Employment-Related Issues Connected to

Same-Sex Marriage


by Laura Mueller, Attorney


June 2009 -- On April 3, 2009, the Iowa Supreme Court upheld a 2007 Iowa district court ruling that determined it is unconstitutional to bar same-sex couples from the institution of marriage. This overturned Iowa law that ultimately defined marriage as a legal union between a man and a woman.

The new right bestowed on same-sex couples to obtain marriage licenses in Iowa implicates many legal questions for employers across the state. Some such issues employers should be aware of include the following.


Federal Law/The Federal Defense of Marriage Act

The federal Defense of Marriage Act ("DOMA") defines "marriage" as a heterosexual union and defines "spouse" as "a person of the opposite sex who is a husband or a wife." These definitions apply for purposes of all federal laws, including ERISA (Employee Retirement Income Security Act) and the Internal Revenue Code. Accordingly, same-sex couples (whether married or protected by another’s state’s domestic partnership laws) are not protected by federal laws such as COBRA (continued health coverage for individuals who lost their job), HIPAA (health information privacy), ERISA (retirement security), FMLA (family and medical leave), and the like (but could be protected by states’ counterparts to those laws, where they exist). Similarly, same-sex married couples will not experience the favorable federal tax treatment enjoyed by their heterosexual counterparts. However, DOMA doesn’t prohibit an employer from voluntarily extending coverage and benefits to same-sex spouses, even though such benefits may not come with the same federal tax incentives and other cost savings available to heterosexual married couples. As a result, Iowa employers may find themselves in the unique position of recognizing an employee as married for some, but not all, purposes.


Interplay Between DOMA and Iowa’s Civil Rights Act

In the 2007 legislative session, the Iowa legislature passed a bill amending Chapter 216 of the Iowa Civil Rights Act to protect against discrimination on the basis of sexual orientation and gender identity in employment, public accommodations, credit, housing, and education. The law became effective on July 1, 2007.

At first glance, interplay of that law with the new same-sex marriage ruling would suggest that employees in same-sex marriages should be able to enjoy all the same employment benefits enjoyed by their heterosexual counterparts. However, that actually will not always be the case. Unquestionably, employment policies that grant spousal benefits to employees not required or governed by federal law (e.g., bereavement leave) will need to be expanded to provide the same rights for same-sex couples. Alternatively, policies and programs governed by federal law will likely preempt our state civil rights statute.

What this may mean for Iowa employers is two-fold: (1) we suspect there will be an increase in civil rights claims by employees arguing that employment benefits are not being extended to their same sex spouses in parity to those given to heterosexual spouses of employees; and (2) as a result, the Iowa legislature may follow many other states in creating a state family and medical leave act and other laws to mirror federal laws which will grant employees involved in same-sex marriages greater equality in Iowa workplaces.


Retirement Plans/ERISA

Iowa’s same-sex marriage ruling will have limited, if any, effect on most employer-sponsored pension plans on account of DOMA because most funded retirement plans are governed by ERISA, a federal law. The spousal rights contained in ERISA will not apply to same-sex couples. For example, a retirement plan would not be required to provide death benefits protection to a surviving same-sex spouse.

  • NOTE: Although not required by federal law, employers could work with their plan administrators to voluntarily extend certain (but not all) spousal benefits to same-sex couples. However, as described below, the tax ramifications connected with participation in the plans may be different for heterosexual and same-sex married couples.

Health Benefits

Employee benefits plans covered by ERISA preempt our state law such that, for example, a same-sex spouse participating in family coverage under an ERISA-governed self-insured group plan is not entitled to a federal pretax deduction for the cost of the premium. However, ERISA has a “savings clause” that provides that it does not preempt state laws relating to insurance. Thus, employee benefit plans that offer coverage through an insurance contract (including contracts for health, dental, vision, and life insurance, as examples) subject to the insurance laws of a state, like Iowa, that recognizes same-sex marriage may have obligations to same-sex couples. That being said, businesses that are self-insured are governed by ERISA and do not have obligations under state law, even if the plan is administered by an insurance company such as Blue Cross Blue Shield.

