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DOMA ruling causes employers to re-look at handbooks

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When the U.S. Supreme Court struck down the Defense of Marriage Act (DOMA) in June, it opened up more than 1,000 federal benefits and responsibilities to legally married same-sex couples.

The ruling also signaled a significant change for employers, who now potentially will have more workers to cover under their existing benefit plans.

"For private employers, the impact is mostly on benefits that they now have to afford same-sex couples, as long as state law recognizes them as being married," said Denise Visconti, office managing shareholder of Littler Mendelson's San Diego office.

The biggest difference for employers involves health insurance and pension benefits, according to Riverside attorney John Wahlin, a partner in the employee benefits practice group of Best Best & Krieger.

In states that recognize same-sex marriages, gay couples may receive the benefit of tax-free treatment of health care coverage and access to pre-tax treatment under an employer’s Section 125 plan, as well as COBRA coverage, HIPAA special enrollment rights, and the right to pension survivorship.

But in California, the change won't be as great since the state's domestic partner laws granted a lot of similar benefits.

"A lot of health plans (in California) currently provide coverage for domestic partners, even if they're not registered under California's registration of domestic partners," Wahlin said.

One of the federal benefits now available to same-sex married couples is the Family and Medical Leave Act (FMLA), which entitles employees to take job-protected, unpaid leave for specified family and medical reasons while continuing to receive their group health care insurance.

FMLA coverage includes military members, so a spouse can take time off to care for an injured service member or to care for children when the spouse is deployed.

Visconti said the new benefits could end up costing same-sex couples in California.

While same-sex couples previously did not have the right to take leave under FMLA, they could take unpaid leave to care for a spouse under the California Family Rights Act and it wouldn't count against their FMLA time. Now, however, any unpaid leave will count against both, "so same-sex couples will get a reduced amount," Visconti said.

Same-sex couples also will have new responsibilities. In one obligation, an employee’s spouse must be named as his or her beneficiary under a qualified retirement plan unless the spouse provides a waiver. That will now apply to same-sex couples who have previously not had to get the waiver.

San Diego's Gina Haggerty Lindell, a partner in the employment practice group of Gordon & Rees, said insurance coverage for a same-sex married employee could depend on where the company's insurance carrier is located. If it's headquartered in a state that doesn't recognize same-sex marriage, they may not provide coverage for same-sex couples.

The recent Supreme Court ruling did not address Section 2 of DOMA, which allows one state to refuse to recognize same-sex marriages entered into in another state.

It is also unknown whether the new tax benefits are retroactive.

"One thing that isn't clear from the Supreme Court decision is whether you can go back and file amended tax returns to get some of the taxes back," Wahlin of Best Best & Krieger said. "It's really silent on that."

Littler's Visconti agreed.

"There are a couple of questions the DOMA ruling created."

Some of the questions will hopefully be answered when the Internal Revenue Service, as expected, issues guidance on the definition of “spouse."

Visconti said she doesn't think the DOMA ruling will have much of a financial impact on California employers.

Employers, however, should review insurance policies to determine how same-sex spouses are treated or defined, review plan documents, employee handbooks, benefit notices and policy manuals.

Gordon & Rees' Lindell said some same-sex couples in California who preferred not to register as domestic partners under state law now may choose to marry, opening them up to many state and federal benefits.

But this does not mean human resources personnel have to go around asking their employees who is married.

"I don’t think an employer has to go to any great lengths to verify any employee's status as married or not," Wahlin said. "Any employee who gets married, the burden is on them to tell their employer they are married."

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