U.S. Supreme Court Rules The Defense of Marriage Act is Unconstitutional – How is a Human Resources Department Supposed to Cope?

By: James D. Silverman, Esq.

On Wednesday, June 26, 2013, the U.S. Supreme Court rendered The Defense of Marriage Act (“DOMA”) unconstitutional, by a 5-4 vote. In a nutshell:

1. The Supreme Court ruled that Section 3 of DOMA was unconstitutional, which means that the federal government is required to recognize same-sex marriages.

2. The Supreme Court did not rule that Section 2 of DOMA was unconstitutional. As a result, states that do not permit same-sex marriage (such as Pennsylvania) are not required (today) to recognize same-sex marriages performed in other states.*

3. The IRS currently follows state law. Therefore, a same-sex couple may be considered married in California but not in Pennsylvania.

Do not be surprised if the IRS issues guidance requiring states to recognize same-sex marriages performed in other states. We assume that members of the Obama administration are looking into this issue now. In addition, some commentators believe that it is only a matter of time before the Supreme Court invalidates Section 2 of DOMA.

4. Domestic partnerships and civil unions are not considered to be marriages. If your business provides benefits to a same-sex partner, you will need to determine whether the employee is married.

5. Employers should review plan documents, summary plan descriptions, plan administration forms, and employee notices, in order to determine which documents need to be revised (or may need to be revised after the IRS issues guidance).

Retirement Plans

For purposes of beneficiary designations, qualified domestic relations orders, joint and survivor annuity rules, hardship withdrawals, plan loans, minimum required distributions, and spousal rollover rules, a same-sex spouse is now a spouse in those states that recognize same-sex marriages.

If an employee marries a same-sex partner in a state that permits same-sex marriage and is then transferred to a state that does not recognize same-sex marriages, the employee would become single for purposes of the retirement plans. Therefore, it might be prudent for an employee with a same-sex partner to still name his partner as beneficiary for purposes of their retirement plans.

Employers with defined benefit plans should consider the death benefit provisions in those plans. Many defined benefit plans provide only a qualified pre-retirement survivor annuity as the death benefit for a participant who dies while an active employee. In the case of an employee with a same-sex spouse, the spouse might receive a death benefit if the employee died while a resident of California but no death benefit if the employee died while a resident of Pennsylvania.

Health Plans

There is still no requirement to provide coverage for spouses. If your plan (including insurance plans, health reimbursement plans, health savings accounts, and voluntary employee beneficiary associations (VEBAs)) provides coverage for opposite-sex spouses, it should provide the same coverage options for same-sex spouses (for those states that permit same-sex marriage).

If a business provides health coverage to a same-sex partner of an employee, the value of the coverage is imputed, taxable income to the employee unless the same-sex partner is a spouse or a dependent (under the Internal Revenue Code).  Employers in states that permit same-sex marriage need to stop imputing the value of health insurance for a same-sex spouse as taxable income for federal tax purposes. There may be a requirement to impute income for state tax purposes in states that do not recognize same-sex marriages. [The IRS has yet to issue guidance as to whether the value of the coverage is taxable for the portion of 2013 prior to the date of the Supreme Court decision.]

The Supreme Court did not announce an effective date for its ruling. If the ruling has a retroactive effective date, employers may need to issue amended W-2s and may want to file for a refund of FICA taxes. Employers with a significant number of employees with same-sex spouses may want to file a protective claim in order to preserve the right to obtain a refund of FICA taxes.

Employers may also want to reconsider policies that provide benefits to domestic partners or partners in a civil union.

Cafeteria (Flexible Benefit) Plans

A same-sex spouse’s medical expenses may now be reimbursed from a flexible medical account. In addition, same-sex couples (in states that permit same-sex marriage) can now marry or get divorced for purposes of being able to change elections in mid-year.

Please note that an employee who has a same-sex marriage (in a state that permits same-sex marriage) and then moves to a state that does not permit same-sex marriage becomes unmarried without getting divorced. It remains to be seen whether the IRS will require those employees to be treated as if they were divorced. In some circumstances, ex-spouses might be better off with a divorce than moving to a state that does not recognize same-sex marriages.


HIPAA special enrollment rights now apply to same-sex spouses in those states that recognize same-sex marriages.

Divorce between same-sex spouses will now be a COBRA qualifying event.

If you have an employee with a same-sex spouse (in a state that permits same-sex marriage), ask your COBRA service provider whether to give an initial COBRA notice to the same-sex spouse.

Family and Medical Leave Act

Employers will need to provide leave benefits if the qualifying event involves a same-sex spouse in those states that recognize same-sex marriages.

Fringe Benefits

Same-sex spouses now become eligible for no-additional cost fringe benefits and employee discounts in those states that recognize same-sex marriages.


Same-sex couples who are married (in the eyes of the IRS) become entitled to experience the joy of the marriage penalty on dual income couples. Employees who are in a same-sex marriage might want to file new W-4s and adjust their payroll tax withholdings.

James D. Silverman practices in Leech Tishman’s Taxation and Employment Practice Groups. He can be reached at 412.586.0711 or jsilverman@leechtishman.com. Please feel free to contact Jim with any questions regarding how the DOMA decision may affect your business.

Leech Tishman is a firm dedicated to providing full-service commercial legal services to individuals, businesses, and institutions. We combine a deep understanding of our clients and their businesses with skilled legal counsel to find solutions. We offer legal services in alternative dispute resolution, bankruptcy & creditors’ rights, construction, corporate, employment, energy, environmental, safety & toxic torts, estates & trusts, government relations, insurance coverage & corporate risk mitigation, intellectual property, litigation, real estate, and taxation. Leech Tishman has offices in Pittsburgh, PA, Chicago, IL, New York, NY, Los Angeles, CA and Wilmington, DE. For more information call 412.261.1600 or visit www.leechtishman.com.

* The states that currently recognize same-sex marriage are CA, CT, DE, IO, ME, MD, MA, MN, NH, NY, RI, VT, WA, and DC.