Starbucks Deficient COBRA Notice at Separation Class Action

Certain federal laws regulate the benefits larger companies provide to their employees. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), an employee terminated under certain circumstances can continue to benefit from the company’s medical plan for a period of time. However, the complaint for this class action alleges that Starbucks Coffee Company does not provide such employees with the required notice of these benefits.

The class for this action is all participants and beneficiaries in Starbucks’s health plan who were sent a COBRA notice by Starbucks during the applicable statute of limitations as a result of a qualifying even, as determined by Starbucks’s records, and who did not choose to continue coverage.

The law requires companies to provide eligible employees with a proper notice about COBRA benefits. Since the information that must be provided is detailed, the Department of Labor (DOL) has provided a Model COBRA Notice form that companies can fill out according to their own specifics and give to employees to satisfy the requirements of the law. However, Starbucks has not chosen to use this form. The complaint alleges this is “presumably to save Starbucks money because COBRA coverage is inherently expensive for employers.”

In fact, the complaint quotes from a Congressional research service study: The “average claim costs for COBRA beneficiaries exceeded the average claim for an active employee by 53%. The average annual health insurance cost per active employee was $7,190, and the COBRA cost was $10,988.14.”

The complaint alleges that the Starbucks COBRA notice violates the law because it does not offer all the information needed in a single document that is “written in a manner calculated to be understood by the average plan participant[.]”

For example, it says, the March 2020 notice given to the plaintiff in this case does not explain how to enroll in COBRA and does not include an election form to facilitate that. “Instead,” the complaint says, “the enrollment notice merely directs plan participants to a ‘catch-all’ general H.R. phone number to enroll in COBRA, and website, operated by a third[] party disguised as Starbucks’s HR department, rather than explaining how to actually enroll in COBRA.”

The complaint includes other allegations about how the notice violates the law in other ways:

  • It does not include the address to which COBRA payments should be sent.
  • It does not identify the plan administrator.
  • It does not include information on how COBRA benefits might be lost prematurely.
  • It does not provide all the explanatory information required.
Article Type: Lawsuit
Topic: Employment

Most Recent Case Event

Starbucks Deficient COBRA Notice at Separation Complaint

June 8, 2020

Certain federal laws regulate the benefits larger companies provide to their employees. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), an employee terminated under certain circumstances can continue to benefit from the company’s medical plan for a period of time. However, the complaint for this class action alleges that Starbucks Coffee Company does not provide such employees with the required notice of these benefits.

Starbucks Deficient COBRA Notice at Separation Complaint

Case Event History

Starbucks Deficient COBRA Notice at Separation Complaint

June 8, 2020

Certain federal laws regulate the benefits larger companies provide to their employees. Under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), an employee terminated under certain circumstances can continue to benefit from the company’s medical plan for a period of time. However, the complaint for this class action alleges that Starbucks Coffee Company does not provide such employees with the required notice of these benefits.

Starbucks Deficient COBRA Notice at Separation Complaint
Tags: ERISA Violations, Improper COBRA Notice