Regardless of whether your state recognizes same-sex marriage, the Supreme Court's declaration of the federal Defense of Marriage Act (DOMA) as unconstitutional will have an impact on your business if you have employees. Since the death of DOMA means that marriage will no longer be federally defined as a union between a man and a woman, the Small Business Administration has recommended that employers start taking action now ensure that all spouses, regardless of their sex, receive equal access to employee benefits.
In a recent article on the SBA website, author Barbara Weltman explains what employers should do in regards to wage withholding, fringe benefits and employment-related laws in order to avoid any future potential discrimination claims. Same-sex married employees that have had to file as single for payroll withholding may need to fill out a new W-4 form to reflect their status as a married person. The discrepancy of legal marriage based on where the couple was married versus the couple's current place of residence can make tax rules and other benefit definitions confusing for employers. However, Weltman notes that the IRS and other federal agencies are currently developing guidelines to clarify rules for couples that work and/or reside outside of the 13 states or the District of Columbia that currently recognize same-sex marriage. Depending on the outcome of this, an employee may have a differing marital status for their state and federal tax withholdings.
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Fringe benefits will also be affected by the federal recognition of same-sex marriage. If you offer a 401(k) or other retirement plan to your employees, Weltman suggests meeting with your benefits adviser to review your plan documents and determine if the language must be revised to make it clear that the provisions are applied to all spouses. Any health coverage benefits offered to employee spouses must be extended to same-sex spouses, and a same-sex marriage should be viewed as a status change that allows a spouses to be added to health plans during the year. Additionally, if your employees are given flexible spending accounts (FSAs), unreimbursed spouse medical costs can be covered through these accounts. As with tax status, individual state recognition of same-sex marriage may cause a discrepancy in coverage policies. Weltman also noted that the section of the Family and Medical Leave Act (FMLA) which allows for unpaid leave time due to spouse illness must now be applied with respect to all spouses.
Even in states that don't recognize same-sex marriages, it's a good idea for employers to look ahead and anticipate the effects of the DOMA decision. Since the June 26 ruling, several states have launched campaigns in support of marriage equality that were only brought forth as a result of the Supreme Court's declaration. Ensuring that your company's policies and documents are in line with the federal ruling now will make the transition much easier if your state legalizes same-sex marriage.