Welcome to the Summer 2013 edition of the Golan & Christie Newsletter. In this issue, we are addressing timely issues that impact you and your business—

SAME SEX MARRIAGE

This article highlights the two cases and discusses implications of the decisions from an estate planning perspective. 

OVERTURNING DEFENSE OF MARRIAGE ACT IMPACTS BANKRUPTCY FILINGS

The Supreme Court’s decision to overturn Section 3 of the federal Defense of Marriage Act, or DOMA, may impact same-sex couples’ ability to file a joint petition for bankruptcy.

EMPLOYMENT AGREEMENTS AFFECTED BY TWO RECENT CASES

Recent decisions by the U.S. Supreme Court and Illinois’ First District Appellate Court have radically changed employment agreements. Discover how this will impact your current agreements and what you should do to protect your business.

Golan & Christie is proud of the relationships we have developed with our clients over the years. Not only do we provide strategic legal counsel in a wide range of practice areas, we also view you and your business with a wide lens in order to determine the most appropriate ways to help you prosper.

Your success is truly our focus and we strive to live that powerful philosophy every day.

-Stephen L. Golan
 Managing Partner

The United States Supreme Court recently handed down two landmark decisions relating to the treatment under the law of same-sex couples.

Case 1: United States v. Windsor

One case, United States v. Windsor, concerned the constitutionality of Section 3 of the federal Defense of Marriage Act (DOMA), which defines “marriage” and “spouse” as excluding same-sex partners for purposes of all federal laws and regulations, including tax and Social Security benefits. In Windsor, the Court held that Section 3 of DOMA, which defines “marriage” and “spouse” as excluding same-sex partners, is unconstitutional in that it violates the principles of due process and equal protection incorporated in the Fifth Amendment. The Court also stated that, historically, the regulation of domestic relations is a matter reserved to the States, and that DOMA interferes with each State’s rights to determine whether same-sex marriages are sanctioned within that State.

The effect of the Court’s decision in Windsor is that each State may determine whether or not to permit same-sex marriages. Perhaps even more important is that the decision requires that all benefits previously provided by the federal government to opposite sex couples must now be provided to same-sex couples who were married in a state that recognizes same-sex marriage. These benefits include Social Security, federal pensions, and various tax benefits such as filing joint income tax returns, utilizing the estate and gift tax marital deductions and portability of estate tax exemptions.

The Windsor decision is important to Illinois residents in that, although Illinois permits same-sex civil unions, its legislature has yet to permit same-sex marriages. Although the Illinois Senate passed a bill last February authorizing same-sex marriages, the Illinois House has declined to vote on the bill. Under current Illinois law, civil union partners are entitled to all of the legal rights and obligations that opposite-sex spouses have under Illinois state law; however, it is unclear whether partners in an Illinois sanctioned civil union will be considered married for federal benefit purposes.

On a broader scale, it is unclear whether legally married same-sex couples will receive equal tax and Social Security benefits in all states, or only in those states that permit same-sex marriages. For example, if the same-sex couple who was legally married in New York were to move to Illinois, where they will be deemed to be in a civil union, would they be considered to be validly married for purposes of the federal benefits? Moreover, if the same couple were to move to Missouri, where same-sex marriages are prohibited under both state statute and the state Constitution, would they be considered to be validly married for purposes of the federal benefits?

The Windsor decision leaves a number of key questions unanswered. We anticipate that many of the questions will be addressed by Congress and the Internal Revenue Service. In the interim, same-sex couples residing in Illinois should review whether: (1) it might be advantageous to marry in a state that authorizes same-sex marriage; and (2) whether their estate plans should be reviewed in recognition of the current state of the law.

Case 2: Hollingsworth v. Perry

In the second case, Hollingsworth v. Perry, the Supreme Court let stand a ruling of a California court which found the Proposition 8 ban on same-sex marriages to be unconstitutional. While the Hollingsworth case impacts only residents of California, the Windsor case has the ability to impact all fifty states.

For more information please contact Barry P. Siegal, (312)696-1699, bpsiegal@golanchristie.com or Nancy Franks-Straus, (312)696-1368, nfstraus@golanchristie.com

The Supreme Court’s decision to overturn Section 3 of the federal Defense of Marriage Act, or DOMA, may impact same-sex couples’ ability to file a joint petition for bankruptcy.

