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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:
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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