In 2013, Minnesota became one of thirteen U.S. states that legally recognize same-sex marriage. (See footnote 1.) If you are a business owner and have employees who are married to someone of the same sex, there are several critical changes in the law you must note as an employer.
All business employers must now assess their employment manuals since spouses of employees in same-sex marriages will soon have access to many benefits previously denied. Since this area of law is brand new and still in development, the best piece of advice would be to use the information below as a basic guide and consult our firm for further questions.
What is DOMA?
On June 26, 2013, the U.S. Supreme Court ruled in United States v. Windsor that §3 of the Defense of Marriage Act (DOMA) unconstitutionally prohibited the federal government from recognizing married same-sex couples. (See footnote 2.) The Supreme Court ruled that persons who are legally married by through state law have a right to federal benefits. The Supreme Court ultimately held that not recognizing same-sex marriage federally, where the marriage was legally created in the states violated the U.S Constitution.
How Will This New Ruling Affect me?
In states such as Minnesota, where same-sex marriage is now legally recognized, employers will need to know that:
- Employee Benefit plans governed by federal law will require all companies to treat employees’ same-sex partners just as equally as opposite-sex couples.
- Business owners will have to offer COBRA continuation coverage to same-sex spouses.
- Businesses with 401(k) plans will have to recognize same-sex spouses for purposes of determining death benefits.
- Employees must be permitted to take family and medical leave (FMLA) to care for an ill same-sex spouse. Any employee married to a same-sex partner will be allowed to take FMLA leave to care for his or her same-sex spouse faced with a physical or mental health condition.
- Employees will not have to pay federal income taxes on the income imputed for an employer’s contribution to same-sex spouses coverage on a pretax basis under a section 125 plan.
How Will Changes in the Law Affect My Business’s Health Care Coverage?
Health care plans that offer coverage for spouses will have to recognize partners in same-sex marriages as well. Businesses must allow for couples in same-sex marriages to change benefits election options. Essentially, health care coverage will include the following changes:
- Same-sex spouse health care coverage will not be treated as imputed income reported on a W-2 rather it will instead be pretax.
- Domestic partners who are not in a legally recognized marriage will continue to be on an after-tax basis.
Will There be Major Changes to Employee Retirement Plans?
All employers must offer retirement benefits to married employees in same-sex marriages. Employers must also recognize same-sex spouses for purposes of determining surviving-spouse annuities and death benefits. Employee benefits and retirement plans are still subject to the laws governing ERISA. Employee retirement plans must allow a qualified joint and survivor annuity for employees with same-sex spouses..
How Will the New Laws Affect Religious Institutions such as Churches?
There has been a significant change in Minnesota law regarding gay marriage that may affect churches. Several common questions regarding the new marriage laws and your church include:
- Church Rental. May our church decline to rent our building to a same-sex wedding ceremony or anniversary celebration?
- Employees. May our church deny employment to an individual because they are in a same-sex relationship?
- Volunteers. May our church turn away volunteers because they are in a same-sex relationship?
- Hostile Work Environment. Can our Biblical teaching regarding homosexuality be deemed evidence of a hostile work environment?
There are additional issues for church schools. In short, there are a number of ways churches can protect themselves by revising their bylaws and organizational documents.
What are the Major Tax Consequences Involved?
The U.S. Treasury Department and the IRS have both stated that same-sex couples who are legally married will be treated as married for federal tax purposes. This matters regardless of whether the same-sex couple is living in a jurisdiction that recognizes same-sex marriage or not.
Same-sex couples that are legally married will be recognized as married in all aspects of federal tax laws including:
- Income Taxes
- Gift Taxes
- Estate Taxes
The statute of limitations for filing a refund claim is three years from the date the return was filed therefore refund claims can still be filed for tax years 2010, 2011 and 2012. This does not apply to taxpayers with exceeding circumstances that would them to file refund claims dating from 2009 or earlier.
 The complete list of states that legally recognize same-sex marriage are California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, and Washington. See NCSL National Conference of State Legislatures at http://www.ncsl.org/issues-research/human-services/same-sex-marriage-overview.aspx#1.
 United States v. Windsor, 570 U.S. (2013).