For married same-sex couples living in a state that recognizes same-sex marriage, the invalidation of DOMA will make it possible for them to file jointly for bankruptcy protection.

While federal law governs bankruptcy proceedings, state law may dictate which assets are included in the bankruptcy estate. In the aftermath of the Supreme Court’s decision, for married same-sex couples living in a state that does not recognize same-sex marriage, there remains some uncertainty regarding the applicability of state law on joint bankruptcy filings by married, same-sex couples. But, as Illinois law currently recognizes same-sex civil unions, an argument could be made in the bankruptcy court that Illinois’ legal recognition of same-sex relationships is analogous to states that recognize same-sex marriages.

If you have any questions about bankruptcy, including filing jointly as a same-sex couple, please contact one of Golan & Christie’s experienced bankruptcy attorneys.

Beverly A. Berneman, (312)696-1221, baberneman@golanchristie.com or Ashley L. Orler, (312)696-2032, alorler@golanchristie.com

First, The Good:

The U.S. Supreme Court recently issued a decision (American Express v. Italian Colors, LLC) that paves the way for employers to limit employees’ use of class actions for certain claims if an arbitration provision in an employment agreement is properly implemented. This case isn’t a magic pill that eliminates class actions entirely, but employers finally have a tool to hopefully avoid meritless class actions filed by ruthless class-action plaintiff attorneys.

Next, The Bad:

In June 2013, Illinois’ First District Appellate Court (Fifield v. Premier Dealer Services, Inc.) eliminated an offer of employment as adequate consideration to support non-competes and other restrictive covenants. The Court ruled that employment is not sufficient consideration because it is an “at-will” relationship. Employment is sufficient only if it continues for two years or more.

And, The Ugly:

Your company’s current employment agreements are unenforceable unless (a) the employee received separate and additional consideration (NOT just a new job or continued employment); or (b) the employee signed the agreement more than two years ago. The only good thing about redoing all those agreements is that you can add the arbitration and class action prohibition language from the U.S. Supreme Court case and maybe save your company hundreds of thousands in fees and settlement money.

Please let us know if you would like us to update your employment agreements or create some for you.

If you need help with any employment issues, contact Laura A. Balson, (312)696-1351, labalson@golanchristie.com or Margaret A. Gisch, (312)696-2039, magisch@golanchristie.com.

On July, 2, 2013, President Obama’s administration announced a one-year delay in the implementation of the Patient Protection and Affordable Care Act’s mandate for employers that was set to take effect in 2014. Beginning on January 1, 2015 (and not in 2014), “large” employers – those that employ more than “50 full-time equivalent employees” – will be penalized if one or more of their full-time employees obtain health insurance coverage through an exchange, which is a state-established marketplace that offers qualifying individuals and employers a choice of healthcare plans that meet coverage standards.

To determine whether they are subject to the Affordable Care Act’s penalties, employers should consult with their accountants, attorneys, and, if applicable, health insurance providers, to weigh their potential liability with their business needs and goals.

If you need help with any employment issues, contact Laura A. Balson, (312)696-1351, labalson@golanchristie.com or Margaret A. Gisch, (312)696-2039, magisch@golanchristie.com.

Golan & Christie is pleased to announce that we have added a new attorney, Anita J. Pancholi.

Ms. Pancholi’s practice at Golan & Christie LLP will be focused on commercial, business and employment litigation. Prior to joining Golan & Christie LLP, Ms. Pancholi was an associate at Latham & Watkins LLP, where she worked on high-stakes commercial litigation and securities class action suits. Ms. Pancholi also clerked for Federal District Court Judge Vanessa D. Gilmore in the Southern District of Texas.

Ms. Pancholi is a member of the Illinois State Bar Association and is licensed to practice in California and Illinois. Ms. Pancholi earned her Juris Doctor from Boston University School of Law in 2005 and graduated from Stanford University with degrees in Human Biology and Economics in 1999.

Golan & Christie is pleased to announce a new addition to our extended family: Caleb Asher Wasserman was born on Thursday, July 18, 2013, weighing 8 pounds, 0 ounces and measuring 21 inches long. He is the second child of Golan & Christie attorney Matthew Wasserman and his wife, Lori. He joins big sister Madelyn. We wish the entire Wasserman family much health and happiness.