It’s been a year since the Supreme Court came down against Federal discrimination against married, same-sex couples in U.S. v. Windsor. Now IRS and the Department of Labor are catching up.
The Feds have issued updates to account for the historic Supreme Court ruling — and in some circumstances extended it even further – to offer equal treatment when it comes to employee benefits.
The two new areas you’ll need to revisit in your own company:
- The Family and Medical Leave Act (FMLA), and
- retirement plans.
Here’s the latest and how to ensure your company stays in compliance with all your employees.
Change 1: To the FMLA
Heads up: It will no longer matter whether or not your business or your same-sex married employee is located in a state that recognizes same sex-marriage in order for that individual to be eligible to take FMLA leave.
Proposed new rules from the Department of Labor would expand who can take advantage of that federal benefit– and who they can take it for.
Under the revised rules, as long as an employee got married in a state that recognize same-sex marriage, your company will need to as well for the purpose of FMLA eligibility. That means if they got married in one of these states, they’re entitled:
- New Hampshire
- New Jersey
- New Mexico
- New York
- Rhode Island
- Vermont, and
And if an employee left the country to get married, that will count, too. You’ll have to recognize same-sex marriages for FMLA eligibility if they took place in: Argentina, Belgium, Brazil, Canada, Denmark, England/Wales/Scotland, France, Iceland, the Netherlands, New Zealand, Norway, Portugal, Spain, South Africa, Sweden and Uruguay.
Note: Keep an eye out as this list is bound to grow considering how many other states and countries are considering legalizing same sex unions.
Not only would you now be required to grant leave to care for a spouse, but for the family members attached to a same sex spouse, notes the Department of Labor in the proposed rule changes.
For example, employees would be eligible for FMLA leave to care for an ailing step-child or step-parent of a same-sex spouse. Also, if you have any employees with a same-sex spouse in the military, you’d be required to let that person take “qualifying exigency leave” because of their same-sex spouse’s covered military service.
There’s still some time. You’re not bound by these changes just yet. The rule is out for a 45-day comment period, so there may be some adjustments to the final version.
Info: To read the Department of Labor’s announcement of proposed rulemaking, click
Change 2: To retirement plans
The DOL isn’t the only federal agency attempting to make parity with Windsor — IRS is acting now, as well.
IRS Notice 2014-19 spells out how U.S. v. Windsor applies to qualified retirement plans.
Several Internal Revenue Code (IRC) sections refer to married individuals, which now include same-sex spouses, who participate in qualified retirement plans.
That may be relevant when your company calculates the compensation of a key employee, for example. According to IRC 318(a)(1), when determining if an employee is a key employee, including whether an employee is a 5% owner, “a spouse is treated as owning shares owned by the other spouse.”
That could impact whether your company’s defined contribution plan becomes taxable. Remember, a plan may become taxable if it’s top-heavy, meaning it disproportionately benefits higher paid employees – i.e., key employees. So that expanded definition is critical.
Info: IRS Notice 2014-19