McDonald’s Corp. Cleared for COBRA Class Deal Covering Thousands

McDonald’s Corp. received final approval for a $156,783 class settlement in a federal lawsuit claiming it sends confusing and legally deficient notices explaining workers’ right to keep their health insurance coverage after leaving their jobs.

The deal is expected to provide 8,959 people with net payments of between $7 and $10, according to settlement papers filed in the US District Court for the Southern District of Florida. It covers participants and beneficiaries in the McDonald’s health plan who received a COBRA notice between Dec. 15, 2017, and Feb. 9, 2021, and didn’t elect to receive continued health coverage under COBRA.

Judge Federico A. Moreno granted final approval to the deal on Tuesday. In a separate order, he awarded the health plan participants’ lawyers one-third of the settlement amount—$52,261—as attorneys’ fees, along with $4,336 in costs.

The lawsuit claims the notice that McDonald’s sends to inform workers of their COBRA rights omits critical information and is presented in a confusing and piecemeal fashion that causes workers to lose coverage.

COBRA, the Consolidated Omnibus Budget Reconciliation Act, requires companies with 20 or more employees to allow workers and their covered family members to continue their employer-sponsored health coverage for a brief period after they’ve been terminated or experienced another qualifying event. The statute requires employers to notify workers of their COBRA rights and dictates what information must be included in the notices.

Dozens of proposed class actions alleging COBRA notice failures have been filed in federal court over the past three years. McDonald’s settlement is in line with similar deals signed by Home Depot USA Inc. ($815,000), Costco Wholesale Corp. ($750,000), WCA Management Co. ($210,000), Enhanced Recovery Co. ($140,000), and Goodman Group Inc. ($112,240).

Faegre Drinker Biddle & Reath LLP represents McDonald’s. Wenzel Fenton Cabassa PA represents the plan participants.

The case is Johnson v. McDonald’s Corp., S.D. Fla., No. 1:21-cv-24339, final settlement approval order 2/14/23.