Employers will be affected by the U.S. Supreme Court’s impending ruling on the constitutionality of the federal Defense of Marriage Act — no matter how the Court rules. The argument in this case hinges on Section 3 of DOMA and the fact that under DOMA, it is not possible for same-sex spouses to have access to the same benefits and rights as opposite-sex spouses — including employee benefits and leave. The Court heard oral arguments in Windsor v. United States, No. 12-307 on March 27.
The plaintiff, Edith Windsor, challenged DOMA after she had to pay federal estate taxes on an inheritance from her deceased same-sex spouse. Due to DOMA, Windsor is not recognized as a spouse under federal law. Arguing for Windsor were attorneys Vicki Jackson, Sri Srinivasan and Roberta Kaplan, and U.S. Solicitor General Donald B. Verrilli. Arguing for the Bipartisan Legal Advisory Group of the U.S. House of Representatives — the party representing the United States since the U.S. Department of Justice has said it will not defend DOMA, was attorney Paul B. Clement.
Windsor: Standing and Jurisdiction
Most of the opening discussion on standing and jurisdiction focused on background discussed in more detail at the end of this article: DOMA is a federal law, and as such is enforced by the federal government. However, in 2012 the Obama administration announced it would no longer enforce the law after the 2nd U.S. Circuit Court of Appeals held that DOMA discriminates against lesbians and gays. The administration’s stance lead to questions from various justices on circumstances under which the president, U.S. attorney general and U.S. solicitor general have decided not to enforce a federal law because any one of them considered it unconstitutional.
Srinivasan noted that the president determined that DOMA would continue to be enforced out of respect for the Congress that enacted the law and the president who signed it, and out of respect for the role of the judiciary in saying what the law is. He said the federal government had appealed the case to the Supreme Court because the government suffered an injury because a judgment was entered against itin the court of appeals.
Clement also seized on the importance of the case in light of the Obama administration’s stance on enforcing DOMA. “I really don’t understand why…if they’ve made a determination that the law is unconstitutional, why it makes any sense for them to continue to enforce the law and put executive officers in the position of doing something that the president has determined is unconstitutional,” he remarked.
Windsor: The Merits
Clement argued that the matter at issue is narrow: whether the federal government has the same flexibility as the states to define “marriage” in traditional terms, to recognize same-sex marriage or adopt a compromise such as civil unions, or simply to borrow the terms in state law. He expressed the view that “the basic principles of federalism” suggest that as long as the federal government defines those terms solely for purposes of federal law, it may adopt a constitutionally permissible definition or borrow the terms of state laws. Verrilli disputed that view. He argued that given concerns over equal protection of the laws, the federal government should not be thought of as “the 51st state.”
Justice Ginsburg asked Clement what kind of marriage it would be if two people who are married cannot file a joint income tax return, take the marital income tax deduction, designate a spouse as a Social Security beneficiary or get leave from work under federal law to care for a sick spouse. Clement responded that it would be a marriage under state law, and that what that means for purposes of federal law “has always been understood to be a different matter” and that premise is the case in other situations under a number of laws.
Kennedy pointed out to Clement that more than 1,100 federal laws define “marriage” and “spouse,” and in his view that means the federal government is “at real risk of running in conflict with what has always been thought to be the essence of the State police power, which is to regulate marriage, divorce, custody.” Clement countered that so many federal laws defining those terms means that the government has not stayed away from such matters, but has gotten involved when it considered it necessary.
Justice Alito asked Clement if the tax treatment of estates, which favors spouses, was intended to foster traditional marriage or whether Congress was “just looking for a convenient category to capture households that function as a unified economic unit?” Clement responded that Congress had sought to establish a uniform federal deduction based on marriage. He said that Windsor should focus her argument against the tax treatment of her spouse’s estate on New York law, but that it was rational for Congress to say that it wanted to treat a same-sex couple in a state where same-sex marriage is legal in the same way that it treats a same-sex couple in a state where it is not. Justice Breyer disputed the notion that differences between states are so important that Congress must pass a law that establishes uniformity in way that denies tax and other benefits to a significant portion of the population. Justice Kagan commented that “for the most part and historically, the only uniformity that the federal government has pursued is that it’s uniformly recognized the marriages that are recognized by the state.”
Verrilli noted that DOMA is called the Defense of Marriage Act, not the Federal Uniform Marriage Benefits Act. He said that is because DOMA is not directed at uniformity in the administration of federal benefits. Verrilli also disputed that there were administrative benefits to DOMA. “If anything, Section 3 of DOMA makes federal administration more difficult,” he said, “because now the federal government has to look behind valid state marriage licenses and see whether they are about state marriages that are out of compliance with DOMA.”
Sotomayor asked Clement how the federal government has the right to create categories based on an interest that belongs to the states. Clement responded that the federal government has the authority to do so based on whatever authority gives rise to an underlying law, and that the government has many programs that might make the states inclined to change the rules so they can benefit from them. He said that the best way for the government to stay out of the debate and let the states and the democratic process deal with it is for the federal government to say that it is going to stick with the traditional definition of “marriage.”
Clement noted that Congress passed DOMA in 1996 in response to the possibility that Hawaii would redefine marriage. Of this, he said, “They picked the traditional definition that they knew reflected the underlying judgments of every Federal statute on the books at that point. They knew it was the definition that had been tried in every jurisdiction in the United States and hadn’t been tried anywhere until 2004.”
