On June 26, 2013, the U.S. Supreme Court, in United States v. Windsor, declared unconstitutional Section 3 of the federal Defense of Marriage Act (“DOMA”), which had prohibited the federal government from acknowledging marriages between same-sex couples. At the time of the ruling, same-sex marriages were recognized in 12 states and the District of Columbia. The decision does not require states to recognize same-sex marriages; Kentucky is among the states that do not. However, that does not mean that Kentuckians, specifically Kentucky employers, are insulated from the effects of this decision.

The Windsor decision raises a host of federal tax and employee benefit issues. For employers in states which do recognize same-sex marriages, the following represent just some of the employment-related implications:

1. Employee benefit plans: the federal laws governing these plans will require companies to treat employees’ same-sex spouses equally as opposite-sex spouses.
2. Employee federal income taxes: employees will no longer have to pay federal income taxes on the income imputed for an employer’s contribution to a same-sex spouse’s medical, dental or vision coverage.
3. Pension plans: employers with pension plans must recognize same-sex spouses for purposes of determining surviving-spouse annuities.
4. COBRA: this coverage must be offered to same-sex spouses.
5. Family Medical Leave Act: a spouse must be permitted to take leave to care for a same-sex spouse who is ill.

While it is clear that employers must reform their policies if they live in a recognizing state, many questions remain unanswered. It is unclear if these benefits are meant to be retroactive. For example, can a same-sex couple seek relief for taxes that were paid on spousal health care benefits? Can FICA taxes be refunded?

Another issue, addressed by Justice Scalia in his dissent, is that many federal laws governing spousal benefits do not include a statutory definition of the term “married.” Federal statutes often look to state law on this issue; but it is unclear which state’s laws should be looked at for guidance—the state in which the couple currently resides or the state where the couple was married.  Thus, employers are left with the question of how to administer benefits of same-sex couples who were married in a recognizing state, but now live in a non-recognizing state.

It is obvious that employers in recognizing states have their work cut out for them as they revise policies and administer benefits. Without further guidance from federal and state regulating authorities, there are more questions than there are answers about how to proceed in the wake ofWindsor. What is the impact of the decision on non-recognizing states? Check back on Wednesday to see how some states are beginning to answer this question.