The Supreme Court's DOMA Decision: Impact Of The Changing Definition Of 'Spouse' On Employee Benefits

On June 26, the U.S. Supreme Court decided the case of United States v. Windsor, holding that Section 3 of the Defense of Marriage Act ("DOMA") is unconstitutional (the "Windsor Decision"). Section 3 of DOMA provides that for purposes of federal law, "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." 1 U.S.C. Section 7. Before the Windsor Decision, Section 3 of DOMA required that all provisions of federal law, including the Employee Retirement Income Security Act ("ERISA") and the Internal Revenue Code ("Code") (and underlying regulations), that refer to spouse or marriage use the DOMA definitions. As a result, under DOMA, same-sex spouses were not required to receive (and in some cases were prohibited from receiving) the same benefit plan protections that applied to opposite-sex spouses. The holding that Section 3 of DOMA is unconstitutional means that this Section is no longer the law and, therefore, same-sex lawfully married spouses are now to be treated in the same manner as opposite-sex spouses for benefit plan purposes. Impact on Definition of "Spouse" The Windsor Decision expressly applies only to persons who are "lawfully married." Because most states do not recognize same-sex marriage, however, it is not clear what the Windsor Decision means for same-sex couples who, although they were married in a state that recognizes same-sex marriage, reside in another state that recognizes only opposite-sex marriages. In fact, Section 2 of DOMA (which was not mentioned in the Windsor Decision and remains in effect) allows states to disregard same-sex marriages performed in other states. The scope of same-sex marriages that are "lawful" and covered by the Windsor Decision is therefore not clear. While it seems apparent that same-sex spouses living in a state that recognizes such marriages are entitled to equality with opposite-sex married couples, a same-sex couple residing in a state that does not recognize their marriage in another state may not be eligible for such equality. Nor is the treatment of state-recognized civil unions (sometimes called domestic partnerships) under the Windsor Decision clear at this point. Whether they are lawful marriages for purposes of the Windsor Decision despite their different designation may depend on the terms of each state's law regarding civil unions. It also may depend upon whether federal agencies choose to step in and define when a same-sex marriage is lawful for federal law purposes. This may be accomplished, for example, by federal regulation that recognizes same-sex marriages for benefits purposes based on the state of marriage celebration, regardless of whether the state of domicileif differentwould recognize such a marriage. To the extent that same-sex spouses are lawfully married, however, employers need to consider what benefits and protections must be extended to same-sex spouses under their employee benefit plans. The following discussion of benefit plan provisions highlights the issues that affect same-sex spouses who are lawfully married but is not intended to be an exhaustive list. Qualified Retirement Plan Benefits and Issues...