  • NOTE: Employers governed by COBRA are not required to offer continuing coverage to a same-sex spouse of an employee, even though, under some circumstances, they will be required to offer the actual insurance coverage. However, under Iowa’s mini-COBRA, smaller qualifying employers not covered by federal COBRA laws will have extended insurance coverage obligations.

Family Medical Leave

Given DOMA, the general consensus is that the Family Medical Leave Act (FMLA) does not require equal treatment between same-sex and heterosexual married couples. However, given Iowa’s civil rights law, this will likely be brought to the courts. Accordingly, employers could in the meantime decide to voluntarily offer medical leave to an employee to care for his or her same-sex spouse. Before instituting such a policy, however, employers must be aware that such leave would not count against the 12 weeks of leave per year that must be provided to employees under the FMLA and, accordingly, the employee could be entitled to an additional 12 weeks of leave to care for a family member for an FMLA-qualifying reason.


Tax Consequences Highlights

The Internal Revenue Code adopts the definition of "spouse" from DOMA and excludes same-sex spouses. Consequently, an employee or his/her spouse may be taxed on typically excludable "spousal" benefits unless another basis for exclusion exists [for example, if an employee can establish that his same-sex spouse is a dependent (a very high standard), s/he may still be able to enjoy federal tax savings].

Here are a few more highlights:

  • The value of health insurance benefits (in the context of an ERISA-governed program and not a state-regulated insurance program, as discussed above) from an employer for an employee’s same-sex spouse will be considered income to the employee for federal income tax purposes.
  • If contributions are made to a cafeteria plan (section 125 [federal]) on a pre-tax basis for a same-sex spouse, the full value of the coverage, including the pre-tax contributions, must be imputed to the employee for federal tax purposes.
  • To calculate state taxes, employers may have to subtract any income imputed to the employee for federal tax purposes, which will create an additional administrative hurdle.

Human Resources Policies

Given that civil rights protections were extended to individuals on the basis of their sexual orientation by the Iowa legislature in 2007, employers should have already audited employment manuals and policies to ensure they are not discriminatory on the basis of sexual orientation. The documents should be reviewed again to identify policies and practices that apply uniquely to married employees to ensure that, as worded, they can now be applied equally to same-sex married couples (or alternatively, if the policy in question is governed by federal law, that it is clear it only applies to heterosexual married couples).

Additionally, employers should review new employee forms, benefit plan enrollment forms, etc. to ensure, where necessary, they are gender neutral in relation to identification of marital status and spouse.

Employers should work with their insurance agents and benefit plan administrators to understand (and change, if needed) the definitions of "spouse" in those plans (i.e., now that same-sex marriage is legal in Iowa, if a federal plan that is not required to recognize same-sex marriage merely refers to a "legal spouse," an employee could argue the employer is voluntarily making the benefit available to individuals in same-sex marriages).


Other Points of Interest

  • As a state program, workers' compensation death benefits will be extended to a same-sex spouse.
  • The federal government will not respect a same-sex marriage for purposes of immigration protections (i.e., spousal filings).
  • Anticipate and be prepared to address inappropriate responses from supervisors or co-workers about an employee's same-sex marriage.

How to Use the Law to Your Advantage

The same-sex marriage ruling, and even further, the offer of additional voluntary employer-sponsored benefits to same-sex couples, can be harnessed by employers in a bid to attract employees and ensure a dynamic and diverse workforce.


To Do

Employers are advised to meet with their accountant/tax attorney, outside payroll administrator, unions involved in the workforce, and insurance agents for assistance in reviewing documents to ensure compliance with the law.

Laura Mueller is available to answer your questions regarding employment-related issues and same-sex marriage. She can be reached at (319) 861-8721.