Under the New York State Marriage Equality Act enacted June 24, 2011, and effective July 24, 2011, New York recognizes as valid any otherwise valid marriage regardless of whether the marital partners are of the same or opposite sex. There is an exception for religious organizations.  In general, the new law does not require such organizations to solemnize same-sex marriages or to treat same-sex partners as spouses. 

The new law further provides that –  

No government treatment or legal status, effect, right, benefit, privilege, protection or responsibility relating to marriage, whether deriving from statute, administrative or court rule, public policy, common law or any other source of law, shall differ based on the parties to the marriage being or having been of the same sex rather than a different sex. When necessary to implement the rights and responsibilities under the law, all gender-specific language or terms shall be construed in a gender-neutral manner in all such sources of law.

Thus, under New York State law, one can marry another person of the same sex and same-sex spouses are treated just like opposite-sex spouses for all purposes. Among other things, this means an employee of a New York employer covered by the state’s Military Spouse Leave Law can take protected leave for his or her same-sex spouse’s military deployment to the same extent as another employee could for his or her opposite-sex spouse. 

Employee Benefits Matters

Same-sex spouses must be treated just like opposite-sex spouses for all other employee benefits that are not covered by the federal Employee Retirement Income Security Act of 1974 (“ERISA”). For example, a group health plan insured by a policy issued in New York must offer coverage and state-mandated continuation coverage for a covered same-sex spouse just as it would for an opposite-sex spouse. However, the Marriage Equality Act has no impact on coverage terms of a self-funded group health plan. This is because ERISA preempts New York’s Marriage Equality Act to the extent that it applies to self-funded ERISA-covered employee benefits. The Marriage Equality Act also has no impact on a plan underwritten by a policy issued in a state other than New York.      

In general, nothing in federal law precludes an employer from extending benefits under ERISA-covered plans to employees’ same-sex spouses. However, the following should be noted –

  1. Federal tax exemptions and income exclusions for employees’ spouses’ coverage and benefits are not available to same-sex state-law spouses. To the extent an employer provides such coverage, it must report the value of the coverage as wages on the employee’s Form W-2 unless the same-sex spouse meets the definition of “dependent” for federal tax purposes.
  2. Many employers provide benefits under ERISA-covered plans through insurance policies or stop-loss arrangements with third-party carriers. In any case where the employer expects a payment or coverage from such a third-party, the employer must make sure – before promising coverage to same-sex spouses – that the arrangement with the third-party will cover costs associated with those same-sex spouses. (Otherwise, the employer will be paying those costs itself.)
  3. Finally, employers considering extending coverage to state law same-sex spouses should – before doing so – review the terms of the relevant benefit arrangements for any required conforming amendments.

New York Personal Taxes

The effect of the Marriage Equality Act on New York income taxes is less than clear.  The general rule under New York tax law, at section 607(a), is that a term used in the state’s personal tax laws (like “marital status”) has the same meaning as the term has for federal income tax purposes, “unless a different meaning is clearly required but such meaning shall be subject to exceptions or modifications prescribed in the [personal income tax provisions of the Tax Law] or by [other] statute.”  Thus, the New York State Department of Taxation and Finance has taken the position administratively that, under certain circumstances, if a different meaning is clearly required, departure from the federal definition may be acceptable even though there is no specific exemption or modification in the New York tax law.

Nevertheless,  the New York State Tax Law, Section 607(b) specifically provides that an individual’s marital status for state tax law is the same as the individual’s marital status for federal rate-setting purposes. Thus, the marital status of an individual for New York State personal taxes seems to be hard-wired to follow the federal definition of marital status. Because the Federal Defense of Marriage Act (P.L. 104-199), recognizes only heterosexual unions for federal purposes, the Internal Revenue Code does not recognize same-sex marriages for federal income tax purposes. Thus, it appears that action by the New York State legislature would be required to overcome the specific terms of the state’s tax laws in this regard.  In any event,  clarification is needed from New York’s Tax Department or legislature on this point.        

The benefits attorneys and employment attorneys of Jackson Lewis are available to help you with your questions regarding implementation of the Marriage Equality Act. For benefits advice, please contact Monique Warren (White Plains), Joseph Lazzarotti (White Plains), Keith Dropkin (White Plains), Bruce Schwartz (White Plains), Robert Perry (New York City), Melissa Ostrower (New York City), Michael Jacobster (New York City), Brian Goldstein (Albany), or Oleg Kotov (Albany).  

For a discussion of the impact on employers of other states’ civil union, domestic partner, and same-sex marriage laws, click here for Illinois, here for Washington, and here for Massachusetts (including  the Massachusetts Supreme Judicial Court’s decision in Goodridge v. Department of Public Health addressing the effects of recognizing same-sex marriage on employee benefits and other practices). 

UPDATEAugust 3, 2011:  The New York State Department of Taxation and Finance has posted instructions for employers on its website stating that an employer is not to withhold state income tax on benefits provided to an employee for a same-sex spouse if the benefits would not be taxable to the employee under federal law if the spouse was of the opposite sex.