Alaska Municipal Attorneys Association
November 18-19, 2013
Anchorage, Alaska
Terrence S. Welch
Brown & Hofmeister, L.L.P.
740 E. Campbell Road, Suite 800
Richardson, Texas 75081
www.bhlaw.net
“The Times They Are A-changin’.”
— Bob Dylan
There have been significant decisions by the United States Supreme Court and other courts during the last several years that have rocked the workplace, resulting in discarding past notions of who is, or is not, married and how same-sex couples should be treated under the law by employers. Not surprisingly, there have been a multitude of cases that address more mundane issues, from overtime compensation under the Fair Labor Standards Act to obesity being considered a disability and the ongoing battle about what constitutes a reasonable accommodation under the ADA. The purpose of this paper is to provide a broad overview of recent cases and where applicable, actions by regulatory agencies in interpreting these new cases.
I. Same-Sex Marriage and the Death of DOMA
A. United States Supreme Court Cases
The two blockbuster United States Supreme Court cases on the topic of same sex marriage during the last term of the Court were United States v. Windsor,[1] and Hollingsworth v. Perry.[2] While not providing a detailed analysis of both of the cases, a brief review is nonetheless helpful.
Edith Windsor and Thea Spyer, a same-sex couple residing in New York, were lawfully married in Ontario, Canada in 2007. Ms. Spyer died in 2009, leaving her entire estate to Ms. Windsor. Ms. Windsor sought to claim the federal estate tax exemption for surviving spouses; however, she was barred from doing so by Section 3 of the Defense of Marriage Act (DOMA) (codified at 1 U.S.C. § 7),[3] which provided that the term “spouse” only applies to a marriage between a man and woman. The Internal Revenue Service (IRS) found that the exemption did not apply to same-sex marriages, denied Ms. Windsor’s claim, and compelled her to pay $363,053 in estate taxes.
On November 9, 2010, a lawsuit was filed against the United States government in the United States District Court for the Southern District of New York, where Ms. Windsor sought a refund because DOMA singled out legally married same-sex couples for “differential treatment compared to other similarly situated couples without justification.” On February 23, 2011, U.S. Attorney General Eric Holder issued a statement from the Obama administration that agreed with the plaintiff’s position that DOMA violated the United States Constitution and said he would no longer defend the law in court. The Bipartisan Legal Advisory Group (BLAG) of the House of Representatives continued the defense of the law. On June 6, 2012, U.S. District Judge Barbara S. Jones ruled that Section 3 of DOMA was unconstitutional under the due process guarantees of the Fifth Amendment and ordered the federal government to issue the tax refund, including interest.[4] The Second Circuit Court of Appeals affirmed the decision on October 18, 2012.[5]
BLAG and the U.S. Department of Justice (DOJ), as a nominal defendant, appealed the decision to the U.S. Supreme Court, which granted a writ of certiorari in December 2012. On March 27, 2013, the Supreme Court heard oral arguments and on June 26, 2013, issued a 5–4 decision declaring Section 3 of DOMA to be unconstitutional. The Court first held that although DOJ decided not to defend DOMA, the government retained a stake sufficient to support Article III jurisdiction because the unpaid refund is “a real and immediate economic injury.”[6] Thus, there was a sufficient basis for the court to entertain jurisdiction over the case.[7] DOMA was then determined to be unconstitutional as a deprivation of the equal liberty of persons under the Fifth Amendment. The Court noted that although the regulation of marriage has traditionally been within the authority of the states,[8] DOMA, applicable to more than 1,000 federal statues and numerous federal regulations—such as Social Security, housing, taxes, criminal sanctions, copyright and veterans’ benefits—was directed to a class of persons that the laws of New York and 11 other states had sought to protect.[9] Justice Kennedy wrote that DOMA is inconsistent with the principle that marriage laws may vary from state to state, but are consistent within each state. “The principal purpose [of DOMA] is to impose inequality . . . to deprive some couples married under the laws of their State, but not other couples, of both rights and responsibilities.”