When does absent Employee cease to be an Employee of the Employer?

FACTS:

CA employer sponsor Safe Harbor 401k plan

Eligibility waiting period is 1 Year of Service (12 mos, 1000 hrs)

Plan Entry Dates: 1/1 and 7/1 coincident with/following waiting period

Employee "A" is hired 3/15/2019 on full-time basis. Projected Entry Date is 7/1/2020

On approximately 1/15/2020  "A" apparently moves and does not show up for work, without any notice to CA employer/plan sponsor. Sometime thereafter the CA employer learns "A" claims to have become disabled since moving and has filed for state (and/or Federal) Disability; "A's" request is denied apparently due to failure to satisfy Disability requirements. "A" did work > 1000 hours from Date of Hire (3/15/2019) to the last day "A" reported for work (approx 1/15/2020). To date, "A" has not been in contact with the CA employer/plan sponsor. The CA employer does not want to send a termination notice in as it fears "A" may try to sue, claiming terminated due to disability.

The CA employer/plan sponsor wants to know if "A" must be provided with enrollment materials at this time (based on 7/1/2020 entry date). They would prefer not to reach out if it is not necessary.

The Plan provides:

1.63 "Period of Severance" means a continuous period of time during which an Employee is not employed by the Employer. Such period begins on the date the Employee retires, quits or is discharged, or if earlier, the twelve (12) month anniversary of the date on which the Employee was otherwise first absent from service.

QUESTIONS:

1.  At what point is "A" no longer an employee of the employer?
2. If "A" is still an employee, albeit an "inactive" employee, when is the employer obligated to provide Enrollment Materials?
3. If "A" is still an employee, albeit an "inactive" employee, what determines termination/severance from employment? Does CA employment law provide a standard for this situation, or, any federal guidelines?

It seems worst case scenario is "A" continues to be an employee, and, since "A" has 1000+ hrs and more than 12 mos have elapsed since DOH, "A" is eligible with an entry date of 7/1 - or is it the date "A" returns to service if later?  Failure of employer to provide Enrollment Materials at this time (or later if eligibility entry date is later date) can be corrected... but if "A" earns zero the correction will result in $0 contributions due.

Any help and/or insight is appreciated. Thank you.

How is the company treating this person on their books?  This isn't a retirement law question.   This is an employment law question.  Have they done other things you would normally do when someone is terminated?  Have they given this person a COBRA notice?   Have they marked him as no longer employed on their payroll system?   Have they notified other benefit providers this person is no longer an employee and not covered under those programs?  

To me the company has to decide when, if ever, did this person stop being their employee.  

10 hours ago, cheersmate said:

The CA employer does not want to send a termination notice in as it fears "A" may try to sue, claiming terminated due to disability.

It sounds like for other legal purposes, the employer is treating A as a current employee still.  It is typically up to the employer or plan administrator to interpret the plan document, but it seems to me there is some danger that the employer's interpretation is arbitrary and capricious if the employer says that A is terminated for qualified plan purposes but not for state employment law purposes.

Also, check the plan document.  Occasionally they have definitions of what constitutes a termination of employment.

Tell the client that it's not a big deal to notify A of the retirement plan.  If A earns no compensation from this point going forward, there will be no cost.

As far as what must be provided, the SPD must be distributed within 90 days after July 1, 2020.  When the enrollment kit must be distributed isn't regulated as tightly, but I wouldn't treat A any differently (assuming the employer concludes that he is an employee still).

I seems to me this is firat an employment law matter, and depending on whether or not still an employee predicates elig issue. The emplyer wants to do what is correct.

What I was hoping is someone may know specifically whether these circumstances ("no show" and now for several months) triggers termination as per some section of CA employment law or regulation. 

The Plan document addresses the Period of Severance begins 12 mos following 1st day absent from work (if not retired, quit, discharged otherwise).

As for COBRA it is a small employer (<20 ees). I am not certain health insurance status. 

38 minutes ago, cheersmate said:

I seems to me this is firat an employment law matter, and depending on whether or not still an employee predicates elig issue. The emplyer wants to do what is correct.

What I was hoping is someone may know specifically whether these circumstances ("no show" and now for several months) triggers termination as per some section of CA employment law or regulation. 

The Plan document addresses the Period of Severance begins 12 mos following 1st day absent from work (if not retired, quit, discharged otherwise).

As for COBRA it is a small employer (<20 ees). I am not certain health insurance status. 

 

This is a question for their labor lawyer who can help interpret CA law.  Normally, an employee who doesn't show up for work after a few days is no longer employed.  The reticence to call the employee terminated may or may not be justified (I'm guessing it is not as he failed to show up for work without any notification)  but the lawyer can best answer.

26 minutes ago, Larry Starr said:

This is a question for their labor lawyer who can help interpret CA law.  Normally, an employee who doesn't show up for work after a few days is no longer employed.  The reticence to call the employee terminated may or may not be justified (I'm guessing it is not as he failed to show up for work without any notification)  but the lawyer can best answer.

It is my understanding the reticence is based on fear of "stirring up an otherwise quiet pot" that could lead to reprisal. Possibly related to California Family Rights Act and/or A's apparent claims of disability (not related to work injury and not at time of no-show, rather sometime thereafter) even though all claims to date have been declined. A has not at anytime reached back to the employer - it is like A just quietly walked away.  The employer paid all wages due.  There was never an exchange of unpleasantry.  In the course of preparing for their upcoming July 1 newly eligible employees, this matter has come to the surface, and to my knowledge.

1 hour ago, cheersmate said:

What I was hoping is someone may know specifically whether these circumstances ("no show" and now for several months) triggers termination as per some section of CA employment law or regulation.

These message boards are frequented by employee benefits professionals throughout the US.  You are unlikely to obtain a response here from someone who claims to be familiar with California employment laws and regulations.

Thank you all - it is very much appreciated as always!