United States: Benefit Plans After United States v. Windsor: Round Two

Last Updated: August 29 2013
Article by Larry R. Goldstein and Sally Doubet-King

For federal-law purposes, same-sex marriages must now be recognized, as a result of the June 26, 2013 decision of the U.S. Supreme Court in United States v. Windsor, No. 12-307, 2013 U.S. LEXIS 4921(2013), which declared Section 3 of the Defense of Marriage Act (DOMA) unconstitutional. Section 3 had provided that:

In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word "marriage" means only a legal union between one man and one woman as husband and wife, and the word "spouse" refers only to a person of the opposite sex who is a husband or a wife.

As we indicated in our July 9, 2013 article, although Windsor did not involve any employee benefit plan, its holding presents many issues for administrators of benefit plans subject to ERISA. For plan administrators, a basic concern for spousal-benefit purposes is whether a same-sex marriage must be recognized (i) if it were valid in the jurisdiction in which the marriage was celebrated; or (ii) only if it were considered valid in the jurisdiction where the parties to the marriage currently reside. The Supreme Court did not have to answer this question in Windsor because the same-sex marriage in that case was valid in the jurisdiction in which it was celebrated and was also recognized as valid in the jurisdiction where the spouses thereafter lived.

Moreover, Section 2 of DOMA, which was not at issue in Windsor and therefore remains in effect, provides that:

No State, territory, or possession of the United States, or Indian tribe, shall be required to give effect to any public act, record, or judicial proceeding of any other State, territory, possession, or tribe respecting a relationship between persons of the same sex that is treated as a marriage under the laws of such other State, territory, possession, or tribe, or a right or claim arising from such relationship.

Since Windsor, federal agencies and departments and at least two federal courts have taken conflicting positions as to what law governs the validity of a marriage, creating uncertainty for benefit plan administrators. These positions are summarized below. So far, however, no federal guidance has been issued as to how administrators of plans subject to ERISA should determine whether a participant is validly married.

Determination of Validity of Same-Sex Marriage Based Upon Jurisdiction Where Celebrated

The following authorities recognize a same-sex marriage that is valid in the jurisdiction (state or foreign country) where it was celebrated:

Office of Personnel Management (OPM) : Among its responsibilities, the OPM administers benefit plans for federal employees. In an Aug. 2, 2013 filing in the Federal Register, it announced that:

As a result of this decision [Windsor], the U.S. Office of Personnel Management (OPM) is now able to extend benefits to Federal employees and annuitants who are legally married to spouses of the same sex, regardless of the employees' or annuitants' states of residency. Consistent with OPM's long-standing policy of recognizing the legal foreign marriages of opposite-sex couples for purposes of the retirement benefit programs that OPM administers, OPM will also recognize legal same-sex marriages granted in countries that authorize such marriages, regardless of the employees' or annuitants' states of residency, for purposes of these programs.

Department of State : An FAQ on a website of the Department of State indicates in part as follows:

Q: Do we have to live or intend to live in a state in which same sex marriage is legal in order to qualify for an immigrant or nonimmigrant visa?

A: No. If your marriage is valid in the jurisdiction (U.S. state or foreign country) where it took place, it is valid for immigration purposes.

Department of Defense : An Aug. 13, 2013 memorandum from the Secretary of Defense states in part as follows:

It is now the Department's policy to treat all married military personnel equally. The Department will construe the words "spouse" and "marriage" to include same-sex spouses and marriages, and the Department will work to make the same benefits available to all military spouses, regardless of whether they are in same-sex or opposite-sex marriages. The Department will continue to recognize all marriages that are valid in the place of celebration.

Obergefell v. Kasich, No. 1:13-cv-501, 2013 U.S. Dist. LEXIS 102077 (S. Dist. Ohio 2013) : The plaintiffs in this case were a same-sex couple validly married in Maryland and residing in Ohio. One plaintiff, John Arthur, was near death. Under Ohio law, an opposite-sex marriage solemnized outside that state is valid in Ohio if valid in where solemnized. Legal recognition of same-sex marriages is prohibited, however, by an Ohio statute and the Ohio constitution. Concluding that the Ohio laws likely violate the Fourteenth Amendment to the U.S. Constitution, the district court entered a temporary restraining order to the Ohio registrar not to record a death certificate for Mr. Arthur that did not indicate his status as married or that did not indicate the other plaintiff as his surviving spouse at the time of death.

