Recognition of Same-Sex Marriages for Federal Tax Purposes

As a follow-up to the overruling of the Defense of Marriage Act (DOMA), the Internal Revenue Service recently released IR-2013-72 which announced the U.S. Department of Treasury and IRS will recognize same-sex marriages and treat the couples as married for federal tax purposes.  Revenue Ruling 2013-17 applied regardless of whether the couple lives where same-sex marriages may or may not be recognized.

According to the Treasury and the IRS, additional guidance for employers will be forthcoming.  Employers can expect guidance for filing refund claims for payroll taxes on previously taxed health insurance and fringe benefits provided to same-sex spouses.  Other agencies may release similar guidance affected by the Internal Revenue Code.

Key points on the ruling may be found at the IRS website.

DOMA Decision

Lower courts have begun to issue rulings based on the Supreme Court's June 26, 2013, Defense of Marriage Act (DOMA) decision, with two district courts recently extending the ruling's application.  In addition, the Department of Labor revised a fact sheet on qualifying reasons for leave under the Family and Medical Leave Act (FMLA), in response to the Supreme Court's historic decision this summer striking down Section 3 of DOMA.

Employee Accountability

I ran across a definition for accountability that I feel truly identifies its precise meaning; ". . . the responsibility of the employee to accomplish with integrity the defined and assigned tasks required by his/her job within a reasonable time in order to assist the organization to fulfill its goals." 

Is employee accountability important?  Yes!  Employee accountability is important to a business's success as a whole.  It is the cornerstone of business success.  A Gallup poll estimates that the lost productivity that stems from disengaged and unaccountable employees costs American businesses between $287 and $370 billion annually.  This is through customer loss due to poor service, high employee turnover and quality control issues, just to name a few impacted areas.

How can you engender a culture of accountability in your workplace?  Through the effective communication of goals, expectations, success and failures.   These are the fundamental tenants of accountability. 

Establish the beliefs and values required for accountability in your organization.  Behavior will follow belief.

• Communicate accountability
• Coach accountability
• Practice accountability

DOMA (Defense of Marriage Act)

First the history lesson.  The Defense of Marriage Act was enacted September 21, 1996, allowing states to refuse to recognize same-sex marriages granted under the laws of other states. 

Section 3 of the Act was ruled unconstitutional in June, 2013 thereby allowing same-sex married couples to be recognized as "spouses" for purposes of federal laws, and allowing them to receive federal protections such as Social Security, health insurance and retirement savings.  Essentially, same-sex couples who are legally married deserve equal rights to the benefits under Federal law that go to all other married couples. 

If you have followed the DOMA case, you know by now that the ruling will have far-reaching implications.  The recent ruling which mandates that all officially recognized marriages be treated equally under the law, has immediate legal ramifications for the 12 states that already allow same-sex marriages.  Opponents of same-sex marriage are bracing themselves for a wave of legal challenges in the states that do not recognize marriages of gay and lesbian couples. 

What does all of this mean for Human Resources and Texas employers?  Well, here in Texas marriage is defined as the "relationship between a man and a woman."   While the Supreme Court removed the federal definition of marriage, it left it to the states to decide whether to honor other states' laws on the matter.  This does not mean that Texas is required to legalize same-sex marriage.  Texas Family Code 6.204 states same-sex marriages performed in other states are void in Texas.  For Texas, there isn't a huge impact immediately.  However, employers should revisit the definition of "spouse" in their benefit plans to ensure that the definition is consistent with the employer's intent, in light of the Windsor decision.  With regard to qualified pensions, plan language and procedures will need to be considered because same-sex spouses have additional rights to federally protected benefits. 

Terminating With Dignity

One of the less enjoyable aspects of my job is having to terminate an employee.  While the decision to terminate may be the best step for the organization, one of HRs goals should be to maintain the employee's dignity throughout the process.  When it is necessary to terminate an employee, here are a few guidelines that I recommend:

1. Consider the timing.  NEVER terminate on a Friday.
2. Always plan out the termination.  Who is terminating the employee and what should be said. 
3. During the termination process, provide the employee with positive feedback about some aspect of their work performance.  They need the kind words!  "Even in the termination based on performance, prompted by the fact that acquired skills were not adequate for a particular situation, the person's assets and liabilities can still be acknowledged," wrote Richard Bayer in Business Horizons.
4. Have an information package available for the employee.  It should contain items such as a termination letter outlining the reasons for the termination (remember to stick to the facts).  Discuss severance, compensation for unused vacation, unemployment compensation, benefits, any type of outplacement assistance, etc.
5. Don't allow yourself to be caught up in the emotions of the termination process.
6. Allow the individual to vent if necessary. After they have vented, allow them a decompression period.  They need to have some control over their departure!
7. Always, always, handle with compassion.

Please remember that each termination decision that is made carries a profound impact on at least one human being's life.  Handle with care.