Gross misconduct is undefined in COBRA legislation. But it is generally considered criminal conduct in the workplace, even though the IRS does not provide guidance on what gross
misconduct is. Courts have provided some guidance by ruling that "the nature of the conduct itself is reasonably outrageous to the employer" or conduct "so outrageous that it shocks the conscience." Courts have also looked to see the employee was denied unemployment benefits when deciding if an employee was fairly terminated.
In the past, acts of gross misconduct included theft, embezzlement, misrepresentations and non- work-related violence effecting the workplace.
If you are an employer, make sure to communicate company standards upon hiring, and before any terminations, to all the employees. Document actions that indicate gross misconduct. It's a good idea to give employees a chance to explain themselves or correct their behavior, before terminating them for gross misconduct.
The Lang v. Quality Mold case shows the importance of providing written and reasonable company standards regarding what qualifies as gross misconduct. We are not talking about making copies with company paper!
In Lang v. Quality Mold a court forced an employer to make the payment to an employee who was fired for misconduct — even though the company said he wasn't owed anything.
The company’s handbook said that employees fired for “gross misconduct” would receive pay for earned but not unused vacation time. The term “gross misconduct” was never defined.
Lang was fired after he failed a mandatory drug test. He did not receive any vacation pay. Lang sued, claiming a failed drug test didn't reach the level of gross misconduct and demanded his pay for leave he didn’t use.
The court agreed with Lang since Quality Mold didn’t explain what conduct it was referring to, the judge said “gross misconduct” refers to actions that are “intentional, wanton, willful, deliberate, reckless or in deliberate indifference to an employer’s interest.”
According to the court, failing a drug test rise to the level of “gross misconduct.” The employee was awarded his vacation pay.
Another case, Jennifer Reavis, a nurse, was terminated from employment for “mooning” a male nurse. Her employer advised that, because of her “gross misconduct,” she did not qualify for COBRA continuation of health care coverage and the COBRA subsidy available under the American Recovery and Reinvestment Act of 2009 (ARRA). Ms. Reavis appealed the decision to the Department of Labor (“DOL”), which determined in an administrative proceeding that she was entitled to subsidized COBRA coverage under the ARRA. The DOL issued a determination letter stating that her conduct did not amount to “gross misconduct” that would disqualify her from COBRA continuation coverage.
If your employer used terms that are not clearly defined in their handbook, and if they did mention "gross misconduct" in employee notices, firing for gross misconduct may be unreasonable. Employee antics, absences and lateness can certainly be grounds for termination. But misdeeds are not considered "gross misconduct" until they eclipse criminal status.
If your employer denies you COBRA continuation coverage on the basis of "gross misconduct," did they:
Record of the acts or lack of acts leading to the termination and how these acts of omissions adversely affected the business?
Make a paper trail on how the choice was made to fire the employee clearly over gross misconduct?
Send you (and your eligible dependents) a “Notice of Unavailability of COBRA Coverage,” advising you that coverage is being denied because you were termination for "gross misconduct? You must also be given the right to appeal the determination by the plan administrator.