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California
supreme court ruling on same-sex
marriage
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On May 15, 2008, the California Supreme Court rejected the
State's ban on same-sex marriage, holding that preventing same-sex
couples from marrying is unconstitutional (In re Marriage Cases, Cal., No. S147999, 5/15/08). On a 4-3 vote, the court invalidated the voter-approved Proposition 22 defining marriage as a union between a man and a woman. |
Background - San Francisco and Same Sex Marriage
The court struck down Family Code Section 300(a) created by Prop. 22 defining marriage as
"a personal relation arising out of a civil contract between a man and a woman, to which the
consent of the parties capable of making that contract is necessary."
The decision comes four years after San Francisco Mayor Gavin Newsom ordered the city to
begin providing marriage licenses to same-sex couples. More than 3,000 marriage licenses were issued to
same-sex couples starting on Feb. 12, 2004, until the California Supreme Court ordered San Francisco to stop issuing marriage licenses to same-sex couples pending its ruling on the legality of such practice.
The California Court of Appeal in October 2006 overturned a trial court, ruling the California
"man and a woman" clause unconstitutional (In re Marriage Cases, Calif. Ct. App., Nos. A110449-51,
A110463, & A110651&2, 10/5/06). San Francisco appealed.
Federal Defense of Marriage Act Limits Ruling’s Impact on Employee Benefits
The impact on the provision of benefits to domestic partners is not necessarily changed
with the court's ruling. Julie Burbank, an attorney with benefits firm Trucker Huss in San
Francisco, said most employers have Employee Retirement Income Security Act plans and
are covered by the Defense of Marriage Act (DOMA).
"We're subject to the Internal Revenue Code in most cases, and unfortunately, because of
DOMA, even though California says a same-sex spouse is a spouse, DOMA says marriage is
a union between a man and a woman," said Burbank, "So for purposes of ERISA and
the Internal Revenue Code, we still can't read spouse to include a same-sex
spouse."
Employers can include employees' same-sex partners in self-funded medical and dental
plans and life insurance plans, she said. And since California enacted the Domestic Partner
Rights and Responsibility Act in 2003, the State has read the law to mean a domestic
partner as spouse, Burbank said.
No Federal Tax Change
But, Burbank added, "California law can't change the federal tax code, so while an employer
can certainly provide the health and welfare benefits without a problem, the
same-sex partners in California will still have imputed income for the employer for code Section 105
and 106."
Employers can still offer such benefits, Burbank said, but "for the federal purposes, they're
still not a spouse regardless of what California says," and thus have to pay taxes on such
benefits.
Any change is up to Congress, which would have to overturn DOMA, "and that's kind of
difficult," said William Sweetnam Jr., a partner at the Groom Law Group in Washington, D.C.
IRS "would not have the authority to do anything that would sort of mirror" the California
court's conclusion, said Sweetnam, formerly the Benefits Tax Counsel in the Treasury
Department's Office of Tax Policy.
People are still trying to figure out issues such as whether a domestic partner is considered
a dependent, Sweetnam said. "And sometimes, even taking the current rules and working
your way through the current rules, you're not going to find an easy result. And that easy
result can only come if Congress decides it," he added.
The California court's decision is "going to bring some sort of pressure, but I would actually
be shocked if in the short run Congress made any sort of change," said Sweetnam.
California enacted legislation that gives registered domestic partners many of the equivalent
benefits offered to spouses. Senate Bill 1827 which took effect Jan. 1, 2007, requires RDPs
to file as married either jointly or separately.
This was the first year California same-sex couples could file joint tax returns, but couples
had to file separate federal returns, a joint dummy federal return, and joint and separate state
tax returns, Burbank said.
Potential Challenges to the Ruling
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San Francisco City Attorney Dennis Herrera noted that seven of California's eight largest cities filed briefs supporting San Francisco.
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Gov. Arnold Schwarzenegger (R) said he respects and will uphold the court's decision.
"Also, as I have said in the past, I will not support an amendment to the [state] constitution that would overturn this state Supreme Court ruling," Schwarzenegger said in a statement.
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Same-sex marriage opponents have submitted more than 1.1 million signatures for certification for a proposed November initiative that would undo the court's decision.
What Employers Need to Do
The outcome of the recent legislation has no marked effect for employers, employees or domestic partners but will keep the issue on the front burner at the federal level. California employers may continue to provide health and welfare benefits to
same-sex couples, domestic partners will still have federal imputed income and federal agencies will continue to define marriage as a union between a man and a woman.
Listed below are prudent action steps and speaking points for you to consider:
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Communicate that the recent ruling has a marginal impact to
same-sex domestic partners as it relates to employee benefits.
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Calculate imputed income for employees covering
same-sex partners.
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Anticipate increased activity effective Tuesday, June 17th the date in which State officials have said county clerks may begin marrying same-sex couples.
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Domestic partners do not need to dissolve previously filed legal partnerships in order to marry.
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Watch for an update at the end of June when California’s secretary of state determines if a recent ballot initiative seeking to put the gay-marriage amendment on the ballot has gathered enough signatures.
Additional
Information
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