These updates tend to focus on when things go wrong at work between a business and its employees, as those situations provide helpful lessons for employers, employees and their attorneys.
But this past month, 286 companies and business organizations filed a “friend of the court” brief with the U.S. Supreme Court that gives us a reminder that employers’ interests and those of their employees often do align.
The amici brief filed in United States v. Windsor relates to the Defense of Marriage Act (“DOMA”), which precludes the federal government from recognizing same-sex marriages. The companies joined the petitioner in asking that DOMA be declared unconstitutional, as it rejects federal tax benefits for same-sex couples who have been lawfully wedded in states that recognize such unions. Major companies joining the brief include Aetna, CBS, Ernst & Young, Facebook, Goldman Sachs, Microsoft, Pfizer, Starbucks and Viacom.
“Although marriages are celebrated and recognized under state law, DOMA, a federal law withholding marital benefits from some lawful marriages but not others, requires that employers treat one employee differently from another, when each is married, and each marriage is equally lawful,” the companies state at the introduction to their argument.
The companies add that “DOMA enforces discriminatory tax treatment of spousal retirement and healthcare benefits,” and “regardless of our business or professional judgment [DOMA] forces us to treat one class of our lawfully married employees differently than another, when our success depends upon the welfare and morale of all employees.”
To sum up the problem, DOMA creates a substantial administrative burden for businesses with employees in same-sex marriages. Under DOMA, private employers must impute income to employees for healthcare benefits to same-sex spouses, while such benefits to opposite-sex spouses are exempt from federal income tax. Also, an opposite-sex married employee can reduce his or her taxable income by paying for the cost of healthcare benefits for the spouse pre-tax, while such a tax advantage is not allowed for benefits paid on behalf of a same-sex spouse. These disparities result in employees in same-sex marriage paying an average of $1,069 more in federal taxes than employees in opposite-sex marriages, the companies estimate.
Although we have no insights into Supreme Court deliberations, multiple factors suggest DOMA may be declared unconstitutional in Windsor, including: deference to states rights, support of the business community, support by the Obama Administration, the benefit of reducing taxes on workers, and – oh, yeah, oyez — combating invidious discrimination.
We shall see. A decision is expected this summer.
Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLC. For more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.