Introduction

The United States Supreme Court in two decisions, United States v. Windsor and Hollingsworth v. Perry, invalidated the federal Defense of Marriage Act (DOMA), and refused to overturn a district court’s decision invalidating California’s Proposition 8. (Prop. 8 is an initiative barring same-sex marriages). California employers should prepare for the changes lawful same-sex marriages will bring to employment laws.

Summary of the Cases

Windsor involved two same-sex spouses, legally married in New York. One spouse, Spyer, died in 2009. The IRS, however, did not recognize the couple as legally married under DOMA. Therefore, Windsor had to pay federal estate taxes on her inheritance of Spyer’s estate, which she would not have had to pay if Spyer had been a man.

Windsor sued, arguing DOMA unconstitutionally discriminated against her on the basis of her sexual orientation and deprived her of equal protection of the laws under the Constitution’s Fourteenth Amendment. The Supreme Court agreed.

Hollingsworth involved “Proposition 8,” a 2008 California ballot initiative defining “marriage” as between one man and one woman. Same-sex couples who had legally married in California before Prop. 8 sued, claiming the initiative is unconstitutional. Although the lower courts agreed Prop. 8 indeed is unconstitutional, the Supreme Court held that Prop. 8’s proponents had no legal standing to appeal. As a result, the U.S. District Court’s opinion invalidating Prop. 8 became the final decision.

Invalidation of DOMA Affects Federal Employment-Related Laws

Federal anti-discrimination laws do not currently prohibit marital status or sexual orientation discrimination. But the invalidation of DOMA will broaden the protection of other federal laws. For example, the Family and Medical Leave Act of 1993 (“FMLA”) requires qualified employers to grant qualifying employees time off to care for a “spouse.” Until the Court in Windsor invalidated DOMA, “spouse” meant “a person of the opposite sex.” Now, employers covered by the FMLA must grant time off to qualifying individuals to care for same-sex spouses if same-sex marriage is lawful under state law. The expansion of the definition of spouse also will affect baby-bonding leave and service member leave under the FMLA.

Certain employer-provided health benefits are excluded from gross income. This exemption also applies to those benefits enjoyed by employees’ spouses. Under DOMA, only opposite-sex spouses enjoyed this benefit. Now, the Internal Revenue Service will be required to defer to each state’s definition of “spouse” for federal income tax purposes. As such, if an employee’s same-sex partner is considered a “spouse” under state law, the partner’s benefits will not be counted toward the employee’s gross income and cannot be included toward calculating federal income tax. Employers’ payroll and benefits departments will have to implement procedures to ensure proper tax treatment of same-sex spouses.

Hollingsworth’s Effect on California Law

The Supreme Court’s dismissal of the appeal in Hollingsworth clears the way for California to recognize same-sex unions. Most California employers are accustomed to employment laws protecting same sex couples. The California Fair Employment and Housing Act (“FEHA”) already prohibits discrimination on the basis of marital status, gender identity and sexual orientation, as well as discrimination against domestic partners. Since California’s Domestic Partners Rights and Responsibilities Act took effect January 1, 2005, California Family Code section 297 also provides registered domestic partners many of the rights enjoyed by opposite-sex spouses.

Once California same-sex couples begin to marry, though, employers will have to provide equal benefits and privileges for same-sex spouses as they do for opposite-sex married couples. For example, employers may offer discounted goods or services to “spouses.” Policies may allow for paid bereavement leave if a spouse or his or her parents pass away. Employers requiring proof of a spousal relationship must apply those verification policies consistently to same-sex and opposite-sex spouses, or risk FEHA or other liability.

The California Family Rights Act (“CFRA”) permits California employees to take up to 12 weeks of leave to care for a spouse or domestic partner with a serious health condition. Employees will be able to use CFRA leave to care for their same-sex spouses with serious health conditions. The law no longer will require married, same-sex couples to comply with the domestic partner registration process.

Similarly, opposite-sex spouses and registered domestic partners are legally “parents” of children born during the marriage/domestic partnership. This definition of “parent” will likely be extended to same-sex couples, which could affect time off for school activities and other leave laws.