Under the federal
Consolidated Omnibus Budget Reconciliation Act (COBRA), employers with 20 or more
employees must offer employees and their dependents the right to continue their
group health coverage if they lose group health insurance coverage because of a
“qualifying event,” including termination, hours reduction, divorce or legal
separation, or death. The
Continuation Benefits Replacement Act (Cal-COBRA),
which is the state law providing health benefits continuation coverage if an
employer has 2 to 19 employees, has similar requirements.
Although termination is
a qualifying event that entitles an eligible employee to elect COBRA
continuation coverage, there is an important exception: If an employee is fired
for “gross misconduct,” COBRA rights don’t kick in.
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Here’s a checklist
employers can use to help determine whether the cause of an employee’s
discharge was gross misconduct for COBRA purposes. The more “Yes” answers you
give, the more likely the reason for the termination was gross misconduct.
• Did the employee’s
conduct physically harm anyone? If so, how badly?
• Has the employee
violated the same work rule several times before?
• Did the employee
realize the seriousness of his or her actions?
• Will the employee be
denied unemployment benefits based on the conduct?
• Did the conduct
seriously harm the employer’s business?
• Was work severely
disrupted?
• Were other employees
significantly affected?
• Was the employer
exposed to bad publicity that could seriously harm its business?
• Was the employer’s
reputation severely damaged?
• Will the employer lose
significant business or otherwise suffer economic harm because of the
misconduct?
• Will the employer be
heavily fined because of the misconduct?
• Could the employer
lose its business license because of the employee’s misconduct?
• Has the harm to the
employer already occurred?
• Will the employee lose
a license needed to work for the employer (e.g., a driver’s license)?
• Was there criminal
activity involved?
• Was it a felony?
• Did the misconduct
harm a person?
• Was fraud involved?
• Was a safety statute
violated?
• Was a civil statute
violated?
• Was the misconduct
purposeful?
• Was the misconduct on
duty?
• Is the policy violated
well known to employees?
• Does the misconduct
justify immediate termination?
• Has the employer immediately
fired other employees who did something similar?
• Did the employee have
an opportunity to explain the conduct before the determination that it was gross
misconduct?
“Yes” answers to the following
questions suggest the employer needs to exercise caution before denying COBRA
continuation coverage for gross misconduct:
• Does the employee have
a reasonable explanation for the conduct?
• Was there any
provocation leading to the employee’s conduct?
• Was this the first time
the employee violated a company policy?
• Is the harm to the
employer merely a potential?
• Is only a misdemeanor
as opposed to a felony involved?
• Does any criminal
activity relate to property as opposed to harm to a person?
• Was the conduct off
duty?
• Has the employer only
reprimanded other employees who did something similar?
Remember to evaluate
misconduct cases carefully, weighing whether the behavior of an employee terminated
for cause was serious enough to be gross misconduct.