COBRA and Cal-COBRA Notice Claims Against California Employers

A former employee who never received a COBRA election notice can ask a court for up to $110 a day, on top of any medical bills the lost coverage caused. Under 29 U.S.C. § 1132(c)(1), a plan administrator who fails to provide the required notices “may in the court’s discretion be personally liable” to the participant. Employers with 20 or more employees face federal COBRA. Smaller California employers face Cal-COBRA instead. The defense usually turns on who the administrator was, what was mailed, and when.

Which law applies to which employer?

Federal COBRA at 20 or more employees, and Cal-COBRA at 2 to 19.

Federal COBRA requires group health plans to offer continuation coverage after a qualifying event. 29 U.S.C. § 1161(b) exempts a plan for a calendar year “if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year.” Part-time employees count in that calculation under the federal rules, so a business near the line should check its count carefully.

Cal-COBRA covers the smaller employers. Under Health and Safety Code section 1366.21, an “Employer” for the California program is a small employer that “employed 2 to 19 eligible employees on at least 50 percent of its working days during the preceding calendar year.” The Health and Safety Code version governs health care service plans, and a parallel article starting at Insurance Code section 10128.50 governs insured plans.

The coverage periods differ. Federal COBRA generally runs 18 months after a termination or reduction in hours under 29 U.S.C. § 1162, with extensions for second qualifying events and disability. Cal-COBRA coverage under section 1366.27 can run up to 36 months.

What notices does federal COBRA require, and from whom?

Three notices, with different deadlines, and the employer may owe some or all of them.

The general notice comes first. Under 29 C.F.R. § 2590.606-1, the plan administrator must give each covered employee and spouse written notice of COBRA rights within 90 days after their coverage begins.

The employer’s notice to the administrator comes next. 29 U.S.C. § 1166(a)(2) requires the employer to notify the plan administrator of a termination, reduction in hours, death, Medicare entitlement, or employer bankruptcy “within 30 days” of the qualifying event. Divorce, legal separation, and a child losing dependent status are different: under paragraph (3), the employee or beneficiary has to notify the administrator within 60 days.

The election notice comes last. Under section 1166(c), the administrator must notify qualified beneficiaries within 14 days of receiving the qualifying event notice. When the employer is also the administrator, 29 C.F.R. § 2590.606-4(b)(2) gives it a single deadline of 44 days after the qualifying event, or after the loss of coverage if the plan starts the period then.

Many small and mid-size employers are the plan administrator without realizing it, because the plan document names the company. A third-party COBRA vendor handles the mailing, but the employer can remain the legally responsible administrator. Checking the plan document is the first step in any notice claim.

What can a former employee recover for a missing notice?

A discretionary statutory penalty of up to $110 a day, plus any losses the missing coverage caused.

The penalty provision is narrower than it first looks. Section 1132(c)(1) applies to “Any administrator” who fails to meet the requirements of paragraph (1) or (4) of section 1166, meaning the general notice and the election notice. The employer’s 30-day notice to the administrator under paragraph (2) isn’t on that list. When the employer and the administrator are separate, the employer’s late notice to the administrator isn’t itself a basis for the statutory penalty, though it can still create other liability.

The amount in section 1132(c)(1) is “up to $100 a day,” and the administrator “may in the court’s discretion be personally liable.” The court also “may in its discretion order such other relief as it deems proper.” 29 C.F.R. § 2575.502c-1 raised the daily figure to “$110 a day” for violations after July 29, 1997. The penalty is discretionary, not automatic. Whether the administrator acted in good faith and whether the former employee was harmed are the facts that shape that discretion.

Actual damages are the larger exposure in some cases. A former employee who lost coverage without a valid election notice and then incurred major medical expenses may claim those expenses or ask to be allowed to elect coverage retroactively. That’s why proof of mailing matters more than the penalty math.

When is a termination not a qualifying event?

When the employee was terminated for gross misconduct.

29 U.S.C. § 1163(2) defines the qualifying event as “The termination (other than by reason of such employee’s gross misconduct), or reduction of hours.” Cal-COBRA has the same exception in section 1366.21(d)(2). An employer that denies COBRA on that basis takes on a real litigation risk, because gross misconduct is a high bar and ordinary poor performance or a policy violation usually won’t meet it.

