Under federal law, employers with 20 or more employees must offer continued health plan benefits, at the workers’ expense, for a period of time after employment ends. And in California, employers with fewer than 20 employees must also do so. However, under both federal and state regulations, you don’t have to offer this COBRA coverage to employees who are fired for gross misconduct. A case arising from a knock-down-drag-out battle between two airline employees sheds light on when you can refuse COBRA coverage to a terminated employee.
Employees Clash Aboard Airplane
Kae Nakisa was a Continental Airlines flight attendant. While working onboard a plane between flights, she had an altercation with co-worker Erika Hall, a Continental catering worker. Nakisa allegedly asked Hall to clean up some trash on the floor, but Hall refused and instead dumped more onto the floor. Nakisa then threw an apple and called Hall a “nigger.” As passengers boarded the plane, Hall attacked Nakisa and held her in a chokehold on the floor until first-class passengers separated the two women. Both Hall and Nakisa were fired.
400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.
Employer Doesn’t Offer COBRA Benefits
Nakisa sued Continental, complaining that after she was terminated, the airline didn’t notify her of her right to health care continuation coverage as the federal COBRA law requires. Continental maintained that COBRA notification was actually mailed to Nakisa as a matter of course. But it also asserted that COBRA notice wasn’t required because it had terminated Nakisa for gross misconduct.
No COBRA Coverage For Gross Misconduct
A federal court in Texas agreed and threw out Nakisa’s case. The court explained that under COBRA, an employee terminated for gross misconduct isn’t entitled to COBRA benefits, and the employer doesn’t have to notify the worker of COBRA rights. The court explained that gross misconduct goes beyond negligence or incompetence. It encompasses conduct that is intentional, willful, reckless or in deliberate indifference to an employer’s interest, or that deliberately violates a reasonable rule or policy that harms the employer or other employees.
The court found Nakisa was guilty of gross misconduct in the fight with Hall. Although Nakisa argued that Hall was the aggressor, the court noted that Hall was walking away when Nakisa threw the apple and uttered the word “nigger.” The confrontation flagrantly violated Continental’s written rules that prohibit fighting or threatening conduct and require behavior that reflects favorably on Continental. Engaging in this altercation knowing that passengers were about to board the plane demonstrated deliberate indifference to Continental’s customer relations interests, the court said.
Who COBRA Covers
To avoid problems, it’s important to know the federal and California COBRA eligibility rules. Here are some guidelines:
- Determine eligibility. Employees qualify for COBRA benefits if they lose group coverage for certain reasons such as termination, hours reduction, disability or divorce. An employee who does not return from leave under the Family and Medical Leave Act may also be eligible. But employees terminated for gross misconduct are not eligible under federal COBRA or Cal/COBRA, and those who voluntarily quit aren’t eligible under Cal/COBRA.
- Figure out length of coverage. The length of continuation coverage depends on the circumstances. It may last for up to 18 months for an employment termination or reduction of hours, 29 months for a disability and 36 months for a covered spouse and dependents after the employee’s death or a legal separation or divorce. California law also provides up to five years of coverage for former covered spouses or employees who are 60 or older at termination and who worked for the employer for at least five years. Continuation rights end if the employee obtains other group coverage or becomes eligible for Medicare, or if the employer terminates group coverage for its employees.
- Evaluate misconduct cases carefully. Weigh whether the behavior of an employee terminated for cause was serious enough to be gross misconduct. Keep in mind that notifying an employee about continuation rights costs you little because the employee pays for coverage.
- Give timely notice of COBRA rights. You must notify your plan administrator within 30 days of a qualifying event. The administrator has 14 days to give written notice to covered employees and their spouses of COBRA continuation rights.