetheless lay the groundwork for sex discrimination claims based on denial of spousal benefits to same-sex married employees. For example, the Equal Employment Opportunity Commission has found that claims by gay and lesbian federal employees alleging sex-stereotyping state a sex discrimination claim under Title VII.6 Although this theory has not been tested in the benefit plan context, a plan provision limiting spousal benefits to opposite-sex spouses could be seen as embodying a sex stereotype that women should marry men and men should marry women, especially now that the elimination of DOMA has eliminated a potential rationale for such a plan design decision.
Relatedly, ENDA is proposed federal legislation that would prohibit discrimination in employment on the basis of sexual orientation. The version of ENDA introduced April 25, 2013 does not contain the benefits plan carve-out that was present in previous versions, whereby nothing in ENDA would be construed to require an employer to treat as married for purposes of any employee benefits plan any person who was not married within the meaning of DOMA § 3.7 If passed, ENDA could thus provide further grounds for an anti-discrimination challenge to plans that deny benefits to same-sex married employees.
Michelle Lamy, Law Clerk, Lewis, Feinberg, Lee, Renaker & Jackson, and Law Student, Stanford University School of Law.
1This article is based on a paper by Teresa Renaker, Shareholder, Lewis, Feinberg, Lee, Renaker & Jackson, P.C.
2See, e.g., "New fight over gay marriage recognition: Benefits can hinge on states," The Boston Globe, 6/27/2013.
3See U.S. Office of Personnel Management, "Guidance on the Extension of Benefits to Married Gay and Lesbian Federal Employees, Annuitants, and Their Families," 6/28/13, available at http://www.chcoc.gov/transmittals/TransmittalDetails.aspx?TransmittalID=5700.
4See, e.g., Cal. Fam. Code § 297.5; 750 Ill. Comp. Stat. 75/5, 75/10.
5See, e.g., State of Ill., 96th Gen. Assembly Reg. Sess., Senate Transcript, 163th Leg. Day, at p. 68 (Dec. 1, 2010) (stating that purpose of Illinois civil union law is to provide rights and responsibilities of marriage to same-sex couples).
6See Veretto v. U.S. Postal Service, EEOC Appeal No. 0120110873 (July 1, 2011) (holding by the Commission that discrimination based on the sex stereotype that men should only marry women can constitute discrimination based on sex).