The safer course is to send the election notice anyway in nearly every termination. Offering coverage that the former employee pays for costs the employer little. A gross misconduct denial that a court later rejects invites the penalty claim, the medical expense claim, and a jury’s view that the employer was punishing the employee twice.

What does Cal-COBRA require of the employer?

Written notice to the health plan within 30 days, and sometimes more if the employer took on administration.

Under section 1366.25(a), group contracts must require the employer “to notify the plan, in writing, of any employee who has had a qualifying event” within 30 days. The same subdivision requires written notice within 30 days when the employer grows into federal COBRA coverage. The health plan, or an employer or administrator that contracted to do it, must then send the election materials within 14 days under subdivision (e).

Subdivisions (b) and (c) add duties when an employer changes health plans. The employer must tell existing Cal-COBRA beneficiaries they can continue under the new plan, and must tell the successor plan who those beneficiaries are. A plan change is where Cal-COBRA notices are most often missed, because the beneficiaries are former employees no one is thinking about.

Steps to take after a COBRA notice claim

1. Preserve the plan document, summary plan description, COBRA vendor agreement, general and election notices, mailing logs and proof of mailing, payroll and benefits enrollment records, and termination paperwork, under a litigation hold once a claim arrives.
2. Calendar the response date on the demand or summons, and check for an EPLI or fiduciary liability policy with notice requirements, and any indemnity from the COBRA vendor.
3. Identify who served as plan administrator, who sent each notice, and who decided any gross misconduct denial, and avoid any action toward the former employee that could look like retaliation.
4. Pull the documents the claim turns on: the date of the qualifying event, the date the administrator learned of it, the date each notice was mailed, and the address used.
5. Talk to a lawyer before responding, contacting the former employee or their lawyer, or offering anything to settle.

COBRA claims often arrive alongside a termination lawsuit, and employee benefits claims defense for California employers starts with the mailing record. Severance negotiations are a natural place to address COBRA premiums, and the firm’s post on severance agreements and releases covers how those agreements are drafted.

FAQ

Is the employer liable if its COBRA vendor failed to send the notice?

It depends on who the plan names as administrator. The statutory penalty in section 1132(c)(1) runs against the “administrator,” and many plan documents name the employer even when a vendor does the mailing. If the employer is the administrator, a vendor’s failure is usually the employer’s problem in court, and the remedy is an indemnity claim against the vendor under the service agreement.

Does the employer have to prove the former employee actually received the notice?

Federal courts generally look at whether the notice was sent by a method reasonably calculated to reach the beneficiary, such as first-class mail to the last known address, rather than actual receipt. That makes the mailing log, the address on file, and any returned mail the key evidence. An employer that can’t show a notice was mailed is in a much weaker position than one that can.

Is the $110-a-day penalty automatic?

No. Section 1132(c)(1) says the administrator “may in the court’s discretion be personally liable” for “up to” the daily amount. Courts can award less or nothing. Good faith, a short delay, prompt correction, and no harm to the former employee all support a smaller award or none.

Can an employer deny COBRA to an employee fired for misconduct?

Only for gross misconduct, which is a narrower category than misconduct that justifies termination. Both 29 U.S.C. § 1163(2) and Cal-COBRA exclude terminations for gross misconduct. Because a wrong call creates penalty and damages exposure, most employers send the election notice even after a for-cause termination and leave the gross misconduct argument for cases with clear, documented facts.

If a former employee says COBRA notice was never sent

If your company has received a demand or lawsuit alleging that a COBRA or Cal-COBRA notice was late, missing, or wrongly denied, the plan document and the mailing record usually decide how strong the claim is. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including COBRA and Cal-COBRA notice claims after a termination. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

29 U.S.C. §§ 1132, 1161, 1162, 1163, and 1166; 29 C.F.R. § 2575.502c-1, § 2590.606-1, and § 2590.606-4; Health and Safety Code sections 1366.21, 1366.25, and 1366.27; Insurance Code section 10128.50.

This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.