What the Supreme Court’s DOMA Ruling Means for Employers
In the aftermath of the high court’s decision on DOMA, employers will need to amend their benefit plan documents and practices to provide equal treatment of same-sex and opposite-sex spouses, at least with respect to those employees who live in states that allow for or recognize same-sex marriage.
Here’s a rundown of some of the changes that are expected (at least in the states that allow gay marriage):
- Employers will no longer be required to impute as additional income to an employee the value of employer-paid health care provided to an employee’s same-sex spouse, and employers will no longer be subject to the corresponding payroll tax costs associated with that income.
- Employers will have to reprogram payroll systems that currently withhold income tax and withhold and pay FICA tax, with respect to the health coverage provided to same-sex spouses. Other steps may involve filing refund claims for taxes paid on the value of same-sex spouses’ health care coverage.
- An employee will be entitled to take FMLA (Family and Medical Leave Act) leave in order to care for a same-sex spouse, assuming all other requirements to take FMLA leave are satisfied.
- Retirement, pension plan and survivor benefits will be required to be provided to same-sex spouses. In addition, a same-sex spouse will have a right to receive various notices of spouses’ rights, and an employee will have to get the spouse’s written consent to name a nonspouse beneficiary.
- Employees will be able to get reimbursement from health flexible spending accounts and health reimbursement accounts for medical expenses of same-sex spouses.
- Same-sex spouses will be eligible for tax-free employer health benefits.
- Same-sex spouses will generally be eligible for federal COBRA coverage.
Class-action suits have their place in our legal system. Some have advanced social justice by holding corporations accountable for egregious violations, such as employment discrimination, price fixing, selling dangerous products and fraudulent labeling.
But too many of these lawsuits are based on nit-picking offenses, with negligible compensation for the “injured” consumers and excessive enrichment of the lawyers. Sadly, they drive up the cost of doing business in America, and we all pay. Knight Kiplinger takes on the ethics of class-action suits. Read more here.
What We’re Reading, 6/6/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our iPads and in our inboxes this morning: further Fed stimulus, the human price of austerity, and the marketing pros/cons of canned and packaged margaritas.
"Fed Considers More Action Amid New Recovery Doubts," by Jon Hilsenrath (Wall Street Journal). Ben Bernanke & Co. are weighing another round of economic stimulus ahead of their June 19 meeting. There was no such talk at the Fed’s last meeting, when things looked rosier … but in light of Europe’s shenanigans, dour jobs reports, and all the other things we round up here each day, the Fed may make some small, cautionary moves.
"Save Us, Ben Bernanke, You’re Our Only Hope," by Matthew O’Brien (The Atlantic). This story is accompanied by a photo of Ben Bernanke as Jedi, which everyone should click to for laughs alone. Beyond that, things get a bit more serious (though, er, no less gimmicky). O’Brien’s argument: The Fed is our last hope to improve the faltering economy, and so far, it’s failed to do so. Manipulating interest rates could help.
"Euro Zone on the Brink," by Roger Altman (Washington Post). Another day, another flood of bummer news from Europe. Today, Greece is pretty close to running out of cash, Spain tells the world straight-up that it really needs that bail-out, and Germany struggles to figure out just what role it wants to play in the whole ordeal. Altman suspects this is mounting to another bump in the recession, a la the Great Depression relapse of 1937. Fortunately, he has a three-step plan! (That seems simple, doesn’t it?)
"Children Lose to Bailed-Out Bankers as Crisis Forces Cuts," by Ben Sills and Rodney Jefferson (Bloomberg). In Spain, this is what austerity looks like: crowded emergency rooms and children who can’t get access to crucial medications. In fact, the handicapped and terminally ill are suffering across Europe, where safety nets are falling out from underneath them.
"Senate Republicans Again Block Pay Equity Bill," by Jennifer Steinhauer (New York Times). The Paycheck Fairness Act fell six votes short of the 60 it needed to pass the Senate yesterday. The law would make it easier for women to sue in instances of gender discrimination — an issue that, incidentally, we take on in the June issue!
