More than a month after the Supreme Court struck down section 3 of the Defense of Marriage Act (“DOMA”) in United States v. Windsor, employers are still waiting for the federal government to answer fundamental questions about the rights of same-sex spouses in the post-DOMA world.  In the meantime, however, lower federal courts have begun to come to grips with these questions in decisions interpreting and applying the Supreme Court’s Windsor decision.

A significant issue for employers is whether they should determine a couple’s marital status based on the law of the state where the marriage was celebrated, even if the couple now resides in a state that does not recognize same-sex marriage.  A number of states have “mini-DOMA” statutes declaring that the state will not recognize same-sex marriages, including marriages performed in other jurisdictions.

Although the Supreme Court held in Windsor that the federal government cannot refuse to recognize a same-sex marriage that is recognized under state law, the Supreme Court did not address section 2 of DOMA, which provides that a state is not required to recognize a same-sex marriage performed in a different state.  As a result, Windsor leaves open the possibility that a same-sex couple’s marriage might be valid in some states and not in others.  A rule that requires plan sponsors to look to a couple’s state of residence rather than to the state of celebration to determine the validity of their marriage would create significant administrative burdens.

A recent decision by a federal district court in Ohio addresses this issue.  An Ohio statute prohibits the state from recognizing same-sex marriages performed in another state.  In Obergefell v. Kasich, a same-sex couple who had been legally married in Maryland, but who lived in Ohio, asked the court to enter a temporary restraining order prohibiting Ohio from enforcing its statute.  The court noted that Ohio had historically recognized as valid other out-of-state marriages that would not have been valid if celebrated in Ohio, such as marriages between minors and marriages between first cousins.  The court found that the couple had established a substantial likelihood that Ohio’s DOMA statute violated the equal protection clause of the U.S. Constitution, as applied to the states through the Fourteenth Amendment, by treating same-sex marriages differently from opposite-sex marriages.

Another recent decision confirms that spousal rights under ERISA now extend to same-sex couples.  In Cozen O’Connor v. Tobits, a federal district court in Pennsylvania held that the surviving spouse of a same-sex couple married in Canada was entitled to a death benefit under an ERISA-governed profit-sharing plan.  As ERISA requires, the plan provided that the participant’s account would be paid automatically to the participant’s surviving spouse upon the participant’s death.  The plan defined “spouse” as the person to whom the participant had been married for at least a year before her death.  The court held that after the Windsor decision, the term “spouse” under ERISA and the Internal Revenue Code “is no longer unconstitutionally restricted to members of the opposite sex, but now rightfully includes those same-sex spouses in ‘otherwise valid marriages.’”

In order to determine whether the couple in the Cozen O’Connor case had an “otherwise valid marriage,” the court considered the effect of state law.  The sponsor of the Cozen O’Connor plan was headquartered in Pennsylvania, and the plan included a Pennsylvania choice of law provision.  A Pennsylvania statute declares that the state will not recognize a marriage between persons of the same sex, even if the marriage was valid where performed (although Pennsylvania’s attorney general recently announced that she will not defend the state’s DOMA statute after the Windsor decision).  The court found that the Pennsylvania statute was entirely preempted by ERISA, however, so that the court did not need to address the constitutionality of  Pennsylvania’s DOMA statute.

The couple resided in Illinois at the time of the participant’s death.  Illinois does not issue marriage licenses to same-sex couples, but it does recognize civil unions that provide same-sex couples with the same legal protections that spouses enjoy under Illinois law.  The Pennsylvania court concluded that Illinois had accepted the couple’s Canadian marriage as valid when it recognized their civil union.  The court concluded, “Windsor makes clear that where a state has recognized a marriage as valid, the United States Constitution requires that the federal laws and regulations of this country acknowledge that marriage.”

The plan administrator in the Cozen O’Connor case did not take a position as to who should receive the plan’s death benefit.  Instead, the plan administrator filed an interpleader action so that the potential beneficiaries could resolve the dispute, and the plan held the death benefit until the court could determine the proper beneficiary.  It remains to be seen how a court will evaluate a plan administrator’s interpretation of an ambiguous definition of the term “spouse” or a claim challenging payments that a plan has already made to a person whom the administrator determined to be the proper recipient.

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Photo of Amy N. Moore Amy N. Moore

Amy Moore advises public and private companies and tax exempt organizations on a wide range of tax, ERISA, and employment law issues concerning all types of benefit programs.  Ms. Moore counsels some of the world’s largest multinational companies on the design and implementation…

Amy Moore advises public and private companies and tax exempt organizations on a wide range of tax, ERISA, and employment law issues concerning all types of benefit programs.  Ms. Moore counsels some of the world’s largest multinational companies on the design and implementation of innovative benefit strategies, including the restructuring of retirement programs to meet the needs of the modern work force; the use of surplus pension and insurance assets to provide non-traditional benefits; and the establishment of funding and security arrangements for welfare plans and executive compensation.  She represents clients in connection with pension fund investments in private equity funds, hedge funds, group trusts, and derivatives.  She also advises on benefits and compensation issues in acquisitions and divestitures, debt finance, joint ventures, and other corporate transactions.  Ms. Moore represents companies in audits and contested agency proceedings involving benefit plans and advises clients on employee benefits issues that arise in connection with ERISA litigation and settlements.  She also counsels employers on issues of plan administration and the correction of operational problems under government-sponsored remedial programs.

Photo of Robert Newman Robert Newman

Robert Newman represents clients ranging from small employers to some of the nation’s largest employers, including for-profit and tax-exempt entities.  His practice includes designing, drafting, and amending a wide range of retirement plans (including 401(k) plans, ESOPs, and traditional and hybrid defined benefit…

Robert Newman represents clients ranging from small employers to some of the nation’s largest employers, including for-profit and tax-exempt entities.  His practice includes designing, drafting, and amending a wide range of retirement plans (including 401(k) plans, ESOPs, and traditional and hybrid defined benefit plans) and welfare plans (including health, severance, and cafeteria plans); creating executive compensation arrangements including nonqualified deferred compensation plans, stock option plans, and other incentive plans; representing clients before the IRS and the Department of Labor; assisting clients with legislative initiatives; providing benefits expertise in corporate transactions and ERISA litigation; counseling clients with respect to pension fund investments in private equity funds and hedge funds; and negotiating and writing employment agreements.