Same-Sex Marriage: What Should Employers Be Thinking About?

By Stuart Harris
[March 2004]

Multnomah County’s recent decision to issue marriage licenses to same-sex couples carries important implications for Oregon employers. Employees who enter into same-sex marriages may seek spousal benefits coverage. This area of the law is very much in flux, but employers are well advised to review their policies and employee benefit plans and consult with their legal counsel regarding any questions.

Where do Oregon employers stand?

On March 3, 2004, Multnomah County began issuing marriage licenses to same-sex couples after the county attorney determined that failing to do so was unconstitutional.

Attorney General’s opinion on the legality of same-sex marriage

About a week later, on March 12, the Oregon Attorney General issued an opinion on two issues. First, whether same-sex marriages are permitted under current state law. Second, whether the Oregon Supreme Court would determine that same-sex marriages should be legally recognized under the Oregon Constitution. The Attorney General determined that (1) Oregon laws currently prohibit county clerks from issuing marriage licenses to same-sex couples, and (2) the Oregon Supreme Court would likely find this prohibition unconstitutional. This opinion is not binding law, and since there is no direct Oregon precedent on the issue, the validity of same-sex marriages under Oregon law will remain uncertain until a test case winds its way to the Supreme Court. The supreme courts of Hawaii, Vermont and Massachusetts have previously concluded prohibitions against same-sex marriage violated their state constitutions, while Arizona's supreme court upheld that state's prohibition.

Oregon law currently prohibits discrimination based on sexual orientation

In a 1999 case, Tanner v. OHSU, the Oregon Court of Appeals determined that a government employer’s refusal to extend benefits to employees’ same-sex domestic partners was unconstitutional. This portion of the court’s holding does not apply to private employers, as the employer in Tanner was a governmental entity and the relevant provision of the Oregon Constitution applies only to governmental entities. The court also determined that Oregon’s statute precluding discrimination in the workplace, which applies to all employers, prohibited discrimination on the basis of sexual orientation, but that the employer’s denial of benefits to same-sex domestic partners in the specific instance was not discriminatory because it was part of a “bona fide employee benefit plan” and not a “subterfuge” for discrimination. As mentioned above, the case involved a governmental employer, and therefore did not consider the impact of the Employee Retirement Income Security Act (ERISA), since governmental employers are not subject to ERISA. (ERISA is discussed more fully below.)

The cities of Portland, Corvallis, Eugene, and Ashland also all have ordinances banning discrimination on the basis of sexual orientation.

OFLA requires employers to allow leave for same-sex domestic partners

Based on the court’s decision in Tanner, the Bureau of Labor and Industries (BOLI) amended the Oregon Family Leave Act to include “same-sex domestic partner” within the meaning of “family member.” Therefore, employees are entitled to take leave under the Oregon Family Leave Act (OFLA) to care for same-sex domestic partners. In order to qualify as a “same-sex domestic partner,” a couple must demonstrate: (1) the same-sex domestic partners are not related by blood closer than would bar marriage in the state of Oregon (first cousins or closer), (2) neither is legally married, (3) they have continuously lived together as a family and share a close personal relationship, which is exclusive and loving, for an extended period of time, and they intend to maintain that family and that relationship with each other for the rest of their lives, (4) they have joint financial accounts and have agreed to be jointly responsible for each other's common welfare, including basic living expenses, (5) they would be married to each other if the law permitted them to marry in Oregon, (6) they are the sole domestic partner of each other and have no other domestic partner, (7) they are both 18 years of age or over, and (8) they are each homosexual.

Are employers required to extend benefits to same-sex marriages the same as heterosexual marriages?

The Employee Retirement Income Security Act (ERISA) and the Defense of Marriage Act

Employers are not required to extend benefits administered under an ERISA plan to cover an employee's same-sex spouse. As a general rule, ERISA preempts state and local laws to the extent those laws “relate to” employee benefit plans. Stated another way, ERISA preempts Oregon state and local laws that would require coverage for domestic partners or same-sex spouses to the extent these laws relate to an ERISA plan. On the other hand, no state or federal law prohibits an employer from extending benefits to the spouse of an employee in a same-sex marriage. ERISA generally does not prescribe which employees must be covered by an ERISA benefit plan, leaving employers free to choose who is eligible for coverage and who is not, so long as that choice is not discriminatory under federal law.

