Q. Under the American Rescue Plan Act (ARPA), if an employee willfully and knowingly disregards company policy, is she not voluntarily terminating her employment? Also, in that same vein, when does misconduct move from violating company policy and arrive at "gross misconduct”?
A. A federal Consolidated Omnibus Budget Reconciliation Act (COBRA) premium assistance program, among other assistance, is available under ARPA to “assistance-eligible individuals” (AEIs) who did not previously elect the continued health care benefit coverage under COBRA. AEIs are generally defined as employees involuntarily terminated or experienced a reduction in hours between Nov. 1, 2019, and Sept. 30, 2021, and includes employees’ covered dependents. Others eligible for the COBRA subsidy are those who elected COBRA continuation coverage but are no longer enrolled because they were unable to continue paying the premium. The agency guidance released the first week of April minimally clarified the scope of beneficiaries who qualify as AEIs and, unfortunately, has yet to provide a clear meaning of “involuntary” for terminated workers. Indications are that additional clarifying guidance may be issued by the U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS).
The initial agency guidance does not shed much light on the meaning of “involuntary” but does confirm, consistent with COBRA provisions, an individual terminated for “gross misconduct” cannot qualify as an AEI. Looking back on previous IRS interpretations of involuntary termination in relation to COBRA suggest that termination for cause has been considered involuntary termination. Thus, termination for violation of company policy would likely be interpreted as termination for cause and an involuntary termination under the current provision.
To meet the undefined “gross misconduct” standard for COBRA purposes, the DOL has taken the position that it depends on specific facts and circumstances, generally noting that excessive absences or generally poor performance does not meet the “gross misconduct” standard. Courts interpretating COBRA gross misconduct determinations, especially the 9th Circuit U.S. Court of Appeals, which reviews federal matters in Idaho and other states, have generally ruled in favor of employees, requiring flagrant and extreme misconduct to meet the standard. Thus, a willful violation of company policy would have to be a substantial deviation from the standards and obligations under your policies to support a gross misconduct determination.
Jason R. Mau is an attorney in the Boise office of Parsons Behle & Latimer. He can be reached at 208-562-4898 or email@example.com.