Is it illegal for a company to continue to take out money for health insurance that it hasnt been paying?

UPDATED: Sep 5, 2019

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Is it illegal for a company to continue to take out money for health insurance that it hasnt been paying?

I recently found out my health insurance
has been terminated for 3 months now. My
employer never notified me of this and
is still taking out money out of my
paycheck for health insurance. Also i am
wondering if this could get me out of a
noncompete contract. Also the company
filed chapter 11 bankruptcy around a
month ago.

Asked on September 5, 2019 under Employment Labor Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

1) It is not legal: in fact, it is a form of theft--they are taking money of yours that they are not entitled to, since you had only consented to allowing it to be taken out to provide you with insurance, but you are not getting the insurance. You could sue them for the money they took out, which will be complicated, unfortunately, by the bankruptcy.
2) It may be sufficient to terminate the non-compete. Certainly, if the non-compete is part of a larger employment agreement which guaranteed you health insurance, then their breach of a material, or important, part of the agreement would be sufficient to terminate the agreement as a whole, letting you out of the non-compete clause.
If the non-compete is a stand alone agreement, then whether it does or does not terminate it depends on whether a judge (if this were to go to litigation; e.g. they were to try to sue you for violating it) would conclude that continuing to charge you for health insurance without providing it was so antithetical to the employer-employee relationship and so unreasonable that it constituted effectively or "constructively" terminating you; if it did, then it would terminate the non-compete. We cannot say definitively whether a judge would or would not feel this were the case; all we can say is that a judge might or could. Unfortunately, there is a subjective element to this (it's in large part up to a judge's personal judgement or evaluation of the situation) and we cannot predict that in advance.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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