[10] New York’s decision was a proper exercise of its sovereign authority and by seeking to injure the class New York sought to protect, DOMA violated basic due process and equal protection principles applicable to the federal government. Constitutional guarantees of equality “must at the very least mean that a bare congressional desire to harm a politically unpopular group cannot” justify disparate treatment of the group. DOMA’s history and text indicated a purpose and practical effect to impose a disadvantage, a separate status, and a stigma upon those entering into same-sex marriages made lawful by the states. The law deprived some couples married under the laws of their states, but not others, of rights and responsibilities, creating two contradictory marriage regimes within the same state; it diminished the stability and predictability of basic personal relations.[11] Justice Kennedy concluded that
[DOMA] is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity. By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment. This opinion and its holding are confined to those lawful marriages.[12]
On the same day that the Windsor opinion was issued, the Court also issued a second 5–4 decision in Hollingsworth v. Perry, a case related to California's constitutional amendment initiative barring same-sex marriage. The Hollingsworth decision effectively allowed same-sex marriages in that state to resume after the Court ruled that the proponents of the initiative lacked the requisite Article III standing to appeal in federal court based on its established interpretation of the case or controversy clause.
In 2008, the California Supreme Court held that limiting the official designation of marriage to opposite-sex couples violated the equal protection clause of the California Constitution.[13] Later that year, state voters then passed a ballot initiative, Proposition 8, amending the state constitution to define marriage as a union between a man and a woman.[14] Same-sex couples who wished to marry filed suit in federal court, challenging Proposition 8 as being in violation of the Due Process and Equal Protection Clauses of the Fourteenth Amendment to the U.S. Constitution.[15] Not unlike the position taken by the Obama Administration in Windsor, California state officials refused to defend the law; however, the federal district court allowed the initiative’s official proponents to intervene and the court subsequently declared Proposition 8 unconstitutional and enjoined its enforcement.[16] State officials declined to appeal but the intervenors opted to appeal. The Ninth Circuit certified a question about Article III standing, to which the California Supreme Court answered that the official proponents of a ballot initiative had authority to assert the state’s interest to defend the constitutionality of the initiative when public officials refuse to do so. The Ninth Circuit, relying on that answer, concluded that petitioners had standing and affirmed.[17] The Supreme Court vacated and remanded, holding that the intervenors did not have the requisite Article III “case or controversy” standing to appeal. While the Court determined the intervenors had standing to initiate this case against the California officials responsible for enforcing Proposition 8, once the federal district court issued its order, they no longer had any injury to redress—they had won—and state officials chose not to appeal.[18] The intervenors had not been ordered to do or refrain from doing anything and their “generalized grievance” was insufficient to confer standing. “Their only interest in having the District Court order reversed was to vindicate the constitutional validity of a generally applicable California law.”[19]
B. So How Is The Federal Government Responding?
Since late June, the Federal Government has been in the process of responding to Windsor. Not surprisingly, federal regulations are being revised accordingly. Federal guidelines have been amended as follows:
● Federal Taxes. On August 29, 2013, in Revenue Ruling 2013-17, the Department of the Treasury and the Internal Revenue Service (IRS) ruled that same-sex couples, legally married in jurisdictions that recognize their marriages, will be treated as married for federal tax purposes. The ruling applies regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage. Under Revenue Ruling 2013-17, same-sex couples will be treated as married for all federal tax purposes, including income and gift and estate taxes. The ruling applies to all federal tax provisions where marriage is a factor, including filing status, claiming personal and dependency exemptions, taking the standard deduction, employee benefits, contributing to an IRA and claiming the earned income tax credit or child tax credit.
