Two of a kind: What employers need to know about Obergefell and same-sex marriage Tuesday, September 22, 2015
Speakers Shafeeqa Giarratani, Partner Partner Shafeeqa Giarratani, an Austin native, practices in the employment and labor, appellate and litigation groups. She represents employers in federal and state court and before administrative agencies and regulatory agencies such as the Equal Employment Opportunity Commission, the Texas Workforce Commission, and the Office of Federal Contract Compliance Programs. She is a strong advocate for her clients and regularly handles litigation matters at both the trial and appellate level, in alternative dispute resolution and before governmental agencies. Shafeeqa has represented management in civil rights, wrongful discharge, Family and Medical Leave Act, Fair Labor Standards Act, employment tort, defamation, breach of contract, tortious interference and other employment-related charges and litigation. She also regularly advises clients that are federal contractors on affirmative action, legislative and regulatory changes affecting employment matters for federal contractors and Office of Federal Contract Compliance Program (OFCCP) compliance issues, from developing affirmative action plans to representing companies during the audit process. Shafeeqa also performs supervisory training seminars, prepares and reviews personnel handbooks and policies and advises clients regarding employee retention and termination. Additionally, her appellate work includes patent, construction and employment matters. She has experience preparing appellate briefs for Texas appellate courts, including the Supreme Court of Texas and to federal courts such as the Federal Circuit. Before law school, Shafeeqa worked as a judicial intern for the Texas Judicial Council under Chief Justice Thomas Phillips. 2
Speakers Alex Clark, Senior Associate Alex Clark is a senior associate in the Dallas office practicing in areas of employee benefits and tax. He represents clients on a range of compensation and benefits matters, including ERISA compliance, the compensation and benefits aspects of merger and acquisition transactions, executive compensation programs, plan terminations, ERISA fiduciary duty and prohibited transaction rules, crossborder employee transfers and benefit plan controversies. Mr. Clark regularly counsels clients on tax and ERISA compliance issues and has significant experience representing clients before the Internal Revenue Service and US Department of Labor. He also advises private equity and hedge funds on compensation issues and ERISA compliance and works with financial institutions in the structuring and implementation of retirement products and services. Additionally, Mr. Clark has considerable experience in federal tax issues related to deferred compensation and tax-exempt organizations. Bennett Kaspar, Associate Bennett is an associate in Norton Rose Fulbright's Los Angeles office and provides employment and labor law counseling on federal and state issues. His experience includes wage and hour disputes, class actions, and updating employment policies to conform with revisions to California law. Bennett has authored several publications on emerging issues in employment law, which can be found on his biography on the Norton Rose Fulbright webpage. 3
Overview of Obergefell v. Hodges Groups of same-sex couples sued their relevant state agencies in Ohio, Michigan, Kentucky, and Tennessee to challenge the constitutionality of those states bans on same-sex marriage or refusal to recognize legal same-sex marriages that occurred in jurisdictions that provided for such marriages. Jim Obergefell sued Ohio for not recognizing his marriage to his longtime partner, which was performed in Maryland shortly before his partner died. The plaintiffs in each case argued that the states statutes violated the Equal Protection Clause and Due Process Clause of the Fourteenth Amendment, and one group of plaintiffs also brought claims under the Civil Rights Act. In all the cases, the trial court found in favor of the plaintiffs. The U.S. Court of Appeals for the Sixth Circuit reversed and held that the states bans on same-sex marriage and refusal to recognize marriages performed in other states did not violate the couples Fourteenth Amendment rights to equal protection and due process. 4 Overview of Obergefell
Overview of Obergefell v. Hodges The Supreme Court granted cert on two questions: (1) Does the Fourteenth Amendment require a state to license a marriage between two people of the same sex? YES. (2) Does the Fourteenth Amendment require a state to recognize a marriage between two people of the same sex that was legally licensed and performed in another state? YES. 5 Overview of Obergefell
