Alerts and Updates

Federal Judge Strikes Down Pennsylvania Same-Sex Marriage Ban, Resulting in Significant Impact on Employee Benefit Plans

May 21, 2014

The impact of Whitewood likely will be felt across many different legal areas—including property ownership and adoption rights.

On May 20, 2014, a federal judge in the case of Whitewood v. Wolf struck down both Pennsylvania's ban on marriage for same-sex couples and its prohibition against recognition of same-sex marriages legally entered into in other jurisdictions on the grounds that such laws violate both the Due Process and Equal Protection Clauses of the Fourteenth Amendment to the United States Constitution. The ruling provides that same-sex couples who seek to marry in Pennsylvania may do so, and already married same-sex couples will be recognized as such in the commonwealth.

The impact of Whitewood likely will be felt across many different legal areas—including property ownership and adoption rights. In addition, its impact may be particularly felt in the administration and operation of employee benefit plans of employers in Pennsylvania.

The dust has just recently settled on the impact of the United States v. Windsor ruling on employee benefit plans from a federal tax perspective. The Internal Revenue Service (IRS) has issued guidance over the past several months addressing the impact of that decision. With the decision in Whitewood, Pennsylvania has now joined the growing list of states to both allow and recognize same-sex marriage. Therefore, same-sex couples who reside in Pennsylvania will be treated the same as opposite-sex married couples for Pennsylvania and local tax purposes.

Employers in Pennsylvania have long dealt with the issue of "imputed income" for same-sex partners; however, as of the Whitewood decision, a same-sex partner who has either been married in Pennsylvania or under the laws of another jurisdiction will no longer be subject to such "imputed income." Rather, that individual will be treated the same as an opposite-sex spouse from a tax perspective.

In addition, if the Whitewood decision is upheld, an employee who resides in Pennsylvania and who marries a same-sex partner in Pennsylvania or under the laws of another jurisdiction would now be eligible for leave under the Family and Medical Leave Act (FMLA) to care for his or her spouse. This is based on the fact that the FMLA defines "spouse" to mean "a husband or wife as defined or recognized under state law for purposes of marriage in the state where the employee resides, including 'common law' marriage and same-sex marriage."

Employers may want to review their employee benefit plans and all communications to employees in light of Whitewood. It is anticipated that the Pennsylvania Department of Revenue will issue definitive guidance on the changes in state tax treatment post-Whitewood. If the Department of Revenue follows the lead of the IRS, May 20, 2014, will serve as a dividing line for the treatment of same-sex spouses in Pennsylvania. (The IRS chose the date of the Windsor decision as a dividing line.) It is unknown how prior time periods should be handled. While the IRS did not require any retroactive changes in light of Windsor, it remains to be seen whether Pennsylvania will also adopt this approach following Whitewood.

Please see our prior Alerts on these issues:

IRS Publishes Post-Windsor Guidance in Notice 2014-1
U.S. Supreme Court Decisions on DOMA and Same-Sex Marriage Have Far-Reaching Implications for Employers

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The employee benefits and executive compensation attorneys at Duane Morris will continue to monitor developments and issue additional Alerts as further guidance is published.

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