Any same-sex marriage legally entered into in one of the 50 states, the District of Columbia, a U.S. territory or a foreign country will be covered by the ruling; however, the ruling does not apply to registered domestic partnerships, civil unions or similar formal relationships recognized under state law. Same-sex marriage partners may file amended tax returns and choose to be treated as married for federal tax purposes for one or more prior tax years still open under the statute of limitations. Generally, the statute of limitations for filing a refund claim is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. As a result, refund claims can still be filed for tax years 2010, 2011 and 2012. Some taxpayers may have special circumstances, such as signing an agreement with the IRS to keep the statute of limitations open, that permit them to file refund claims for tax years 2009 and earlier. Additionally, employees who purchased same-sex spouse health insurance coverage from their employers on an after-tax basis may treat the amounts paid for that coverage as pre-tax and excludable from income.[20]
● Immigration. On July 1, 2013, Secretary of Homeland Security Janet Napolitano issued the following statement:
After last week’s decision by the Supreme Court holding that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional, President Obama directed federal departments to ensure the decision and its implication for federal benefits for same-sex legally married couples are implemented swiftly and smoothly. To that end, effective immediately, I have directed U.S. Citizenship and Immigration Services (USCIS) to review immigration visa petitions filed on behalf of a same-sex spouse in the same manner as those filed on behalf of an opposite-sex spouse.[21]
USCIS has done exactly that, and visas and green cards now extend to same-sex spouses. An FAQ issued by USCIS provides the following information about immigration and same-sex marriages: U.S. citizens or lawful permanent residents in a same-sex marriage can now sponsor their spouses for a family-based immigrant visa; U.S. citizens who are engaged to be married to a foreign national of the same sex can file a fiancé or fiancée petition; and same-sex couples who were married in a U.S. state or a foreign country that recognizes same-sex marriage may file an immigrant visa petition for the spouse, because as a general matter, the law of the place where the marriage was celebrated determines whether the marriage is legally valid for immigration purposes. Just as USCIS applies all relevant laws to determine the validity of an opposite-sex marriage, it will apply all relevant laws to determine the validity of a same-sex marriage. The domicile state’s laws and policies on same-sex marriages will not bear on whether USCIS will recognize a marriage as valid.[22]
● Family and Medical Leave Act. The U.S. Department of Labor issued its Guidance (Fact Sheet #28F)[23] in mid-August confirming that same-sex married couples are entitled to the same benefits of the Family and Medical Leave Act (FMLA) as heterosexual married couples. The Guidance indicates that FMLA spousal leave entitlements extend to same-sex spouses that reside in states that recognize same-sex marriages. DOL now defines “spouse” as “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including “common law” marriage and same-sex marriage.” An employer located in a state that does not recognize same-sex marriage does not have to grant FMLA leave to a same-sex married employee to care for that employee’s same-sex spouse if the same-sex married couple does not reside in a state that recognizes same-sex marriage. There is nothing in the DOL Guidance, however, that precludes an employer from having its own internal leave policy allowing for leave for a same-sex spouse. Until there is further judicial review, there will be disparate treatment of same sex married couples for FMLA leave purposes that will turn on the place of residence—DOL’s interpretation is unique because it focuses solely on the residence of the employee and not where the employer is located.
● Other Federal Regulations. Below is a summary of other regulations from the federal government about same-sex marriage:
· Employees may cover their same-sex spouses under health care plans provided by their employers without having to pay taxes on the value of such coverage.
· Same-sex spouses have full rights to continuation health care coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) in the event of a participant’s termination of employment, divorce or legal separation.
· Employees may receive tax-free reimbursement under flexible spending accounts, health reimbursement arrangements and health savings accounts for qualified medical expenses incurred by same-sex spouses.
· Same-sex spouses are entitled to the same special enrollment right under the Health Insurance Portability and Accountability Act (HIPAA) as opposite-sex spouses.
· Same-sex spouses are entitled to a 50 percent qualified joint and survivor annuity (QJSA) or a 75 percent qualified optional survivor annuity (QOSA) under a participant’s pension plan, and the spouse’s consent is required to pay pension benefits in any other form.