Unless you’ve been living under a rock, you probably are well aware that on June 26, 2015, the U.S. Supreme Court ruled that same sex couples have a constitutional right to marry and have their marriages recognized across the country. Obergefell v. Hodges, 135 S. Ct. 1039 (2015). This was a landmark ruling for the gay rights movement, but …… What does Obergefell mean for employers?
The good news is that for most companies the decision should not require any significant changes in policies, as a number of states already allowed same-sex marriages or recognized domestic partnerships. However, even if you do not need to modify any policies, same sex marriage is an emotional issue for many people. With all of the publicity surrounding this decision, this is a good time to be aware of possible hostility or tensions toward LGBT employees or any simmering issues in your workplace.
LGBT Discrimination – Obergefell was an important decision because there is no federal law which expressly prohibits discrimination on the basis of sexual orientation or gender identity. However, almost one half of the states and numerous municipalities, including large states like New York and California, already allow same sex marriage and prohibit discrimination based on sexual orientation. If you do business in those areas, your policies should already prohibit such discrimination. Again, this is an opportune moment to remind your managers and employees that your company will not tolerate discrimination or harassment of any employee based on sexual orientation, or gender identity.
Marital Status Discrimination – Even if you are not in a state which currently has such a law, a number of states, including New York, New Jersey, Connecticut, and California, as well as states like Michigan, Nebraska, and North Dakota ( where same-sex marriage was banned until last week’s ruling), prohibit discrimination on the basis of marital status. Such protections are now unequivocally also extended to same-sex marriages and spouses. This is also something to be aware of as an employer, in that you may have employees who are opposed for moral or religious reasons to same sex marriage. While they have a right to their beliefs, they should not be permitted to allow those attitudes to invade the workplace. Thus, if an LGBT employee chooses to get married, the marriage should not affect their job. Moreover, whatever privileges and benefits the company extends to heterosexual couples must now be extended to same sex couples.
Lastly, even if Obergefell does not change the law in your state or city, we often observe an “uptick” in claims where there is a new decision or verdict in a specific area, as the issue suddenly becomes “top of mind” with your employees. Thus, this may be a good time to remind your management that such discrimination is both against the law and against your policies, and to be aware of events occurring in your workplace.
Leave and Benefit Policies
The impact of this decision on employee benefit plans and policies may not be significant, as this was already clarified by the IRS and the DOL in the aftermath of United States v. Windsor, the 2013 Supreme Court decision striking down the Defense of Marriage Act. The IRS and DOL took the position that such a union should be considered valid. Now, Obergefell has eliminated this issue by virtue of the opinion’s declaration that same-sex marriage is a constitutional right. Nonetheless, this is a good time to audit your policies.
FMLA Leave. In the case of the Family Medical Leave Act, earlier this year the DOL issued a final rule expanding the definition of “spouse,” under which an otherwise eligible employee is allowed to take FMLA leave to care for a same-sex spouse regardless of whether the employee lives in a state that recognized their marital status. Many of the questions raised by the final rule are now moot, since after Obergefell states can no longer prohibit same-sex marriage.
Nevertheless, employers will want to make sure their FMLA policies, forms, and practices are current and accurately reflect this recent development, as well ensure they train supervisors and administrators accordingly. Employers should also be mindful of the differing definitions and applications of marriage under the varying state leave laws that may also apply and be sure to check with employment counsel to ensure compliance with obligations on both the federal and state levels.
Other Leave Policies. Employers that offer bereavement, non-FMLA medical, and/or military leaves should update the policies to reflect that the particular leave is extended to also include same-sex spouses and relatives of same-sex spouses.
Tax Issues. In addition, prior to Obergefell, in states which did not recognize same-sex marriages, employers were required to impute the value of benefits provided to same-sex spouses for state tax purposes or withhold state income taxes with respect to same-sex spouses. After Obergefell, however, such benefits should no longer be taxable for state tax purposes, and the previously inconsistent federal and state income tax treatment will no longer apply. Relatedly, in light of the potential income tax implications of the Obergefell decision, employers should also be prepared to update tax and withholding information upon the request of newly recognized same-sex spouses.
Domestic Partnerships. Notably, Obergefell has no impact on domestic partnership or civil union relationships recognized under state law. As a result, employers may now want to consider whether special treatment for such relationships is still appropriate post-Obergefell, where same-sex couples have the same rights and ability to marry as heterosexual couples. For its part, while the FMLA will now cover individuals who enter into a same-sex marriage, it does not protect civil unions or domestic partnerships. As such, employers will want to carefully consider the application of FMLA protection in certain situations but remain free to grant broader leave rights than those provided for under federal law.
In summary, employers should be ready to remind management of your anti-discrimination policies, and update any employee handbooks, policies, plan documents, forms, beneficiary designations and other personnel documents as necessary.