After a Philadelphia school district fired a high-school math teacher for misusing money from the extracurricular activity account, the teacher sued. He claimed, among other things, that the school district refused to offer him COBRA continuing health insurance coverage.
The school district argued it wasn't obligated to offer COBRA because he'd been fired for "gross misconduct," and COBRA law says workers fired for that reason aren't owed continuing coverage. But the court didn't see things that clearly.
In letting his case proceed, it noted that COBRA doesn't define "gross misconduct." It said that other courts deciding similar cases have borrowed definitions of "willful misconduct" or other terms from state unemployment compensation law. Using those definitions, the court said, there wasn't enough proof without question that the teacher was guilty of gross misconduct. (Chatterjee v. School District of Philadelphia, E.D. Pa., No. 21602, 2001)
Advice: Such cases may come down to a question: Swallow your pride or swallow a lawsuit? You may not like extending health insurance coverage to workers fired for abusive or unethical behavior, but it's often the smartest course. Given the legal uncertainty of what constitutes gross misconduct, you're on shaky legal ground when using this reason to deny COBRA. And in court, the burden of proof is on you.
That's why it's smarter to offer COBRA than risk lengthy litigation. The good news: With COBRA, you don't have to help pay premiums. Under federal law, you can make the employee pay up to 102 percent of the cost to your group insurance plan for maintaining the benefits. The extra 2 percent is to cover your administrative costs.
For more details on COBRA rules and notification requirements, get the Labor Department's free booklet, Health Benefits Under COBRA, at (800) 998-7542 or www.dol.gov/dol/pwba/public/pubs/COBRA/cobra99.pdf.
- Don't institute payroll deductions without employees' consent
- Think twice before challenging unemployment--former worker may well qualify for benefits
- Never retaliate for wage complaint--unless you're prepared to pay big bucks!
- Design your bonus program with the FMLA in mind
- Expect new rules on who's exempt; possible changes to comp-time law