Labor Department Extends ERISA Protections to Same-Sex Spouses

The effect of United States v. Windsor continues to ripple through federal law, expanding by leaps and bounds the rights and protections afforded to same-sex spouses.  The effect has been magnified by a friendly federal bureaucracy under the Obama administration, which is widely adopting a place-of-celebration rule for recognizing same-sex marriages under federal laws using words like “spouse” and “marriage,”  thus extending federal recognition to same-sex spouses even if they live in states that don’t themselves recognize their marriages. 

The latest installment in this story is the announcement today by the Labor Department that henceforth it will interpret the Employee Retirment and Income Security Act of 1974 (ERISA), which governs most private pension and health plans, to include same-sex as well as opposite-sex spouses.

[T]he term “spouse” will be read to refer to any individuals who are lawfully married under any state law, including individuals married to a person of the same sex who were legally married in a state that recognizes such marriages, but who are domiciled in a state that does not recognize such marriages. Similarly, the term “marriage” will be read to include a same-sex marriage that is legally recognized as a marriage under any state law.

The Department defended its decision to adopt a place-of-celebration rule rather than a place-of-domicile rule based on its reading of Windsor and policy considerations, like a need for uniformity and certainty in coverage of employees who move from one state to another.

This is the most natural reading of those terms; it is consistent with Windsor, in which the plaintiff was seeking tax benefits under a statute that used the term “spouse”; and a narrower interpretation would not further the purposes of the relevant statutes and regulations. . . .  

A rule that recognizes marriages that are valid in the state in which they were celebrated, regardless of the married couple’s state of domicile, provides a uniform rule of recognition that can be applied with certainty by stakeholders, including employers, plan administrators, participants, and beneficiaries.

A rule for employee benefit plans based on state of domicile would raise significant challenges for employers that operate or have employees (or former employees) in more than one state or whose employees move to another state while entitled to benefits. Furthermore, substantial financial and administrative burdens would be placed on those employers, as well as the administrators of employee benefit plans.

The contrary rule, recognizing for federal purposes only those marriages recognized in states where employees actually live, “would be burdensome for employers and would likely result in errors, confusion, and inconsistency for employers, individual employees, and the government,” argued the Department.

The need for inter-agency coordination with the IRS and Department of Health and Human Services (which have already adopted place-of-celebration rules) also led to adoption of the place-of-celebration rule.  “[G]iven 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.”  These problems “are avoided by the adoption of a rule that recognizes marriages that are valid in the state in which they were celebrated.”  It’s also “consistent with the core intent underlying ERISA of promoting uniform requirements for employee benefit plans.”

The practical effect of this decision for married gay couples cannot be overstated.  Consider that some states now recognizing same-sex marriages, like California, do not have residency requirements for getting validly married under state law.  A couple can fly to San Francisco in the morning, get married in the afternoon, and be back home in time for the reception. What that means is nicely summed up by Tico Almeida, president of the GLBT advocacy group Freedom to Work: “It’s great that the Labor Department has adopted the ‘state of celebration’ rule so that gay and lesbian couples from Texas can go to California to get married and then have ERISA protections at their Texas jobs.”

There is also, it should be noted, an effect for unmarried gay couples currently getting benefits from private employers who have recognized domestic partnerships.  ERISA covers only “spouses” and will not be extended to domestic partners.  Since federal benefits will now be available to same-sex spouses wherever they live, many companies across the country will likely end their domestic-partnership programs.  Other companies, which never had such programs, will now be providing full benefits to all married couples, gay or straight.  One effect of the widespread recognition of gay marriage has been, and will continue to be, to release the hydraulic pressure to create alternative statuses.  Three decades of experimentation with alternative family statuses like civil unions and domestic partnerships is coming to an end. 

Of course, the Labor Department’s interpretation of the relevant statutes could be challenged.  Any employer who objected to providing health and other benefits to same-sex couples covered by ERISA would have standing to sue.  While I doubt such efforts would be successful, we haven’t necessarily heard the last word on this subject.

UPDATE: I now see that co-blogger Will Baude beat me to the punch in posting about the new Labor Department policy.  He raises similar points, and a couple of additional ones worth your attention.