UPDATE — Same-Sex Marriage Benefits

In our May 2008 issue, we discussed the potential implications that the May 15, 2008 California Supreme Court (the “Court”) decision regarding the ability of same-sex couples to get married under the laws of the State of California could have on qualified pension plans, health and welfare plans, and non-qualified deferred compensation plans (collectively, “plans”). The purpose of this article is to provide an update on the status of same-sex marriages in California and the possible consequences for sponsors of such plans.

On June 17, 2008, the State of California began issuing marriage licenses to same-sex couples pur- suant to the Court’s ruling. Between June 17, 2008 and November 4, 2008, over 18,000 same-sex couples were legally married in California. In addition, the ruling affected countless other same-sex couples who live in California and were married in other jurisdictions that recognize same-sex marriages (including, Massachusetts, Canada, Spain, South Africa, Belgium and the Netherlands). According to the Court’s ruling, the State of California will recognize marriages performed in other jurisdictions that recognize same-sex marriages.

In order decrease the uncertainty for participants, beneficiaries and plan administrators that resulted from the Court’s ruling and the limitations on its application by the Federal Defense of Marriage Act, many plan sponsors have amended their plans to clarify whether, and to what extent, they would recognize same-sex marriages for the purposes of determining if the same-sex spouse of a participant would be considered a “spouse” for certain features of the plans. (See our May 2008 article for a more complete discussion of the issues involved in deciding whether and to what extent plans may recognize same-sex marriages.)

In October 2008, Connecticut became the third state to recognize same-sex marriages. In a case similar to the one in California, the Connecticut Supreme Court ruled that it was against the Connecticut Constitution to deny same-sex couples the right to marry. Pursuant to that decision, Connecticut began issuing marriage licenses to same-sex couples on November 12, 2008.

In the meantime, Proposition 8 was put on the November 4, 2008 California ballot, and was passed by the California voters by a slim margin (52% to 48%). Proposition 8 amended the Constitution of the State of California to state that only marriages between one man and one woman would be recognized in the State of California. As a result, the State of California ceased issuing marriage licenses to same-sex couples on November 5, 2008 (the date Proposition 8 became effective).

Also on November 5, 2008, three separate lawsuits were filed with the Court in response to the passage of Proposition 8. The lawsuits ask the Court to:

  • invalidate Proposition 8 on the grounds that it is not an amendment to the Constitution, but a revision of the Constitution (which requires legislative action rather than a mere majority vote of the electorate); and
  • issue an immediate stay of the implementation of Proposition 8 (to remain in effect until the Court determines its validity). These lawsuits have either been joined by or are supported by dozens of cities, counties and elected officials, including Governor Schwarzenegger.

In a 6–1 vote, the Court agreed to consolidate and consider the cases. However, the Court refused to issue the requested immediate stay order. In addition, the Court agreed to rule on whether the 18,000 marriages that took place between June 17, 2008 and November 4, 2008 would be valid if the Court decides to enforce Proposition 8 as an appropriate amendment to the California Constitution. Interestingly, the plaintiffs did not ask the Court to decide if the passage of Proposition 8 affects the marriages that already took place. In fact, Secretary of State Jerry Brown stated in his opposition to the plaintiffs’ request for the Court to hear the case that the State of California believes that those 18,000 marriages are valid and unaffected by the passage of Proposition 8. In any event, the Court has decided that it will address this issue, which should provide all interested parties with clear guidance on this complicated issue.

The Court could hear oral arguments in the case as early as March 2009. The Court must issue its decision within 90 days of the oral arguments. As a result we may know the fate of California same-sex marriages by June 2009, one year after California began issuing marriage licenses to same-sex couples.

So, how do these events affect plan sponsors? At this time, the 18,000 same-sex couples who married between June 17, 2008 and before November 5, 2008 are still validly married. As stated above, many plan sponsors have already amended their plans to state whether, and to what extent, the plans will recognize same-sex marriages. Other plan sponsors, however, have deferred the decision regarding how to handle same-sex marriages in their plans until after the Court makes a decision in the case. Either way, plan sponsors should ensure that the administrators of their plans are aware of the decision they have made, in case a claim for benefits based on “same-sex” marital status is filed before the Court issues its ruling.

Please contact us if you would like to discuss this issue.