Dear Gina – I just fired an employee for gross misconduct. Please tell me I don’t have to offer him COBRA?
Unfortunately, the answer is not cut and dried. Technically, the triggering COBRA qualifying event of termination of employment excludes termination for gross misconduct (including the covered employee, spouse or dependent children). However, it becomes sticky as COBRA law contains no definition of gross misconduct, and no consistent standard has been articulated by the courts or regulators.
Except for the most flagrant conduct that is clearly a substantial and willful disregard of the employer’s interests, plan administrators cannot be sure which employee conduct would fall into the category of gross misconduct. We advise all of our COBRA clients to send the COBRA notice to err of the side of caution. We’ve seen many court cases are won by the ex-employee because gross misconduct has no legal definition. So, while there may be a sting of injustice in offering COBRA to an employee who may not deserve it, the expense and headache of a potential lawsuit are much greater for the employer than simply offering COBRA at the outset.