Same-Sex Marriage in Pennsylvania: An Employee Benefits Perspective

By Wendy Pongracz

Last year’s U.S. Supreme Court decision in United States v. Windsor significantly changed the legal landscape for same-sex marriage. In that case, the Supreme Court held that Section 3 of the federal Defense of Marriage Act, which defined “marriage” to mean only a union between a man and a woman and “spouse” to refer to a person of the opposite sex, was unconstitutional as a violation of equal protection pursuant to the Due Process Clause of the Fifth Amendment. The landmark Windsor decision means that same-sex marriages performed in a state that recognizes same-sex marriage must be treated the same as opposite-sex marriages for purposes of federal law.

Even after Windsor, individual states could still adopt or define their own definitions of marriage. For instance, Pennsylvania had “Marriage Laws” that prohibited same-sex marriage and also prohibited recognition of out-of-state same-sex marriages, even if valid in the jurisdiction in which they were celebrated. On May 20, 2014, however, federal judge John E. Jones, III, issued his decision in Whitewood v. Wolf, striking down those laws:

[W]e hold that Pennsylvania’s Marriage Laws violate both the Due Process and Equal Protection Clauses of the Fourteenth Amendment to the United States Constitution. Because these laws are unconstitutional, we shall enter an order permanently enjoining their enforcement. By virtue of this ruling, same-sex couples who seek to marry in Pennsylvania may do so, and already married same-sex couples will be recognized as such in the Commonwealth.

The Governor of the Commonwealth declined to appeal the Whitewood decision, and an attempted appeal by a county clerk was promptly dismissed.

The immediate impact of the Whitewood decision is that married same-sex couples who live in Pennsylvania and who were legally married in jurisdictions in which the marriage was valid, for example, in New York or Montreal, must be recognized as married in Pennsylvania. It also means that same-sex couples may apply for and be granted marriage licenses in Pennsylvania using the same standards that apply to opposite-sex couples.

What Windsor and Whitewood mean in the workplace:

Employee Benefits: The IRS and the Department of Labor have issued guidance about how to apply the Windsor decision to pension and health plans. The IRS and DOL have concluded that for the purposes of the matters under their respective purviews, the terms “spouse” and “husband and wife” include individuals who entered into a legal marriage in any jurisdiction that recognizes same-sex marriage, regardless of whether the individuals live in a jurisdiction that recognizes same-sex marriages, and that the term “marriage” includes a legally-recognized marriage under any state, territory or foreign jurisdiction.
Pension Benefits: Following Windsor, the IRS issued guidance requiring that validly-married same-sex couples be treated as married for all federal tax purposes where marriage is a factor, including under pension plans. Retirement plans must be amended to comply with Windsor and the related IRS guidance by December 31, 2014, or the applicable date under the IRS’s general amendment guidance for qualified retirement plans.
Health Benefits: While in the past, employees who covered a same-sex partner under an employer-provided health plan were taxed on the fair market value of the coverage provided to the domestic partner, validly-married individuals will now be treated for tax purposes the same as opposite-sex individuals. Individuals who were taxed on these benefits in prior years may be eligible to apply for a refund. Employers may also apply for refunds related to their portion of the tax. The IRS has also issued special guidance about how Windsor affects cafeteria plans, as well as health and dependent care flexible spending accounts and health savings accounts.
Plans Subject to State Law: The health plans of employers subject to state law (e.g. private sector insured health plans and the plans of state and local governments) must now treat validly-married same-sex couples the same as opposite-sex married couples (e.g. adding spouses to coverage in the same manner).
Self-Insured Plans: Nothing in ERISA prohibits a private sector self-insured plan (that does not define or refer to “spouse” or “marriage” in terms of state or federal law) from continuing to exclude from coverage a same-sex marriage spouse.Further federal action would be required to mandate inclusion, even after Windsor and Whitewood.
COBRA: If a health plan, by action or law or by its terms, covers a same-sex spouse as a spouse under an employer-provided health plan, the plan must offer the same COBRA benefits for families of same-sex married couples as for opposite-sex couples. This also applies to the Pennsylvania “Mini-COBRA” statute.
FMLA: On June 20, 2014, the Department of Labor issued proposed rules to revise the definition of spouse under the FMLA in light of Windsor. Under the proposed changes, eligible employees in legal same-sex marriages, as well as in common law marriages recognized in the state where the marriage was contracted, will be able to take FMLA leave to care for their spouse, regardless of where they live. Under the FMLA’s current regulatory definition of spouse, eligible employees can take FMLA leave to care for a same-sex spouse only if they reside in a state that recognizes same-sex marriages.
Federal Benefits: There are over 1,000 federal laws in which marriage status is a factor and from which individuals in same-sex marriages can now benefit, including filing joint income tax returns with the IRS; estate tax and estate planning benefits and tax provisions; veteran and military benefits; federal employment benefits; and immigration benefits, to name only a few.
What about Domestic Partnerships and Civil Unions? It is important to note that neither the recent case law nor the IRS or DOL guidance applies to domestic partnerships or civil unions. Individuals in these relationships should be alert to possible changes, especially with respect to their employee benefits. For example, employers that offered “domestic partnership” coverage for health benefits may decide to narrow the eligibility rules to include only those in valid marriages.

For assistance in navigating the changing legal landscape in the area of marriage equality, feel free to contact any of the employee benefits attorneys at Willig, Williams & Davidson.