United States v. Windsor ___ U.S. ___ (2013) was the Supreme Court case holding that Section 3 of the Defense of Marriage Act (“DOMA”) was unconstitutional.  In doing so, the court found that all federal rights must be granted to married same-sex couples.  Federal agencies are now in the process of informing the public of what this ruling means.  On September 18, 2013 the Department of Labor released “Guidance to Employee Benefit Plans on the Definition of ‘Spouse’ and ‘Marriage’ under ERISA and the Supreme Court’s Decision in United States v. Windsor.”

The Guidance Regarding DOMA & Retirement

The Employee Retirement Income Security Act (“ERISA”) governs pension plans in private industry.  This Guidance changes the definition of “spouse” to mean any individual legally married in a state.  Included in this definition are same-sex couples that are legally married in one state, but reside in a state that does not allow same-sex marriage.

As was the case in the Windsor decision, this ruling does not apply to same-sex couples that are not legally married, i.e. civil unions.  While state laws may apply to those couples who are in a civil union, a couple must be in a relationship that is recognized by a State as a legal marriage.

What Does this Mean?

This ruling creates uniformity in the pension system.  If the rule applied only to couples where they were domiciled it would have created problems.  A same-sex couple legally married in State A but living in State B which does not recognize same-sex marriage would have created logistical problems.  As the Guidance said “[s]uch a system would be burdensome for employers and would likely result in errors, confusion, and inconsistency for employers, individual employees, and the government.”

Furthermore, there would be an issue with consistency among the different federal agencies.  As the Guidance notes “given the interconnectedness of statutory provisions affecting employee benefit plans, recognition of marriage based on domicile could prevent qualification for tax exemption, lead to loss of vested rights if spouses move, and complicate benefits determinations if spouses live in different states.”

The Department of Labor discussed this Guidance with the IRS and the Department of Health and Human Services and finds that this new rule is consistent with the goals of ERISA.

For individual businesses this means that if they participate in a pension plan they must extend those plans to those employees who are in a legal same-sex marriage.