Overview of Obergefell v. Hodges (1) Does the Fourteenth Amendment require a state to license a marriage between two people of the same sex? YES. The Court held that the Due Process Clause of the Fourteenth Amendment guarantees the right to marry as one of the fundamental liberties it protects, and that analysis applies to same-sex couples in the same manner as it does to opposite-sex couples. (2) Does the Fourteenth Amendment require a state to recognize a marriage between two people of the same sex that was legally licensed and performed in another state? YES. Marriage rights have traditionally been addressed through both parts of the Fourteenth Amendment, and the same interrelated principles of liberty and equality apply with equal force to these cases; therefore, the Constitution protects the fundamental right of same-sex couples to marry. The Court also held that the First Amendment protects the rights of religious organizations to adhere to their principles, but it does not allow states to deny same-sex couples the right to marry on the same terms as those for opposite-sex couples. 6 Overview of Obergefell
Employee Benefits Post- Obergefell Background Same sex married couples have been treated the same as opposite-sex married couples under federal law since United States v. Windsor In response to the Windsor decision, federal government agencies, including the Internal Revenue Service and Department of Labor, adopted a state of celebration rule. A same-sex marriage performed under the laws of any state must be recognized for purposes of federal taxes and ERISA-governed plan rights in all states regardless of where the couple resides. IRS Notice 2014-19 addressed retroactive impact of Windsor, and required all tax-qualified benefit plans to be operated consistent with Windsor effective June 26, 2013, and amended by December 31, 2014 (or, if later, the due date for the employer s federal income tax return for the period that included June 26, 2013). 7 Employee Benefits Post-Obergefell
Employee Benefits Post- Obergefell What changes as a result of Obergefell? Employers will no longer be required to impute (or withhold) state income tax on value of group health benefits provided to samesex spouses. In most states, this does not represent a change since Windsor because most states with an income tax conform to federal tax law (i.e., tracked the federal law definition of wages ). Employers with employees in non-recognition states should confirm that payroll processing is correct. Employers will reconsider continuing need for domestic partner benefits. Cost-savings Transition issues Compliance with Equal Benefits Ordinances 8 Employee Benefits Post-Obergefell
Employee Benefits Post- Obergefell Open Questions Based upon existing law, employer self-funded group health plans arguably remain able to continue to offer only opposite-sex spousal benefits. Nothing under ERISA or the Public Health Services Act requires coverage of spouses or defines spouse for purposes of employer health plans. ERISA preempts state discrimination laws. BUT SEE: July 15, 2015 EEOC administrative ruling: [S]exual orientation is inherently a sex-based consideration, and an allegation of discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII. Employers should consider risks and consult counsel if excluding same-sex spouses from coverage under health and welfare benefit plans. Church plans that do not elect to be covered under ERISA. Church plans that do not treat same-sex spouses consistent with opposite-sex spouses are likely to see increase in discrimination claims. Claims for retroactive benefits. 9 Employee Benefits Post-Obergefell
Obergefell s Unanswered Questions What Obergefell did not address: Is sexual orientation a protected class? Likely no, because the court did not use strict scrutiny analysis. Ok, then what is the standard of review used when LGB people allege discrimination? Intermediate or Rational-Basis Plus? Not clear from ruling. Kennedy has authored all gay rights decision in the last 20 years and has yet to clearly articulate a standard of review. Can Businesses or Individuals invoke religion to deny same-sex couples service? The court does mention in the opinion that the First Amendment protects religious institutions from performing or speaking about same-sex marriages if they are contrary to their faith. It did not mention whether private businesses or individuals could use religious freedom/expression as basis of denying service to LGB persons 10 Overview of Obergefell
Religious Freedom Issues Implicated by Obergefell Does Hobby Lobby allow employers to deny healthcare benefits to LGB couples on the basis of religious belief? In 2014, the Supreme Court ruled that a for-profit, closely-held company could use a religious liberty defense to a refusal to provide healthcare benefits under the Affordable Care Act. If a lesbian and her partner marry, and an employer offers healthcare benefits for spouses, does Hobby Lobby give that employer a pass to refuse benefits for the partner on the basis of religious belief? If not for healthcare, what about benefits for things like family planning services? Reproductive therapy? Leave for adoption? No one has the answers to these questions, yet but at least 19 states currently have religious freedom laws that could put this issue at the forefront of the next wave of litigation on LGB rights 11 Other Employment Issues