"Growing Economic Inequality ‘Endangers Our Future’" (Fresh Air). Nobel Prize-winning economist Joseph Stiglitz dropped by the Fresh Air studio to talk lobbying, tax policy and student loans with Terry Gross. Fun fact: He’s largely credited with popularizing the phrase “the 1%,” which we will now never be rid of.
"The Fortune 400," by David Cay Johnson (Reuters). Speaking of tax policy and the 1%, six American families with incomes over $200 million (each!) paid no federal income taxes in 2009. Cue the Occupy outrage!
"Most Recent High School Graduates Not in College Lack Full-Time Job, Study Says," by Bonnie Kavoussi (Huffington Post). Three out of four high school graduates who took the working route do not actually have jobs, according to a sobering new study by Rutgers’ Center for Workforce Development.
And in other news: Warren Buffett graduated from D.C.’s infamous public schools, New York magazine has some “advice” for Wall Street interns, and a business battle is brewing canned and packaged margaritas. (In a war like this, everybody loses.) Also, the Internet now has 340 trillion trillion trillion addresses (that’s a number?) and Michelle Obama was on Letterman last night.
What We’re Reading, 6/5/12
Every morning, we poll the staff and round up their favorite economic, financial and political reads of the day. On our agendas this morning: emergency conference calls, Wall Street’s best-paid CEO, and the economics of starting a donut empire.
"G7 Hold Emergency Eurozone Talks," by Quentin Pell, Peter Spiegel, Guy Dinmore and Mure Dickie (Financial Times). Your friendly curator has never known a conference call to help with much of anything, but finance ministers from the G7 countries convened via phone line today to discuss the European crisis. By all accounts, little came of it. (Surprise!) The same cannot be said of talks between German chancellor Angela Merkel and European Commission president Jose Manuel Barroso — Merkel announced in a press conference that Germany will at last allow some wiggle room in pooling European debt. The Central Bank is also dreaming up ways to draw Europe closer together.
"Europe’s Fade Becomes a Drag on Sales for U.S. Companies," by Nathaniel Popper (New York Times). No one buys Mac Books and Chevys when the proverbial sky is falling down. That, unfortunately, can also impact U.S. companies and their investors: Cisco, Dell, Netapp and a number of other U.S. firms have already reported a drop in European sales.
"Lower Oil Price Offers U.S. Consumers Hope," by Gregory Meyer and Robin Harding (Financial Times). “Hope” is a word we don’t often see in financial headlines — but oil prices are down 17% in the past month, and that could give both consumers and the overall economy a boost.
"Bitter Wisconsin Recall Race in Voters’ Hands," by Bob Secter (Chicago Tribune). It’s showdown day in Wisconsin, arguably the most polarized state in the country. If you’re not up on the brutal recall election, AP has an FAQ.
"Wall Street CEO Pay Rises 20% with KKR’s Kravis No. 1," by Laura Marcinek and Nikolaj Gammeltoft (Businessweek). Henry Roberts Kravis made $30 million last year — which is, for perspective, about 1/26th the value of the entire Tumblrverse. CEOs saw a 20% pay raise overall, down from 26% in 2010. Ah, how the other half lives!
"How Bank of America Execs Hid Losses — In Their Own Words," by Cora Currier (ProPublica). Shareholders filed suit against Bank of America on Sunday, demanding to know if executives lied about the bank’s losses before it acquired Merrill Lynch in 2008. Lots of skeletons are shaking out, and ProPublica has kindly gathered them up.
"The Last Days of MF Global," by Peter Elkind and Doris Burke (Fortune). MF Global suffered the eighth-largest bankruptcy in U.S. history … and we couldn’t even put a ranking on the broker’s infamy.
"Don’t Eat Fortune’s Cookie," by Michael Lewis (Princeton.edu). Alright, we’re veering from finance a bit — but renowned economics writer Michael Lewis will the commencement speech at Princeton today, and his remarks are really worth reading. A sample: “The ‘Moneyball’ story has practical implications. If you use better data, you can find better values; there are always market inefficiencies to exploit, and so on. But it has a broader and less practical message: don’t be deceived by life’s outcomes.”