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Never consider insurance costs when terminating

by on
in Employee Benefits Program,Firing,Human Resources

It’s frustrating! Every year, employers face yet another increase in their health insurance premiums. And if there are many older or sick employees, those costs will keep on rising. Even adding one sick child to the list can drive costs into the stratosphere.

But before you even consider firing (or refusing to hire) someone because they might jack up insurance costs, count your dollars, not your pennies. You might be staring down a lawsuit that could dwarf whatever premium costs you hoped to avoid.

Recent case: Jay Dybdahl sued his former employer and supervisor after he was terminated. He claimed the underlying reason was that his son, who was covered by the company health insurance plan, was seriously ill and therefore a financial drain on the company.

The court said the case should go to a jury trial. Dybdahl can argue that coincidental timing cast doubt on the company’s claim it had good reasons to terminate Dybdahl. (Dybdahl v. Midwave, No. 09-331, DC MN, 2010)

Final notes: Simply put, it’s illegal under the ADA to terminate someone because of his or her association with a disabled person. Plus, the Employee Retirement Income Security Act—which governs benefits plans—makes it illegal to fire someone in order to deny a benefit he or she would otherwise receive.

Imagine how a case like this will play in front of a jury. Here’s an employee with a sick child who needs health insurance coverage. If Dybdahl can persuade jurors that the real reason he was terminated was to cut the employer’s insurance costs, the sky’s the limit on damages.

Advice: In a situation like this, just bite the bullet. Either you or your employees will have to pay higher premiums. Sorry.

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