Other Employment Issues Implicated by Obergefell Family and Medical Leave Act Department of Labor previously modified definition of spouse; four states (including TX) enjoined Obergefell resolves any ambiguity or legal argument against including samesex spouse USDC Northern: After Obergefell, Plaintiff states no longer demonstrated a likelihood of success on the merits 12 Other Employment Issues
Other Employment Issues Implicated by Obergefell Title VII Obergefell does not expand Title VII s protected classes to include sexual orientation BUT may trigger other protected class concerns: sex, gender stereotyping, religious beliefs EEOC s Position Commission holds sexual orientation discrimination is covered by Title VII because it is sex discrimination. See David Baldwin v. Dep't of Transportation, EEOC Appeal No. 0120133080 (July 15, 2015). Strategic Enforcement Plan lists "coverage of lesbian, gay, bisexual and transgender individuals under Title VII's sex discrimination provisions, as they may apply" as an enforcement priority for FY2013-2016. 13 Other Employment Issues
Other Employment Issues Implicated by Obergefell State Anti-Discrimination Laws Some states prohibit discrimination based on marital status, but not sexual orientation Employment Non-Discrimination Act Would prohibit private discrimination based upon sexual orientation and gender identity Has previously stalled in Congress; revived by Obergefell? 14 Other Employment Issues
Anti-Discrimination Issues Implicated by Obergefell In addition to not answering the questions indicated previously, Obergefell also does not provide guidance for employers who operate in states that do not protect LGB citizens from discrimination on the basis of sexual orientation. There are currently 22 states that do not protect LGB citizens from discrimination by private employers based on their sexual orientation. Only 19 states and D.C. prohibit private employers from discriminating based on gender identity. 15 Other Employment Issues
Anti-Discrimination Issues Implicated by Obergefell For employees in these states, how does Obergefell pose potential problems? If an employee works in a state where discrimination is permissible based on orientation, those who wish to get married to a partner of the same sex are opening themselves up to discrimination from landlords, private businesses, and their employers. Because Obergefell has eliminated the line between opposite and same sex marriages meaning, it s all marriage now under the law, there is likely no marriage-based discrimination for this employee. However, Federal actors like the EEOC have signaled increased support for treating discrimination based on orientation the same as discrimination based on sex, and thus in violation of Title VII 16 Other Employment Issues
Other Employment Issues Implicated by Obergefell Affirmative Action/Federal Contractors Executive Orders 11246: sexual orientation/gender identity discrimination by federal contractors prohibited Same-sex marriage may bring more claims to the surface; OFCCP will investigate 17 Other Employment Issues
Employer Best Practices Review Employee Handbook Ensure all language regarding marital rights extend to same-sex marriages Include sexual orientation and gender identity in EEO policy HR Overhaul FMLA, W-4, health insurance, COBRA, 401(k), cafeteria plans, beneficiary designations Update all forms, policies, enrollment processes and procedures to be orientation-neutral Fringe Benefits Review Tuition reimbursement, bereavement leave, housing/relocation benefits, employee discount plans All marital benefits must be orientation-neutral 18 Employer Best Practices
Employer Best Practices Update Benefits Plans Review internal and third-party provisions Conform definition of spouse federal (and state) definition Training Ownership, leadership, management, even vendors need to be current Affirmatively train on the post-obergefell workplace 19 Employer Best Practices
What s next? Gender Identity In the opening words of Obergefell decision, Justice Kennedy states that The Constitution promises liberty to all within its reach, a liberty that includes certain specific rights that allow persons, within a lawful realm, to define and express their identity. Definitions Gender Identity: an individual s own sense of what gender they are In some individuals gender identity does not match their biological sex Distinct from sexual orientation, which refers to which sex an individual is attracted to Gender transition: Highly individualized, and can include a name change, changing clothing style, grooming, health care such as counseling, hormone therapy, or different types of surgery 20 20
Common Workplace Issues Names and Pronouns Respect employees preference Facilities OPM guidance says allow access consistent with employees gender identity, though this is a developing area Confidentiality sexual orientation & transgender status are confidential Appropriate Questions do not ask about medical treatment or sexuality Dress Standards allow employees to dress per their gender identity Harassment do not tolerate it! 21 21
Recommendations Have a written policy of non-discrimination, including gender identity Have a written gender transition policy Train all staff on policy; give extra training to hiring officers 22 22
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