Under The Consolidated Omnibus Budget Reconciliation Act (“COBRA”), employees and their families are not entitled to COBRA coverage under the employer’s group health plan when an employee is terminated for “gross misconduct.” There will be no qualifying event under COBRA unless the voluntary or involuntary termination of employment is for reasons other than gross misconduct.
However, the term “gross misconduct” is not specifically defined in COBRA or in regulations under COBRA. Therefore, employers should be very cautious about withholding COBRA benefits when an employee is terminated for misconduct. Whether a terminated employee has engaged in “gross misconduct” is a determination for the Courts and will depend on the specific facts and circumstances of the situation. Employers should be aware that there can be serious consequences for failing to comply with COBRA if an employee’s misconduct is not deemed “gross misconduct”.
There are certain offenses that clearly constitute gross misconduct, and have been deemed so by Courts. Generally, it can be assumed that being fired for most ordinary reasons, such as excessive absences or generally poor performance, does not amount to “gross misconduct.”
This article was written by Natalie C. Najarian, Associate at Demorest Law Firm.
