The Aftermath of DOMA: Sales Boon, HR Burden?

The day before I sat down to write this month’s column, the U.S. Supreme Court announced two highly anticipated and hotly debated decisions: Hollingsworth v. Perry and United States v. Windsor. In Hollingsworth, the Supreme Court declined to decide whether to reverse the California courts’ rulings that Proposition 8 is unconstitutional because its proponents lacked the authority to appeal the issue. In Windsor, the Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA), which had defined marriage as a union between one man and one woman. While these decisions and their dissents will give legal analysts and commentators grist for years to come, from the public’s perspective the net effect is simple: The Supreme Court has forged a clear pathway for widespread legalization of same-sex marriage.

For the readers of this magazine, that pathway translates (hopefully) into a very positive thing: increased sales. Like all newlyweds, these brides and grooms will want to furnish their homes, register for wedding gifts and plan celebrations.

But what has sales teams jumping for joy has human-resource departments scratching their heads. By vigorously defending each state’s right to establish its own definition of marriage and by striking down a uniform federal definition that was contrary to certain electorates’ desires, the Supreme Court also laid the groundwork for ever-shifting mounds of HR paperwork. Among the programs now in potential upheaval are employment benefits (including COBRA), Family Medical Leave Act (FMLA) eligibility, spousal health benefits, and surviving-spouse social security benefits. Companies may need to modify plan documents, amend benefit election forms and, potentially, make other operational changes.

Employers and employees are understandably focused on health care, which was already shifting to accommodate the requirements of the Affordable Care Act. Employers will need to re-examine current health coverage offerings for same-sex domestic partners—benefits that, at least in states that recognize same-sex marriage, may be challenged by activist groups on the basis that they provide an additional (read: unfair) benefit to same-sex employees. Moreover, under the Health Insurance Portability and Accountability Act (HIPAA), marriage qualifies as a change in status that allows an employee to make a plan change outside the annual open enrollment period.

And let’s not lose sight of the fact that the Supreme Court ruled that Section 3 of DOMA was unconstitutional, which means it was unenforceable from Day One. So employees who were previously denied benefits under DOMA may start making retroactive claims.

Some companies are fortunate to be ahead of the curve. According to Jacqueline Fagan, vice president of human resources for Lifetime Brands: “Our plan documents were written in New York, and we have long offered benefits to same-sex domestic partners.  We currently do have offices in states that both recognize and do not recognize same-sex marriage. For us, the biggest change will be the maintenance of our administration of imputed income for those employees who live in states that still do not recognize same-sex marriage and those states that do permit it.”

But not all companies are as prepared as Lifetime Brands. What will happen, for example, when an employee marries his or her partner in a state that permits it and then, years later, is transferred to an office in a state that does not? Is the employee still entitled to married status for federal purposes even though he/she is now living in a state that does not consider his/her marriage valid? And does the transferee state’s position on same-sex marriage give the employee a legitimate basis to refuse to relocate?

These and other questions undoubtedly will be tested and it may take years, if not decades, to establish a workable system for multi-state employers and employees.

But for now, let’s all celebrate the sales boost that is almost sure to come.

Kristi Davidson is a shareholder in the New York City office of Buchanan Ingersoll & Rooney. She can be reached at kristi.davidson@bipc.com.

Editor’s Note: The comments are those of the author and are not necessarily views shared by HFN or Macfadden Communications.