Is your business located in one of the 13 states that recognize same-sex marriage? If you have an employee who’s married to someone of the same sex, then HR questions are coming your way – and fast.
Howard Bye-Torre, an employee benefits attorney with Stoel Rives and a contributing author of the Employee Benefits Institute of America’s “Employee Benefits for Domestic Partners” guide, says the Supreme Court’s decision to repeal the Defense of Marriage Act raises a number of questions for employers that won’t really be answered for a while.
“We’re on hold basically to see what the federal government will do,” says Bye-Torre, who says the IRS and the Department of Labor will need to put out guidelines to instruct employers.
“Obama said he’s directed his cabinet to get moving on the changes and to get guidance out there,” he says, but adds that federal agencies are already grappling with guidelines for ObamaCare, so it may take a while.
In the meantime? Bye-Torre says the best thing business owners can do is get in touch with their accountants and their lawyers, and get the conversation started on what changes could be coming down the pike.
3 Things to Know for SMBs in States Where Same-Sex Marriage Is Legal
No. 1: Health coverage for same-sex spouses will no longer be taxed.
Employers who extend health-care benefits to same-sex spouses of employees are right now responsible for withholding federal income tax and unemployment tax on the value of that coverage. “These benefits can now be provided on a tax-free basis,” says Bye-Torre, which will cut down on administrative work for business owners.
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No. 2: Pension plans will be affected.
Employers who offer pension plans will now have to offer same-sex spouses the same rights that opposite-sex spouses have.
No. 3: Rules may depend on your health insurance policy.
Bye-Torre says that for businesses that buy health-insurance policies through the state insurance commission, the coverage extends automatically to same-sex spouses. “But if they self-fund benefits, they will still have the option of whether to provide benefits for just opposite-sex spouses or if they want to provide benefits to both,” says Bye-Torre, who notes that there’s no federal law that protects gay and lesbian individuals from discrimination.
For SMBs in states where same-sex marriage is not legal, Bye-Torre says there’s more of a gray area as to how the Supreme Court ruling will affect benefits.
“It’s essentially wait-and-see,” says Bye-Torre, as some laws are written based on the state where couples live, and some laws look to the state where the marriage occurred. This makes it difficult to understand what the ruling means for a gay couple who may have gotten married in New York, where same-sex marriage is legal, but who resides in Alabama, where it is not.
Bye-Torre says it gets even murkier for businesses that operate in multiple states – which is why more guidance is needed from the federal agencies that enforce the law.
That said, Bye-Torre says the repeal of DOMA may be a boon for small businesses that employ staffers in same-sex marriages.
“Some of the biggest employers have been doing what they call a ‘gross-up,’ which is that they paid their employees extra wages to reimburse them for the extra federal income tax they were paying on health coverage,” explains Bye-Torre. Now that same-sex spouses won’t be taxed on that coverage, Bye-Torre says penny-pinching small businesses will be better able to compete with the big guys for employees.