In 1996, Congress passed and President Clinton signed into law the Defense of Marriage Act (DOMA), which for purposes of applying federal law (including ERISA) defines marriage as a “legal union between one man and one woman as husband and wife.” DOMA also provides that states do not have to recognize same-sex marriages valid in other states. So long as DOMA is in effect, federal law does not recognize same-sex marriages and employers are not required to extend ERISA-covered benefits to same-sex marriage partners. Note that some commentators believe DOMA will eventually be declared unconstitutional. If this occurs, the ERISA preemption analysis arguably weakens, and in other circumstances courts have held that particular laws having an effect on ERISA plans do not have an effect sufficient enough to warrant preemption. Also, ERISA preemption does not apply to state insurance laws. If Oregon law eventually gives full and unequivocal recognition to same-sex marriages, it is uncertain how that ruling would affect the issuance of group insurance policies within the state.

Fringe benefits not covered by ERISA

Whether or not employers will be required to recognize same-sex marriages for non-ERISA benefits is unclear. (Non-ERISA benefits would include programs unrelated to retirement or healthcare, such as a bereavement leave policy, to pick one example.) As mentioned above, until a test case is tried and appealed, there is no binding pronouncement as to whether same-sex marriages will be recognized under Oregon law. The Attorney General's opinion is noteworthy, although not binding on the courts. Therefore, an Oregon employer is arguably not currently required to recognize same-sex marriages. However, employers who choose not to extend non-ERISA benefits to same-sex marriages could face greater exposure in sexual orientation discrimination claims under Oregon law. For example, an employee alleging some type of discrimination based on sexual orientation could argue that an employer’s failure to extend benefits to that employee’s same sex spouse is evidence of a discriminatory work environment.

Also, based on the ruling of the Court of Appeals in Tanner, employment-based sexual orientation discrimination is prohibited by Oregon’s statute prohibiting discrimination on the basis of sex. Unless the Oregon Supreme Court says otherwise, an employer denying non-ERISA benefits to same-sex domestic partners (and purported same-sex spouses) may need to be able to show that the program is not a subterfuge for sexual orientation discrimination.

What should employers be doing?

In these uncertain times, you should carefully review language in your benefit plans and policies to ensure the applicable rules are clearly stated. And where appropriate, terms like “spouse” and “domestic partner” should be clearly defined. You should seek advice from your employment and employee benefits attorneys prior to making any changes, as the laws impacted by Multnomah County’s decision are varied and complex. In addition to ERISA and discrimination laws, there are issues involving the FMLA, OFLA, COBRA, and workers’ compensation laws, among others.

Employers who decide to extend benefits to cover same-sex spouses may be ahead of where the courts are headed, which is the surest method of avoiding any dispute. But even under that scenario it is essential that you consult with your insurance carrier prior to implementing this course of action, to ensure there will be no dispute in the future as to coverage. Among other things, you may want to revise eligibility rules so that “spouse” clearly encompasses same-sex spouses, and warn employees that the value of coverage for a same-sex spouse will be taxable to the employee unless that person qualifies as the employee’s dependent under the Internal Revenue Code. If you already extend benefits to same-sex domestic partners, benefit plans should be revised so they include same-sex spouses.

If you decide not to extend benefits to cover same-sex spouses, which is clearly not required for those plans covered by ERISA and arguably not required under current Oregon law even for non-ERISA benefits, the uncertainty will continue. An employee whose same-sex spouse is denied benefits could file a BOLI complaint or a lawsuit for discrimination, leaving it to BOLI or the courts to decide whether there has been any improper discrimination. Despite this risk, Oregon employers have the option to sit tight and let the courts, the legislature and the people sort out the law before taking any steps regarding same-sex marriage.

For further information, please contact:

Author: Stuart Harris Portland, Oregon (503) 778-5428 StuartHarris@dwt.com

Jason T. Froggatt, Seattle, (206) 628-7629, jasonfroggatt@dwt.com
Jeff Belfiglio, Bellevue, (425) 646-6128, jeffbelfiglio@dwt.com

This Employee Benefits Advisory is a publication of the Employer Services Department of Davis Wright Tremaine LLP. Our purpose in publishing this Advisory is to inform our clients and friends of recent developments in employment law. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

Copyright © 2004, Davis Wright Tremaine LLP.

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