United States: Windsor v. United States: The Potential Impact on Employer-Provided Benefit Plans

Last Updated: June 24 2013
Article by Aaron Flinn

Each summer, Hollywood studios crank up the marketing campaigns for their summer blockbuster movies hoping to generate anticipation for their impending releases. Similarly, summer is also the time that lawyers and other interested parties await decisions from the United States Supreme Court for cases heard in the spring, although probably with less vigor that summer moviegoers. One such case is Windsor v. United States ("Windsor") regarding the constitutionality of the Defense of Marriage Act ("DOMA") in connection with a federal estate tax audit. While parties of both sides of the same-sex equality movement are eagerly awaiting the Court's announcement of its decision in Windsor, employers should also be paying attention. A ruling that DOMA is unconstitutional could have a significant impact on the administration of employer-provided benefit plans.

Currently, DOMA provides a federal definition of marriage as the legal union of a man and a woman. Therefore, in applying all federal laws, such as ERISA, legal unions between same-sex couples (whether classified as marriages, unions or domestic-partnerships) are not recognized, even those which are sanctioned by state law. As a result, under federal law, an employer is not required to recognize an employee's same-sex partner as a spouse for purposes of administering any benefit plans of which the employee is a participant, notwithstanding the same-sex partner and the employee are in a legal relationship sanctioned by applicable state law. Consequently, a holding by the Supreme Court that DOMA is unconstitutional could, potentially, require an employer to treat their employee's same-sex partner as a spouse for purposes of healthcare plans, life insurance, and other employer provided benefit plans and programs. This would most likely create additional legal questions which would need to be resolved. For example, what if employee and partner entered into a legal relationship in State X but moved to State Y, which does not legally sanction or recognize same-sex unions. Is an employer in State Y required to treat the same-sex partner as the employee's legal spouse? Alternatively, could the employer refuse to recognize the partner as a spouse or have the discretion to do so? Does the answer depend on the type of legal relationship which exists between the employee and their partner (e.g., civil union, domestic partnerships, marriage)? These are just a few of the additional issues which could arise in administering employee benefits plans should DOMA be found unconstitutional.

Similar to summer moviegoers, numerous people and organizations are heavily anticipating the Court's announcement of its decision in Windsor. While it is unknown what the social impact of DOMA being held to be unconstitutional would have, such a holding could have potentially drastic effects on the administration of employer provided benefit plans with respect to the benefits, rights and obligations conferred thereby on employees' spouses. Moreover, a holding that DOMA is unconstitutional will, unfortunately, likely only result in additional unresolved legal issues concerning the administration of such benefit plans. Thus, it is possible such a holding will, as is the case with successful (and even unsuccessful) summer blockbusters, lead to future coming attractions in upcoming summers.

For further information visit Waller's ERISA Exchange blog

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