On Friday, the Supreme Court of the United States issued its long-awaited opinion in the Obergefell case, striking down bans on same-sex marriage as unconstitutional and legalizing same-sex marriage in every state. We posted earlier this year that a federal district court struck down Alabama’s same-sex marriage ban as unconstitutional, after which counties began issuing marriage licenses to same-sex couples. Shortly thereafter, the Alabama Supreme Court ordered a halt to the issuance of marriage licenses to same-sex couples. The U.S. Supreme Court’s opinion Friday ended any confusion on same-sex marriage in Alabama.
So, what does the Obergefell decision mean for employers? Above all, it simplifies the meaning of the word “spouse.” Employers with employees in more than one state faced a patchwork of state and federal laws as to whether a same-sex spouse was a legal spouse, and if so, the legal ramifications in each state. The inconsistency in state law also muddled Family and Medical Leave Act (FMLA) issues. The FMLA entitles eligible employees to take unpaid leave to “care for a spouse, son, daughter, or parent who has a serious health condition.” For the FMLA, the United States Department of Labor (DOL) previously defined spouse as “a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including ‘common law’ marriage and same-sex marriage.” Now, no matter the state, a spouse is a spouse.
As a general rule, employers offering fully insured health benefits will now be required by state insurance laws to offer them to all spouses. However, self-insured employers are in a different position. Generally, self-insured employers are not required to offer spousal coverage and federal law does not necessarily dictate which spouses, if any, must be covered. Although self-insured plans may not be not legally required to cover same-sex spouses, self-insured employers must carefully consider the risk of a discrimination claim for exclusion based on sexual orientation. While federal law has not (yet) established sexual orientation as its own protected category, the EEOC has found sexual orientation discrimination to fall under sex-based discrimination.
Now that states will uniformly recognize same-sex marriages, employers that previously offered benefits to same-sex domestic partners may decide to cut down or eliminate that category of benefits. This change could also affect unmarried opposite-sex couples.
While many are celebrating Friday’s ruling, some employers may prefer to not cover same-sex spouses, either for fear of heightened expenses or due to religious objections. If an employer is determined not to cover same-sex spouses, the best option is probably to eliminate benefits coverage for spouses altogether. This may prove to be an unintended consequence of the change in the law.