Roberts asked Verrilli if when Congress said “marriage” it had same-sex marriages in mind. Verrilli responded that he did not think so, “but that they may well have had in mind deferring to the normal state definition of ‘marriage,’ whatever it is.”
In response to Roberts, Verilli said that neither DOMA nor a measure in which the federal government recognized same-sex marriage violate federalism. However, he responded to Kennedy that Congress would have to defend a federal measure that regulated marriage in all respects.
Verrilli argued that the equal protection analysis in this case should focus on two fundamental points: (1) what does Section 3 of DOMA do; and (2) to whom does Section 3 do it? As explained in more detail below, Section 3 defines marriage as a legal union between opposite-sex couples. Bur as a result, Verrilli said that Section 3 excludes lawfully married same-sex couples from an array of federal benefits. Said Verilli: “The question is: What is the constitutionality for equal protection purposes, and because it’s unconstitutional and it’s embedded into numerous federal statutes, those statutes will have an unconstitutional effect.”
When asked by Roberts if Congress passed and President Clinton signed DOMA out of “animus,” Verrilli responded that he did not think so, but that “whatever the explanation, whether it’s animus, whether it’s that —more subtle, more unthinking, more reflective kind of discrimination, Section 3 is discrimination.”
How We Got Here
Section 3 of DOMA defines the words “marriage” and “spouse,” for purposes of any act of Congress, as well as any ruling, regulation or interpretation of a U.S. government bureau or agency in the following way:
…the word “marriage” means only a legal union between one man and one woman as husband and wife, and the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.
Among the regulations and rules DOMA affects are those governing tax treatment of estates and inheritances.
Edith Windsor married Thea Spyer in Canada in 2007. Spyer died in 2009; Windsor had to pay federal estate taxes of $363,000 on what she inherited from Spyer, since federal law under DOMA does not recognize her as Syper’s spouse. Windsor sought a refund of the estate taxes, arguingthat DOMA violated the equal protection clause to the 14th Amendment to the U.S. Constitution.
The U.S. District Court for the Southern District of New York in Windsor v. United States (1:10-cv-08435-BSJ-JCF (S.D.N.Y.)) on June 6, 2012 ruled in Windsor’s favor. The district court ruled that DOMA section 3, by which the tax was not waived, is unconstitutional and violated Windsor’s rights under the Equal Protection Clause of the 14th amendment. It ordered that the estate taxes be refunded to Windsor, but stayed the ruling pending appeal.
The 2nd U.S. Circuit Court of Appeals, which has jurisdiction over Connecticut, New York and Vermont, ruled on Oct. 18, 2012 in Windsor v. United States, No. 12-2335-cv(L), slip op (2nd Cir. Oct. 18, 2012). The court said that DOMA discriminates against lesbians and gays and that such discrimination requires heightened scrutiny by the courts.
Although the Obama administration supports the position of the district court and 2nd Circuit, it appealed the case to the Supreme Court. The High Court granted certiorari on Dec. 7, 2012, agreeing to hear the case.
What This Means
DOMA is the underpinning for federal legal and regulatory treatment of marriage, which in turn affects what employers can and may do for employees’ partners and spouses. The legality of same-sex marriage has long posed complications for employers, since it varies greatly between some states and the federal government and even between states themselves.
A finding that DOMA is unconstitutional could have broad implications, including the need for employers to change their human resources and benefits policies and their benefits plans. But how broadly the Court rules will determine what adjustments employers may have to make, and whether they will continue to contend with the administrative complications of divergent federal and state laws on same-sex marriage.
Regardless of how the Supreme Court rules, employers will have to deal with complications regarding same-sex marriage. How much an employer will have to do will depend on the scope of the ruling.
If the Court overturns the 2nd Circuit’s Windsor ruling, employers will have to continue to contend with varying treatment of same-sex marriage and the complications that poses for benefits administration.
This means that employers in states where same-sex marriage is legal will have to continue to contend with: (1) the administrative complexity of favorable state law and tax treatment of same-sex marriage; and (2) federal regulatory and tax treatment that does not recognize same-sex marriage and extends no breaks to same-sex spouses. Employers in states where same-sex marriage is not legal do not have to contend with such complications.
If the Court upholds Windsor and overturns the federal DOMA, that will spell new federal treatment of same-sex marriage under federal law. And in the process it could also invalidate state DOMAs.
But it is possible that if the Court overturns the federal DOMA, it may do so in a way that allows state DOMAs to stand. That would mean continued complications as well since states would then still be able to define marriage as they choose for purposes of their own laws. That means there would continue to be variations between states on how same-sex marriage is recognized and treated, and also variations between federal recognition and the approach of most states.
If the Court overturns Windsor or upholds it but does so in a narrow ruling that does not affect state DOMAs, employers in states where same-sex marriage is legal will have to continue to contend with: (1) the administrative complexity of favorable state law and tax treatment of same-sex marriage; and (2) federal regulatory and tax treatment that does not recognize same-sex marriage and extends no breaks to same-sex spouses.
Employers would be wise to monitor the issue and stay informed in the event that the Supreme Court overturns DOMA. Thompson Information Services will provide coverage of these matters as they develop.