Businesses must keep an eye on the courts and be ready to adapt to new marriage laws.
by Nancy Townsend
Indiana's Defense of Marriage Act (DOMA), which prohibited same-sex marriage and refused to recognize same-sex marriages from other states, was ruled unconstitutional on June 25. Chief Judge Richard L. Young entered a final judgment in three federal lawsuits that challenged Indiana's DOMA: Baskin v. Bogan, Fujii v. Indiana Governor, and Lee v. Pence. The Seventh Circuit Court of Appeals quickly stayed that ruling pending appeal, but the case presents a likelihood that Indiana employers will be required to recognize the validity of their employees' same-sex marriages. The ruling in Baskin followed a decision by the U.S. Supreme Court in United States v. Windsor in June 2013, invalidating a portion of the federal DOMA, which had defined marriage for purposes of federal law as “only a legal union between one man and one woman.”
ERISA Rights After Windsor
After Windsor, the U.S. Department of Labor changed the definition of “spouse” under ERISA to mean any individuals who are lawfully married under any state law. The revised definition affected ERISA health and welfare rights: tax treatment of employees' health care premiums for same-sex spouses under IRS Section 125 premium-only plans; employees' use of pre-tax dollars to pay for needs of same-sex spouses from FSA and HSA accounts or reimbursements from employer-sponsored HRAs; continuing COBRA coverage for same-sex spouses; HIPAA special enrollment privileges for the same-sex spouse; and same-sex dependent care through the Dependent Care Assistance Program. The definitions also changed ERISA rights arising from Qualified Joint and Survivor Annuities, Qualified Pre-Retirement Survivor Annuities, IRA rollover distributions, QDROs, hardship distributions from 401(k)s and 403(b)s, spousal consent for employee loans, and spouses' rights to defer distributions from retirement plans.
FMLA Rights After Windsor and Baskin
The Federal Family and Medical Leave Act (FMLA) requires employers with 50 or more employees to allow unpaid leave to care for a spouse with a serious health condition. After Windsor, Labor Department regulations controlled FMLA leave and defined spouse as “husband or wife as defined or recognized under state law, for purposes of marriage in the state where the employee resides.”
If Baskin is affirmed, it will require Indiana to recognize same-sex marriages and will require Indiana employers to allow FMLA leave to care for same-sex spouses of Indiana residents. Illinois residents must currently be allowed FMLA leave to care for their same-sex spouses because Illinois allows and recognizes same-sex marriages. Indiana's other border states, Kentucky, Michigan and Ohio, do not currently allow or recognize same-sex marriages but that may soon change. Federal courts have ordered those states to recognize same-sex marriages but have stayed the orders during the appeals.
Interestingly, same-sex married couples working for the same employer might now find themselves with less “Bonding Leave” or “Parenting Care Leave” because married employees must share those types of FMLA leave whereas unmarried employees each have their 12 weeks' leave for those purposes.
State Employment Laws After Baskin
The decision in Baskin, if affirmed, will also impact other Indiana employment statutes. An unemployed person who moves to join a same-sex spouse in another region will retain eligibility for Indiana unemployment benefits. Likewise, employees will be entitled to Indiana military family leave when their same-sex spouses are ordered to active duty. Same-sex spouses would also have spousal rights under Indiana Small Employer Group Health Insurance.
Keeping Up in the Workplace
As these laws change, Indiana employers and ERISA plan sponsors must adapt by updating ERISA plan documents, administrative procedures and forms that define “spouse”; updating company policies for documenting marriages, civil unions and domestic partnerships and their validity; implementing changes with managers and administrative personnel to ensure they understand the changes in ERISA benefits, leave requirements and other employee rights; and updating employee handbooks and communicating changes to employees, emphasizing the need for documentation of marital status and updated beneficiary designations.
Nancy J. Townsend is an associate with Burke Costanza & Carberry LLP. She has wide experience in state and federal courts at all levels, beginning with her service as a law clerk in the U.S. District Court for the Northern District of Indiana in 1985. She has more than 20 years' business and commercial experience in the Northwest Indiana legal community.
