On June 26, 2013, the US Supreme Court issued two high-profile rulings involving same-sex marriage. The decisions will have significant implications for health and retirement plan administration, in addition to other employment-related consequences. In United States v. Windsor, the Court held that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional on Fifth Amendment grounds. Section 3 defined the terms "spouse" and "marriage" for purposes of federal law (including the Internal Revenue Code, ERISA and the FMLA) as being solely between one man and one woman. Notably, the case did not involve the constitutionality of DOMA's other operative provision, Section 2, which allows states to refuse to recognize same-sex marriages performed under the laws of other states. In Hollingsworth v. Perry, the Court held that the supporters of California's Proposition 8, which barred same-sex marriage in that state, lacked standing to defend it in federal court, and therefore could not appeal a district court decision declaring Proposition 8 unconstitutional.

The plaintiff in Windsor, the surviving spouse of a same-sex marriage performed in Canada and recognized as valid in New York, was barred by DOMA Section 3 from claiming the federal estate tax exemption for surviving spouses. The plaintiff paid the applicable estate taxes, but was denied a refund by the IRS, which concluded that she was not a "surviving spouse" under DOMA. The plaintiff then brought suit for the refund in district court, arguing that Section 3 violated her equal protection rights, as applied to the federal government through the Fifth Amendment.

While the suit was pending, the US Department of Justice informed the House of Representatives that it would no longer defend Section 3's constitutionality. However, the Bipartisan Legal Advisory Group (BLAG) of the House of Representatives voted to intervene in the litigation. The district court:

Applying heightened scrutiny to classifications based on sexual orientation, the Second Circuit affirmed the district court and the Supreme Court agreed to review the case.

As a preliminary matter, the Court addressed whether the government and BLAG had standing to appeal to the Second Circuit and appear as parties before the Court. The Court concluded that Article III and "prudential" standing requirements were satisfied because, among other reasons, the district court's order required the US Treasury to pay money it would not otherwise disburse but for the order.

Affirming the Second Circuit on the merits, the Court held that DOMA Section 3 violated protections under the Fifth Amendment and was therefore unconstitutional. Analyzing Section 3 on equal protection grounds, the Court reasoned that the law improperly singled out a class of individuals in same-sex marriages that were lawful under state law. The Court noted that Section 3 implicated over 1,000 federal statutes and federal regulations, including Social Security, government healthcare benefits, bankruptcy protections, veterans' benefits and tax rules.

Assessing DOMA's design, purpose and effect, the Court emphasized that the federal government had historically deferred to state-law policy decisions regarding domestic relations. The Court noted that DOMA, owing to its sheer scope, was a departure from the tradition of relying on state law to define marriage.

The majority stated that its opinion and holding are limited to same-sex marriages that are lawful in a state.

The other same-sex marriage case before the Court, Hollingsworth v. Perry, involved a challenge to California's Proposition 8, a ballot initiative that amended California's constitution to provide that "[o]nly marriage between a man and a woman is valid or recognized in California." Proposition 8 was challenged in federal court on due process and equal protection grounds by two same-sex couples that wanted to marry. However, the California officials named in the plaintiffs' suit — California's governor, attorney general and other state and local officials — refused to defend Proposition 8, although they continued to enforce the law. Proponents of Proposition 8 then intervened in the case to defend the initiative. Following a bench trial, the US District Court for the Northern District of California:

On appeal, the US Court of Appeals for the Ninth Circuit:

The Ninth Circuit concluded that the proponents had standing to defend Proposition 8's constitutionality in federal court, but affirmed the district court's holding on the merits. The Supreme Court agreed to review the Ninth Circuit's decision.

In Hollingsworth v. Perry, the Court held that the proponents lacked standing to defend Proposition 8 in federal court, and that the Ninth Circuit therefore lacked jurisdiction to consider their appeal. The Court reasoned that the proponents had no "direct stake" in the outcome of their appeal, and that their only interest in having the district order reversed was to vindicate the constitutionality of a generally applicable state law. According to the Court, once Proposition 8 was approved by voters, the proponents had no role (special or otherwise) in the law's enforcement. The Court vacated the Ninth Circuit's judgment and remanded the case with instructions to dismiss for lack of jurisdiction.

Also on June 26, the California State Registrar (Department of Public Health) issued a letter concluding that county clerks and recorders should not issue marriage licenses to same-sex couples until the Ninth Circuit addresses the status of the district court's injunction (which was stayed pending resolution of the case) barring state officials from enforcing the ban on same-sex marriage.

From an employee benefits perspective, the Court’s DOMA Section 3 decision – which arrives mid-year for calendar year plans – raises many questions and will have a significant impact on plan administration. In states that recognize same-sex marriage, legally married same-sex spouses will now be treated as spouses for purposes of the federal tax code, ERISA (including COBRA) and other federal laws. (It is unclear whether the Court’s ruling will apply retroactively.) At present, twelve states (thirteen, if California is added to the list) and the District of Columbia recognize same-sex marriage. It is also unclear how the decision will apply in those states that do not currently recognize same-sex marriage. For example, it is uncertain how the decision will apply for a same-sex couple that was lawfully married in a state that recognizes same-sex marriage when that couple relocates to a state that does not recognize same-sex marriage.

These issues, and others, will likely be the topic of future guidance from the regulating agencies. The IRS, for example, has stated that it:

The DOMA ruling also raises implications under other federal laws. For example, married same-sex couples may now seek benefits under the immigration laws with the same rights as heterosexual married couples. Those benefits include green card sponsorship or waiver eligibility based on marriage to a US citizen or lawful permanent resident, a nonimmigrant fiancée visa or dependent nonimmigrant visa status to accompany spouses who are temporary US visitors or workers. United States Citizenship and Immigration Services (USCIS) has issued a statement on the implementation of Windsor.

Additionally, prior to the Court's DOMA decision, the DOL had concluded in a November 1998 opinion letter that "[b]ecause FMLA is a Federal law, it is our interpretation that only the Federal definition of marriage and spouse as established under DOMA may be recognized for FMLA leave purposes." (Wage and Hour Opinion Letter FMLA -98 (Nov. 18, 1998)). As a result of the Court's DOMA Section 3 decision, the regulatory language deferring to state law on the definition of "spouse" may now govern, although the DOL has not yet opined on the impact of the decision.