The United States Supreme Court recently issued landmark decisions regarding same-sex marriage. Although the decisions do not change the fact that same-sex couples may not marry in South Dakota [at the time this article was published], employers may still be impacted by resulting changes to the interpretation of numerous federal laws, including laws which affect many common employee benefits. Thus, as explained below, South Dakota employers should not presume they are not impacted by the decisions, and should begin taking steps to ensure compliance.
The Supreme Court’s Rulings
This past week, the Supreme Court issued two related opinions addressing the rights of same-sex couples: United States v. Windsor and Hollingsworth v. Perry. In Windsor, the Court was asked to address the constitutionality of Section 3 of the Defense of Marriage Act, or “DOMA,” which excluded same-sex marriage from the definition of “marriage” and “spouse” for purposes of all federal law. The Court held that the provision was an unconstitutional violation of the Due Process Clause of the Fifth Amendment. As a result of the Court’s decision, the definition of “spouse” and “marriage” under federal law must now include a same-sex marriage recognized by state law. In Hollingsworth, the Supreme Court found it lacked jurisdiction and thus declined to rule, at this time, on the broader question of whether all states must permit same-sex marriage.
Stated simply, after Windsor and Hollingsworth, states are still free to define marriage. Whether two individuals are “married” for federal law purposes, must be determined by looking to the laws of the state where the couple resides. If state law permits same-sex marriage, such marriages will be recognized for purposes of federal law. If state law prohibits same-sex marriage, such marriages will not be recognized under federal law.
Although simple in the abstract, applying such a rule may prove complicated, especially for employers. As the majority opinion noted, the Windsor decision will impact “over 1,000 federal laws and the whole realm of federal regulations.” Accordingly, employers must now determine how this wide spread change in the definition of “marriage” affects their various legal obligations to employees. For example, the Windsor ruling may affect:
1. Employee and Employer Taxes. Employers who were previously providing health benefits to an employee’s same sex spouse may no longer need to include the cost of such coverage when determining the employee’s income tax withholding and the employer’s payroll taxes.
2. Retirement and Health Benefit Plans. Most employee benefit plans are governed by federal law. Thus, depending on the plan language, and the state the employee resides in, same-sex spouses may now also be entitled to such benefits.
3. FMLA Leave. The Family and Medical Leave Act requires employers subject to the Act to provide employees with leave to care for an ill spouse. Employers may now be required to extend such leave to an employee to care for a same-sex spouse.
Impact on South Dakota Employers
In 2006, South Dakota voters approved a constitutional amendment effectively banning the recognition of same-sex marriage in South Dakota. As a result of the amendment, the South Dakota Constitution provides that “[o]nly marriage between a man and a woman shall be valid or recognized in South Dakota. The uniting of two or more persons in a civil union, domestic partnership, or other quasi-marital relationship shall not be valid or recognized in South Dakota.” Thus, as same-sex marriage is currently illegal in South Dakota, under Windsor, a same-sex couple residing in South Dakota will not be considered “married” under federal law.
However, this does not mean South Dakota employers are immune from the reach of Windsor. As previously stated, Windsor provides that if a married same-sex couple resides in a state which permits same-sex marriage, such marriages will be recognized for purposes of federal law. Thus, South Dakota employers with employees residing in states where same-sex marriage is legal, or will soon be legal (e.g., both Minnesota and Iowa) will be impacted by Windsor, even though South Dakota does not recognize same-sex marriages. Moreover, it is still an open question whether a state which does noes permit same-sex marriage must recognize a valid same-sex marriage performed in another state. Thus, all South Dakota employers should continue to monitor the affect Windsor will have on its business and employment practices.
What Employers Should Do Now
Given that the Windsor decision was recently issued and the fact that it implicates such a wide array of federal laws, many uncertainties remain. As the federal government, employers, and employees begin sorting through the plethora of federal laws and regulations impacted by the Windsor decision, questions and issues will undoubtedly arise. Given these uncertainties, it appears likely that the federal government will be issuing regulatory guidance addressing the federal government’s interpretation of the Windsor decision. Nonetheless, there are many actions an employer can take now to ensure that it is ready to comply with Windsor. To name just a few examples, Employers should:
1. Determine if any employees reside in a state which currently permits same-sex marriage. Keep in mind that if an employee in a same-sex marriage resides in a state which permits same-sex marriage (e.g. Minnesota or Iowa) and commutes to South Dakota to work, the company needs to recognize the marriage for federal law purposes.
2. Review benefit plans and the FMLA policy to determine how spouse is defined for purposes of these benefits.
3. Work with counsel, payroll, insurers, and third-party administrators to make any necessary revisions to plan documents and begin operating the plan in accordance with the law.
For assistance in determining how your company and its employee benefits may be affected by the Windsor decision, please contact one of Davenport Evan’s employee benefits attorneys.
Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the state’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.DEHS.com or call 605-336-2880.