Determination of Validity of Same-Sex Marriage Based Upon Jurisdiction Where Parties Reside

The following authorities conclude that the validity of a same-sex marriage is determined by the jurisdiction in which the parties to the marriage reside:

Department of Labor : In an Aug. 2013 fact sheet on qualifying reasons for leave under the Family and Medical Leave Act (FMLA), the Department of Labor (DOL) defined "spouse" as:

a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including "common law" marriage and same-sex marriage.

Cozen O'Connor P.C. v. Tobits, No. 11-0045, 2013 U.S. Dist. LEXIS 105507 (E.D. Pa. 2013) : The district court in this case decided that a qualified retirement plan should pay a pre -retirement survivor annuity upon the death of a plan participant to the surviving spouse in a same-sex marriage. The marriage occurred in Canada and was authorized under the law of that country. The couple lived in Illinois at the time of the participant's death. The district court held that "there can be no doubt that Illinois, the place of the couple's domicile," would consider the surviving party to the marriage as the participant's surviving spouse. Illinois recognizes same-sex civil unions and the district court concluded that because the Illinois probate court recognized the survivor as the sole heir to a civil union, it accepted as valid the Canadian marriage.

Civil Unions

Further issues are presented in states such as Illinois that recognize same-sex civil unions but not same-sex marriages. A marriage between persons of the same sex, or a civil union, legally entered into in another jurisdiction, will be recognized in Illinois as a civil union. In the Cozen decision discussed above, the parties to such a union were treated as "spouses" for qualified plan purposes. This may not be the position of the federal government, however, as indicated by another of the FAQs on the Department of State's website referred to above:

Q: I am in a civil union or domestic partnership; will this be treated the same as a marriage?

A. At this time, only a relationship legally considered to be a marriage in the jurisdiction where it took place establishes eligibility as a spouse for immigration purposes.

Observations

We sense that most benefit plan administrators and personnel managers favor federal guidance requiring that the validity—for federal-law purposes—of any marriage be determined by the law of the jurisdiction (state or foreign country) in which the marriage was celebrated. If a place-of-residence rule governed, the plan of an employer with business operations in several states might have to treat participants in same-sex marriages differently depending upon where they resided. The spouse of a participant in such a plan who is in a same-sex marriage and resides in a state that does not recognize such marriages might not be entitled to plan benefits that would be provided to the same-sex spouse of a participant residing in a state where same-sex marriages are recognized. This would frustrate one of the principal objectives of ERISA, the development of a uniform federal law governing benefit plans.

When the OPM announced that it would use a place-of-celebration rule for federal benefit plans, we assumed that this was an indication that federal guidance for benefit plans in the private sector would take the same approach. However, the DOL's use of a place-of-residence rule for FMLA purposes gives us pause. The FMLA guidance was issued by the DOL's Wage and Hour Division; the DOL's Employee Benefits Security Administration has so far been silent on same-sex marriages after Windsor.

Both the Internal Revenue Code and ERISA address spousal benefits in qualified retirement plans, but under Reorganization Plan No. 4 of 1978, the authority of the Secretary of Labor to issue regulations, rulings and opinions under most provisions of Title I of ERISA was transferred to the Secretary of the Treasury (i.e., the Internal Revenue Service (IRS)). Thus, the IRS, rather than the DOL, may be the federal agency that issues definitive guidance for qualified retirement plans, at least, on same-sex marriages.

In order to determine one's filing status for federal tax purposes, the current edition of IRS Publication 17, Your Federal Income Tax (released before Windsor) states as follows:

State law governs whether you are married or legally separated under a divorce or separate maintenance decree.

*          *          *

You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests[:] * * * You are living together in a common law marriage recognized in the state where you now live or in the state where the common law marriage began.

The IRS thus treats a common-law marriage as valid for federal income-tax filing purposes if the marriage had been recognized either by the state of residence or by the state where the marriage began. A similar rule should logically apply to a same-sex marriage and for benefit-plan purposes as well as tax-filing purposes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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