Q.- We are firing two employees because they used our tools and started a competing business on company time. We think this is gross misconduct. Do we have to offer them COBRA?
A.- We suggest that you consult your legal counsel.
COBRA does not include a definition for gross misconduct, but courts do not look kindly on denying COBRA coverage. If the company refuses to offer these individuals continuation coverage under COBRA and if the individuals sue, being wrong about gross misconduct can lead to an award of retroactive COBRA coverage and the imposition of penalties of up to $110 per day. If the company does not offer COBRA coverage, we suggest that you send a letter to the individuals informing them that COBRA coverage will not be offered because the company has determined that they were terminated for gross misconduct.
