UPDATE: On June 26, 2013 the U.S. Supreme Court issued decisions in two cases impacting same-sex marriage. While these rulings do not decide a constitutional right to same-sex marriage, the implications are very broad. As a result of these decisions, once same-sex marriages become legal in Minnesota on August 1, 2013, same-sex married Minnesotans will have the same access to federal rights and benefits enjoyed by opposite-sex couples. Various commentators are suggesting that given the majority opinion that the central section of DOMA violated the Fifth Amendment’s due process and equal protection guarantees, the door has been opened for future challenges from states where same-sex marriage is prohibited. Much work remains as the U.S. government considers and defines marriage under numerous federal laws and policies but it is expected that same-sex married couples in Minnesota will be able to file joint federal and state taxes just as opposite-sex couples are allowed and same-sex married couples will be eligible for all of the Social Security benefits opposite-sex couples currently receive. From an employment law perspective, employers are encouraged to review and revise employment policies and benefits to ensure that all married couples are entitled to the same benefits. From an estate planning perspective, married couples need to assess the tax implications of moving to states that don’t recognize same-sex marriage for state estate tax purposes.
Shortly before the end of the 2013 legislative session, Minnesota became the 12th state to legalize same-sex marriage. Minnesota joins the states of Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Washington in enacting such legislation. The District of Columbia and three sovereign Native American Nations have adopted similar laws. A bill to legalize same-sex marriage in Illinois is still under consideration. In addition to the 12 states that recognize same-sex marriage, a number of other states recognize civil unions – with differing definitions – which include California, Colorado, Hawaii, Illinois, New Jersey, Nevada, Oregon and Wisconsin.
The bill, approved by the Minnesota legislature and signed by Governor Dayton in May, created a new definition of “civil marriage” as a “civil contract between two persons.” The prior statute defined “marriage” as being “a civil contract between a man and a woman.” The new statute also removed the express prohibitions against same-sex marriage and deleted the provision that refused to recognize same-sex marriages contracted in other states or countries or enforce said marriages in Minnesota.
To address significant concerns raised by religious organizations, the law allows a religious group to refuse to solemnize (i.e. officiate) or celebrate “a civil marriage that is in violation of its religious beliefs.” Further, the law makes it clear that each “religious organization, association or society has exclusive control over its own theological doctrine, policy, teachings and beliefs regarding who may marry within that faith.” A clergy person is not subject to fine, penalty or civil liability for failing or refusing to solemnize a same-sex marriage.
The Minnesota law, however, would have no effect on Federal benefits and rights which are currently governed by the Defense of Marriage Act (DOMA). DOMA defines marriage as between a man and a woman and denies benefits to same-sex couples. The United States Supreme Court is currently considering a challenge to the constitutionality of DOMA. A decision is expected by the end of the current term which is set to end in June 2013. Look for an update this summer.
The new law has broad implications in Minnesota. First, Minnesota will now confer all of the same rights previously conferred on heterosexual married couples on same-sex married couples. Next, all provisions of state law that are triggered by the status of marriage will now apply to all married persons. This would cover many areas of Minnesota law such as traditional family law, estate planning and probate, living wills, powers of attorney, insurance law, employment benefits, etc.
With the right to marry, same sex couples will also now be subject to traditional family law including divorce, prenuptial agreements and adoption law. Same-sex couples can use Minnesota’s statutory framework to end a marriage and equitably divide property, seek spousal maintenance, share child support obligations and address other issues by use of the Minnesota statutes and case law on family law matters.
Impact on Employers
Effective August 1, 2013, Minnesota statutes will define “civil marriage” as a “civil contract between two persons.” Statutory terms referencing marriage will then include same-sex marriage. The most immediate impact the new law is likely to have on Minnesota employers is that same-sex married couples will have access to many employment benefits that have traditionally been given to married heterosexual couples.
Tension remains, however, with respect to the coordination of the new state law with conflicting federal law. This means employers need to examine all benefit plans to determine whether they must offer benefits to same-sex spouses as well as the definition of “spouse” for state and federal taxation provisions. Because the federal DOMA defines marriage as the union of one man and one woman for federal law purposes, this federal law preempts state laws that recognize same-sex marriages. (Note: The U.S. Supreme Court is currently considering a challenge to the constitutionality of DOMA, as well as the constitutionality of California’s Proposition 8 abrogating same sex marriage in California, and a decision is expected in the case shortly. If DOMA is declared unconstitutional, employers will be required to recognize same-sex spouses under federal law.)
Employers should also check with insurance benefits providers regarding the definition of “spouse” in insured benefit plans. Benefits covered by federal law will not automatically apply to a same-sex spouse. An employer must provide same-sex spouses with any benefits that the employer provides to opposite-sex spouses under state law or employer policy. Examples of state law employment policies that must now extend to same-sex spouses are state-law based leaves to care for a spouse and any coverage provided by an insurance policy an employer purchases in Minnesota.
Absent a religious exemption, employers should update employment policies and handbooks to provide that any reference to rights or benefits not be gender-based. The Minnesota Human Rights Act (MHRA)’s prohibition of employment discrimination based on marital status will now include discrimination based on status with respect to same-sex marriage. Leave entitlements under the Family and Medical Leave Act (“FMLA”), however, will not be extended to same-sex spouses because while the FMLA defines “spouse” by reference to state law, DOMA applies to the FMLA. Consequently, FMLA leave may only be taken to care for a spouse of the opposite sex.
The new law grants religious organizations exclusive control over who may marry under the doctrine and beliefs of that faith. The new law also does not affect the manner in which nonprofit private religious associations or corporations provide adoption, foster care or social services. Under the MHRA, nonprofit religious associations, corporations and educational institutions are generally not prohibited from taking action based on sexual orientation, including making employment decisions. However, the religious exemption does not apply to secular business activities engaged in by the religious entity, if unrelated to religious and educational purposes for which the entity is organized.
In the estate planning arena, the ability to marry under Minnesota law does not necessarily equate to the full rights and benefits that heterosexual couples benefit from under federal law. For example, a same-sex couple is not entitled to the federal unlimited gift and estate tax marital deduction for transfers made between them, because the marriage is not recognized at the federal level.
A well-thought-out estate plan is critical for same-sex couples. It should incorporate the appropriate documents for a proper wealth-transfer strategy as well as provide each partner with the legal authority to act on behalf of the other partner in the case of incapacity or death.
In the near future, as noted above, the Supreme Court is expected to rule on two cases which will affect the federal rights of same-sex couples. These rulings will have a direct impact on Minnesota couples who choose to marry under the new law. As such, it will also be critical that the estate plan provide flexibility for changing circumstances.
Same sex couples and Minnesota employers should review their current plans and practices and start thinking about what changes, if any, need to be made.