As we previously reported, the United States Supreme Court’s ruling in U.S. v Windsor declared Section 3 of the Defense of Marriage Act or “DOMA” to be unconstitutional.  This section of DOMA excluded same-sex marriage from the definition of “marriage” and “spouse” for purposes of all federal law. 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.

Following the Windsor decision, many uncertainties remained regarding how the decision would impact federal employment laws such as the Family and Medical Leave Act (“FMLA”) and employee benefit plans subject to the Employee Retirement Income Security Act (“ERISA”).  Over the past several months, the Internal Revenue Service (“IRS”) and the Department of Labor (“DOL”) have addressed many of these uncertainties by issuing guidance regarding the Windsor decision.

The guidance issued by the IRS and DOL has effectively expanded the scope of the Windsor decision by adopting the “state of celebration” rule for purposes of federal taxes and ERISA governed employee benefit plans.   Although the DOL has yet to adopt such a rule for of the FMLA, it appears poised to do so in 2014.  As explained below, as a result of the adoption of the state of celebration rule, even employers in states like South Dakota which prohibit same-sex marriage will likely need to treat same-sex spouses the same as opposite-sex spouses for benefit purposes.

The State of Celebration Rule

Following Windsor, there was much speculation as to whether marriage for federal law purposes would be determined by the “state of domicile” or the “state of celebration.”  Under the state of domicile approach, a same-sex couple legally married in a state which permits same sex marriage (e.g., Iowa or Minnesota) would not be considered legally married for federal law purposes if they resided in a state, such as South Dakota, which prohibits same-sex marriages.  In contrast, under the state of celebration approach, as long as a same-sex couple married in a state which permits same-sex marriage, the couple would be considered married for federal law purposes even if they reside or relocate to a state that does not permit same-sex marriage.

In late August 2013, the IRS ended the speculation by issuing Revenue Ruling 2013-17 which adopted the state of celebration rule for purposes of federal taxation and ERISA governed benefit plans.  The IRS noted that the adoption of the state of celebration rule avoids many of the administrative complexities which would likely accompany the state of domicile rule.  For example, the IRS noted that the adoption of the state of domicile rule would raise significant challenges for employers that operate in more than one state or that have employees (or former employees) who live in more than one state or who move between states with different marriage recognition rules.  Shortly after the IRS issued the revenue ruling, the DOL published Technical Release No. 2013-04 which provided that the DOL would also adhere to the state of celebration rule for purposes of employee benefit plans.

Notably, the DOL has not yet adopted the state of celebration rule for purposes of the FMLA – which requires covered employers to provide employees with job-protected leave in certain circumstances.  Accordingly, the governing FMLA regulations still provide that a “husband or wife is defined or recognized under state law for purposes of marriage in the state where the employee resides.”  However, the DOL recently announced its fall 2013 Agency Rule List which provides a window into what rules the DOL is working on for 2014. The list indicates that the DOL will issue a rule this coming March which will revise the definition of “spouse” in light of the Windsor decision.  It seems highly likely that following the revision of the definition of “spouse” under the FMLA regulations that the DOL will adopt a “state of celebration” rule for purposes of FMLA leave.

Employer Action

As a result of the adoption of the state of celebration rule for purposes of taxation and ERISA governed benefits, employers in South Dakota and other states which continue to define marriage as between a man and a woman will need to be cognizant of the Windsor decision, related agency guidance, and the impact they will have on benefits offered to employees.  Moreover, employers subject to the FMLA need to be mindful that, as of now, the FMLA still uses the “state of domicile” approach but that this may change in just a few months.  If you have questions as to how your company’s benefits may be impacted, please contact one of Davenport Evans 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 or call 605-336-2880.