Foster Swift Employment, Labor & Benefits E-News
March 24, 2014
Friday, March 21, 2014 in DeBoer v Snyder a federal court judge struck down as unconstitutional the voter-approved Michigan Marriage Amendment (the “MMA”) that prohibited same-sex couples from marrying in Michigan. The court held that county clerks across the state may not refuse to issue marriage licenses to couples because they are the same gender. Shortly after the court issued its opinion, the Sixth Circuit Court of Appeals issued an order staying the DeBoer decision until at least Wednesday, March 26, 2014. The DeBoer ruling is of particular importance to Michigan employers. If the DeBoer decision becomes the law in Michigan, then employers will have to recognize same-sex marriages performed in Michigan when complying with a variety of federal employment laws.
The Ruling. The plaintiffs, April DeBoer and Jayne Rowse, are an unmarried same-sex couple living in Michigan. They each adopted children individually, but wanted to adopt their children jointly. Michigan’s Adoption Code restricts adoption to either a single person or married couples. Because the MMA prohibited Ms. DeBoer and Ms. Rowse from marrying in Michigan, it effectively prevented them from jointly adopting the children in Michigan. After a trial, the Hon. Bernard Friedman issued a written opinion, which recognized that Michigan has expansive powers to pass laws regarding domestic relations. However, he also ruled that Michigan may not pass laws which treat individuals differently without a legally sufficient reason for doing so. Judge Friedman found that Michigan’s decision to marry opposite-sex couples while refusing to marry same-sex couples was not rationally related to any legitimate state interest. Because Michigan did not have a legally sufficient reason for treating Ms. DeBoer and Ms. Rowse differently than an opposite-sex couple, the Judge found that the MMA violated their right to the equal protection of the laws under the United States Constitution.
The 6th Circuit Court of Appeals stayed Judge Friedman’s ruling pending an appeal by the Michigan Attorney General until at least Wednesday, March 26, 2014. Until at least that date, county clerks are banned from issuing new marriage licenses for same-sex marriages. As for those couples married in Michigan between the time Judge Friedman issued his ruling and the 6th Circuit stay, it is unclear whether the federal government will recognize those marriages. Gov. Rick Snyder’s office indicated that “the governor and administration are not weighing in on these issues at this point.”
What Does The Ruling Mean for Employers? If the Sixth Circuit refuses to stay the DeBoer decision after March 26, 2014, then Michigan employers will have to recognize same-sex marriages performed in Michigan when applying all federal employment-related laws, such as the federal Tax Code, ERISA, COBRA, and FMLA.
Last summer, in Windsor v United States, the United States Supreme Court struck down the federal Defense of Marriage Act. (See, Beyond DOMA; More Changes Coming For Employers?). Windsor held that when enforcing federal laws, the federal government will recognize marriages which were lawfully performed under any state’s laws. If same-sex couples may be lawfully married in Michigan, then the federal government will recognize same-sex marriages performed in Michigan when enforcing federal laws. Employers will have to administer pay and benefits programs accordingly. Below are some examples of how Michigan employers may have to adjust their practices if the Sixth Circuit refuses to stay the DeBoer decision after March 26, 2014.
ERISA Health Care Benefits Plans. If a Michigan employer has an ERISA plan which generally offers medical benefits to “spouses” without any specific reference to gender, then the employer will likely have to offer the medical benefit to the employee’s same-sex spouse if the couple marries in Michigan. However, neither the Windsor decision nor subsequent guidance issued by the Internal Revenue Service and the Department of Labor alter an employer’s authority under ERISA to determine the spousal eligibility provisions for its health care plan. Since an employer retains the right post-Windsor to choose whether or not to offer coverage under its health plan to spouses, current federal law still permits an employer to specifically exclude coverage to spouses of the same sex under its self-funded medical plan. However, it’s possible that the DeBoer decision will affect Michigan insurance laws in such a way that fully-insured medical plans may be required to extend any spousal coverage to opposite-sex and same-sex spouses. The Department of Insurance and Financial Services has issued no formal statement regarding this matter. Foster Swift will monitor and report on any developments in this area.
ERISA Retirement Plans. 2013 IRS guidance provides that a retirement plan must treat a same-sex spouse in the same manner as an opposite-sex spouse for federal tax purposes effective as of September 16, 2013. If the Sixth Circuit does not stay the DeBoer decision after March 26, 2014, then a same-sex spouse lawfully married in Michigan must be treated as a spouse for purposes of any spousal consent rules (including spousal consent that may be needed for participant loans or distributions) and any survivorship rules (including applicable qualified joint and survivor annuity rules).
Family Medical Leave Act. Under federal Department of Labor regulations, an employer only has to recognize a same-sex spouse under FMLA if the same-sex marriage is recognized in the employee’s state of residence. Before the Deboer decision, Michigan employers did not have to recognize same-sex spouses for purposes of administering FMLA leave to Michigan residents because the MMA prohibited same-sex marriage in Michigan. If the DeBoer decision becomes the law in Michigan, then employees who are both lawfully married and residing in Michigan may take FMLA leave for the care of their same-sex spouse.
COBRA. If an employer provides health insurance which covers same-sex spouses, then the employer will have to treat the same-sex spouse as a “spouse” for all purposes under COBRA. For example, COBRA requires that the health plan administrator provide a covered spouse an initial notification which includes an overall summary of continuation rights and plan procedures. If the Deboer decision becomes the law in Michigan, then the employer must provide this notification to a same-sex spouse who was lawfully married in Michigan and who was covered under the employer’s health plan. Similarly, a covered same-sex spouse will become a qualified beneficiary with the right to elect health plan continuation coverage if he or she loses health care coverage because of a qualifying event, e.g. the death of the employee or divorce.
Please contact Foster Swift's employment or employee benefits attorneys with any questions you may have regarding your business' human resources practices to make sure they comply with the current status of the law and any future changes to the law.