DOMA Implications for Illinois Small Businesses
On June 26, 2013 the SCOTUS in United States v. Windsor found Section 3 of the federal Defense of Marriage Act (DOMA) unconstitutional. Section 3 had prohibited marriages between same-sex couples from being acknowledged by the federal government. This meant that under DOMA same-sex couples were denied federal marriage benefits.
With the Supreme Court’s ruling in Windsor businesses are going to need to update and evaluate their current employee benefit plans. Currently, the Windsor ruling only applies to the 12 states and the District Columbia that recognized same-sex marriage at the time of the ruling.
In those states, companies will need to make sure they are not discriminating against gay spouses in their employee benefit packages. This can be extremely complicated especially for companies that do business in multiple states. For a legally married same-sex couple who live in a state where same-sex marriage is recognized there are new benefits, and there are new obligations for employers in those states. Below is a checklist for employers concerning the expanded obligations.
Health Insurance. Big and small businesses must make the necessary changes to ensure that same-sex couples get equal tax treatment, specifically concerning health insurance premiums. Before Windsor, benefits coverage for same-sex spouses was taxable income. Post Windsor, the gay spouse’s benefits coverage will be paid for on a pretax basis under a Section 125 plan
Pension Plans. Businesses with pension plans must change the plans in order to recognize same-sex spouses. The plans must recognize gay spouses for surviving-spouse annuities.
401(k) Plans. Companies with 401(k) plans will have to recognize same-sex spouses for purposes of determining death benefits, and the gay spouse will be considered the beneficiary unless the couple agrees otherwise
Family and Medical Leave. Employees must be permitted to take family and medical leave to care for an ill same-sex spouse.
The checklist above is an outline of future changes for all businesses to make. Besides the changes employers are going to have to make in light of Windsor, there are still many unclear issues surrounding this Supreme Court ruling. The impact of the Court’s ruling in Windsor is extremely broad, and it will affect hundreds of laws and regulations. One thing is for sure, based on the DOMA ruling, companies will need to carefully examine and evaluate their employee benefit plans.
If you are an employer and have questions concerning the implications of the recent Supreme Court Ruling on your small business, please contact Bellas & Wachowski – Attorneys at Law at (800) 825-9260.