New Jersey Appellate Court Hands Workers a Win in Unemployment Benefits Case

Over the last several years, the New Jersey Department of Labor and Workforce Development has taken a number of steps attempting to introduce new language to the laws surrounding unemployment benefits. Many of these have been viewed as unnecessarily harsh, and the department has been accused of purposely limiting terminated workers’ ability to file for unemployment benefits. We recently argued against the law in court, and the results are that the N.J. Appellate Division court reviewed the most recent iteration of the language in question and deemed it “a linguistic morass, one that cannot be readily or sensibly understood and applied.” They have charged the department with creating substitute language over the next six months. The decision is being viewed as a win for the state’s unemployed employees.

The rule in question was N.J.A.C. 12:17-2.1, which was introduced two years ago in 2015. That rule replaced a previous one that had been the subject of numerous reversals of benefit denials, and had itself been the target of preemptive objections by advocates for the state’s workforce.

To understand the legal saga behind the court’s recent decision, you need to first understand that New Jersey law imposes delays and other consequences based upon the circumstances of a person’s departure from their place of employment. Initially New Jersey law only referred to either “misconduct” or “gross misconduct” in spelling out benefits restrictions, but in 2010 the new rule was put in place. According to 12:17-2.1, those who are unemployed with no misconduct cited are entitled to begin collecting benefits one week after termination, while those whose termination was a result of “simple misconduct” are required to wait eight weeks before they could begin to receive compensation. Those who are dismissed as a result of “severe misconduct” are completely disqualified from receiving benefits until they have worked in a new job for a minimum of 4 weeks and have earned six times the weekly benefit rate to which they are entitled. When the termination is related to “gross misconduct” the requirement extends to being in the new job for a minimum of eight weeks and having earned at least ten times the amount of the weekly benefit.

Though the statute clearly defined what gross misconduct was – spelling it out as an act that would be viewed as a crime of the first, second, third or fourth degree under state laws – there were no specifics for what simple or severe misconduct represented. “Severe misconduct” represented an additional standard that was added to the law, which originally only referenced misconduct and gross misconduct. With the introduction of “severe misconduct”, misconduct became “simple misconduct.” Neither simple misconduct nor severe misconduct were defined: instead the law provided representative examples that made clear that “severe misconduct” – which significantly delayed the receipt of benefits while simple misconduct did not — was interpreted as violations of company conduct rules, including being repeatedly late after having received a written warning, abuse of leave, use of drugs or intoxicants at work, and physical assault.

This 2010 amendment introduced the opportunity for employers to delay providing benefits for reasons that were viewed as inappropriate, and in 2013 our law firm filed a lawsuit on behalf of Joan Silver, a teacher at the Middlesex County Youth Facility. Ms. Silver had taught at the facility for nine years. The school had a rule requiring teachers to collect all pens from students at the end of each class for security reasons, and on six occasions she had failed to collect and return the correct number of pens. Following the sixth shortfall she received a warning that she would be terminated if it happened again, and six months later it did. Not only was she terminated over the missing pen, but the school indicated that she was guilty of severe misconduct based on having violated an employer policy repeatedly, and that therefore her unemployment benefits should be delayed.

Upon hearing our arguments in Ms. Silver’s case in 2013, the court reversed the denial on the grounds that her conduct did not qualify as either an intentional or malicious act, indicating that it was inappropriate to interpret negligence or inadvertence as a “severe” act when the lower category of “simple misconduct” had a standard requiring intent and malice. At that time the court referenced the fact that the Department of Labor was in the process of creating a distinction between simple and severe misconduct and that they awaited that guidance. The new rule was passed in 2015 indicating that “simple misconduct” is an “act of wanton or willful disregard of the employer’s interest, a deliberate violation of the employer’s rules, a disregard of standards of behavior that the employer has the right to expect of his or her employee, or negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design, or show an intentional and substantial disregard of the employer’s interest or of the employee’s duties and obligations to the employer.” This definition was passed into law despite numerous objections from our firm and other workforce advocates based on its removal of a requirement of maliciousness. We argued that there had never been an intent on the part of the legislature to hold back unemployment benefits based on negligence or on making a mistake – even if the mistake was made on more than one occasion.

Upon the law’s passage we challenged it in court, charging that the new law was an attempt to disqualify more workers from the benefits that they deserved by expanding the definition of misconduct. In making their decision, the appellate court looked to the rulings handed down in our original representation of Ms. Silver, recalling its decision that there was a “critical distinction between intentional and deliberate conduct on the one hand and negligent or inadvertent conduct on the other.” The court said that the Department of Labor’s 2015 revision to the rules “failed to make this critical distinction,” and blended “concepts of negligence with intentional wrongdoing that cannot be sensibly understood or harmonized.” They further questioned the rule’s definition of “simple misconduct,” and though they did not go so far as to indicate that they believed the department had acted maliciously, they did indicate that they needed to return with a better solution in 180-days’ time.

The Department of Labor has indicated that it attends to appeal the court’s decision, but in the last two months the Appellate Division has handed down two rulings that favored employees’ rights.

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