Benefits administration in the era of same-sex marriage

The advent of state-recognized same-sex marriage in Massachusetts earlier this year creates a number of perplexing questions for employers in neighboring states that may employ Massachusetts residents.

You can reduce this uncertainty by considering this matter in a three-step manner:

• Understanding the laws that apply

• Identifying the options that are available

• Updating your benefits documentation and practices to clearly and accurately implement those choices you make

First, remember that this is a change to Massachusetts law. It is only the commonwealth of Massachusetts, and those subject to its laws – to the extent that those laws are not pre-empted by federal law – that are required to recognize the validity of same-sex marriage.

The federal Defense of Marriage Act makes clear that for the purposes of all federal legislation, only the union of one man and one woman can be considered a marriage. Further, Maine and New Hampshire have statutes that not only prohibit same-sex marriage but effectively prohibit the recognition of otherwise valid same-sex spouses as spouses in these states.

Does this mean that no issues are created for employers in these states by the developments in Massachusetts? No, but it does limit the issues primarily to those of employee relations and communications, rather than legal exposure.

While you cannot grant to a Massachusetts employee’s same-sex spouse any benefits reserved exclusively for spouses, neither are you required to exclude them from benefits that are only typically reserved for spouses. Consider each benefit that depends upon or applies to a spouse, and ask “do I want to extend this — to the extent permissible — to Massachusetts same-sex spouses?”

Remember that the choices here may affect your non-Massachusetts employees as well.

For example, the extension of benefits to domestic partners might not only encompass Massachusetts same-sex spouses, but also other unmarried persons in relationships with your employees. Benefits also could be limited to “dependents” as defined in the tax code, avoiding the possibly complicated tax reporting issues that could otherwise arise.

No matter what you choose to do, you will need to make changes to certain practices, and it is advisable that you update all of your documentation. At a minimum, you need to be able to distinguish employees who are married to same-sex spouses from other married employees.

If an employee lives in Massachusetts and informs you that he is married, you may need to ask the follow-up question of the gender of his spouse. Otherwise you risk violating state and/or federal law in your treatment of the spouse. If your new-hire paperwork only asks for marital status and the name of the spouse, then John Smith of Methuen, Mass., who honestly and accurately tells you he is married to Pat Smith, could present some problems.

Ideally, every instance of the words “spouse,” “married,” “husband” and “wife” in any of your benefits documents or forms should be reviewed. Wherever possible you want to make clear how a Massachusetts same-sex spouse is intended to be treated under such provision.

David Phillips, an associate at the Concord law firm of Gallagher, Callahan & Gartrell, practices law in the areas of taxation and employee benefits. For more information, call 800 528-1181 or e-mail or Phillips@gcglaw.com.