Benefits Administration Manual

Consolidated Omnibus Budget Reconciliation Act (COBRA)

414. Gross Misconduct

If the termination from employment is due to "gross misconduct", then the department should not offer COBRA coverage. While providing this exception to offering COBRA, the statute and IRS have not provided a definition for employers to use. However, if a department wants to utilize the gross misconduct exception, you should draft a written policy that will serve as the basis for your decision on what will constitute gross misconduct. It is very important that your employees are made aware of what type of actions would constitute a gross misconduct termination.

Keep in mind that when a covered employee is terminated for gross misconduct, there is no qualifying event for the covered employee, spouse, domestic partner, or dependent children. None of these individuals are offered COBRA. It is recommended that the Personnel Office send a letter to qualified beneficiaries stating that COBRA coverage will not be offered.

Although there is not a common standard to apply in gross misconduct cases, one federal court fashioned the following definition of gross misconduct:

• Gross misconduct may be intentional, wanton, willful, deliberate, reckless or in deliberate indifference to the employer's interest. It is misconduct beyond mere minor breaches of employee standards, but conduct which would be considered gross in nature.

The following information can also assist you in determining gross misconduct cases:

• Written Policy: Is there a written policy in your department that described the actions that would constitute gross misconduct? Was the employee made aware?
• Employee History: What type of employment history did the employee have at the department? Was the reason for termination a recurrent problem?
• Violation of Law: Did the employee violate a federal, state or local law? Has the employee been charged in criminal court? Has the employee admitted the violation?
• State Unemployment Compensation Disqualification Based on Gross Misconduct: A description of reasons to disqualify former employees from collecting unemployment compensation is identified in the California State Unemployment Insurance Law.
• Consult Legal Counsel: Legal counsel should review the reasons for termination and assist in the gross misconduct decision making process.

A gross misconduct decision should not be based upon a single event described above, but totality of the facts and circumstances associated with the employee.

Updated February 14, 2011 at 3:43 PM.