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Recent Rulings by the IRS, DOL and EBSA Provide Guidance on FMLA, Federal Taxes, and ERISA for Same-Sex Spouses

On Behalf of | Nov 7, 2013 | Articles |

The June 26, 2013 Supreme Court decision in U.S. v. Windsor struck down Section 3 of the Defense of Marriage Act (DOMA) of 1996, which established marriage as a legal union between one man and one woman, further defining a “spouse” as only a person of the opposite sex. Prior to this decision, same-sex marriages could not be recognized by federal law, even if such marriages were permitted or recognized under state law.

The Windsor decision had and will have a number of important implications on benefits, welfare plans, retirement plans, and other forms of coverage that included protections or applications to spouses of employees covered by such programs. Many of these implications are still being sorted out, as shown by some of the administrative interpretations that have followed.

A recent IRS ruling that took effect on September 16, 2013 clarified that same-sex couples who were legally married in a jurisdiction that recognizes same-sex marriages as legal will be treated as married for the purpose of federal taxes. This means that even couples who reside in states that do not recognize same-sex marriage will be considered married, based on the fact that their marriage was performed in a state that legally recognizes same-sex marriage.

This means that coverage or benefits provided to same-sex spouses will no longer be treated as taxable income. Additionally, all federal tax laws relating to qualified retirement plans will also now be applicable to same sex spouses.

The EBSA (Employee Benefits Security Administration) also recently issued a Technical Release that similarly adopts a “state of celebration” rule rather than a “state of residence” rule in determining the validity of a same-sex marriage as it pertains to ERISA.

In terms of the Family and Medical Leave Act (FMLA), the Department of Labor (DOL) has issued an update indicating that FMLA now applies to employees seeking leave for the care of a same-sex spouse. However, contrary to the IRS ruling, the DOL has adopted a state of residence rule as it pertains to FMLA coverage, meaning that a same-sex spouse will only qualify if the employee’s marriage is officially recognized by the state in which he or she resides. This may limit the rights of Michigan residents, where same-sex marriage is still prohibited. The DOL updates regarding FMLA are effective June 26, 2013.

Employers and employees alike should be aware of the implications of these rulings on benefits, coverage, and taxes. An employment law attorney can be one of your best resources in obtaining advice or information regarding the applicability of the Windsor decision and these recent rulings to you or your employment situation.

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