Week Ending 3/22/13: Silver v. Board of Review

Alan Schorr’s Employment Case of The Week ending March 22, 2013

Silver v. Board of Review, --- A.3d ----, 2013 WL 1149596 (App. Div. March 21, 2013) (Published)

This week’s Case of the Week, Silver v. Board of Review is a complete game changer for unemployment law. The Appellate Division has finally ruled that the Department of Labor has been interpreting the new “severe misconduct” standard improperly. In so ruling, the Appellate Division has published an opinion with bright line law that should put an end to the almost random disqualifications that have caused untold harm to New Jersey’s unemployed workers for the past two years. I am especially proud of this case, since our firm represented Ms. Silver.

Joan Silver was a teacher at the Middlesex County Youth Facility, a correctional facility, from 2002-2011. During that time, Ms. Silver experienced repeated problems with students stealing pens, crayons, or other supplies. Over the nine years, she had been written up for six previous incidents of student theft (this was a correctional facility for criminal youth). On the final day of her employment she had handed pens out to each student. She carefully checked each pen in, and believed that she had all the pens, but after class was dismissed she realized she only had 11 pens instead of 12. She immediately reported the potential security breach and a search was made for the missing pen, but it was never found. Ms. Silver’s new supervisor decided to terminate her for this lapse.

Ms. Silver applied for unemployment benefits, and was denied all benefits due to severe misconduct. The Appeal Tribunal affirmed, finding that,

In this case at hand, while there is little doubt the claimant was a conscientious employee, her action of failing to ensure she had all twelve pens before releasing the class was a violation of the established procedures in place.

Without making any finding that Ms. Silver ever intentionally violated any policy, the Appeal Tribunal held that since Ms. Silver had been previously warned regarding the same and similar procedural lapses, she was disqualified from all benefits for severe misconduct. Ms. Silver appealed to the Board of Review, which rubber-stamped the Appeal Tribunal decision.

It is important to understand the history of the severe misconduct statute. Prior to July 1, 2010, there was only one tier of misconduct disqualification, which would impose a six week penalty. In July 2010, the Legislature attempted to pass a statute that would assist employers by lowering the amount of unemployment tax paid by employers, who were suffering from high rates due to the very high unemployment. After the statute passed with bi-partisan support, Governor Christie issued a conditional veto insisting that if the monies coming into unemployment are reduced, then unemployment must be reformed so that less money is paid out.

The CV provided that the penalty for “simple misconduct” would be increased from six weeks to eight weeks, and that there would be an intermediate tier of disqualification for “severe misconduct”. The intermediate tier, however, did not contain an intermediate penalty. The penalty for “severe misconduct” was total disqualification - the same penalty as for “gross misconduct”, which requires the commission of a crime. The only difference was the amount of time you had to be re-employed before re-applying for benefits. The statute provided no definition of “severe misconduct”, merely providing a list of examples which were obviously rushed and prepared with little thought. Some of the examples of “severe misconduct” were identical to those which were already “gross misconduct”, such as theft of company property. Some examples were simply absurd, such as “excessive use of intoxicants or drugs on work premises” (with no indication of how many joints you have to smoke before it raises from simple to severe misconduct).

There were a couple of examples which the Department of Labor seized upon to improperly disqualify tens of thousands of otherwise eligible employees - repeated violations of an employer’s rule or policy and repeated lateness or absences after a written warning. These two examples were especially dangerous because these examples would never even rise to the level of “simple misconduct”, and therefore workers were disqualified for severe misconduct for actions that would never even constitute “misconduct” as defined by the regulations and 57 years of case law. Nevertheless, Senator Sweeney pushed through the bill without any public disclosure or comment and “severe misconduct” was born.

The CV provided that the Department of Labor should adopt a set of regulations to define the contours of severe misconduct, but after two years, the Department of Labor has failed to adopt any regulations at all. Instead, the DOL has set about disqualifying workers for practically any reason at all. We have had clients disqualified for mixing paint incorrectly, forgetting to lock a jewelry cabinet (nothing was stolen), accidentally handing out an incorrect x-ray, attending a grandfather’s funeral (see Regis v. Board of Review), and, in the case of Joan Silver, having a juvenile criminal steal a pen from her despite her best efforts to follow all policies and procedures.

The misinterpretation of this new statute by the Department of Labor had devastating effects. So many people were disqualified from benefits that the waiting time for an Appeal Tribunal ballooned from three weeks to six months. Workers were completely denied due process when their benefits were denied without good cause, as they were not afforded a fair hearing for over six months, which completely negated the entire purpose of having unemployment as a safety net. Several legislators have tried to remedy the situation. Senator Buono introduced a very well written Bill which would much more clearly and fairly define the tiers of disqualification. Although the Bill has passed the assembly, it has become bogged down in the Senate. The Senate Labor Committee has held hearings and declared that New Jersey is denying due process to workers, but has failed to take any remedial actions.

It has also taken two years to get this issue to the Appellate Division. This is the fifth “severe misconduct” case that we have taken to the Appellate Division. In the first three, the Board of Review voluntarily remanded and paid benefits, which prevented judicial review. The last one, Regis v. Board of Review, was remanded by the Court for reasons unrelated to the severe misconduct (read more here). In the meantime, the disqualifications increased in numbers and absurdity. The only reason that this case reached an Appellate panel is because the Middlesex County counsel stepped in and decided to file its own brief challenging Ms. Silver’s benefit. That removed the matter from the Board of Review’s hands, since they could not offer remand.

That is why this published opinion is so very important and why I call it a game changer. The Appellate Division has finally stepped in and redefined the contour of the misconduct statutes, emphasizing that, in order to be “severe misconduct”, an employee’s actions must at least rise to the established definition of “misconduct”, which requires an employee’s actions to be “intentional, deliberate, and malicious”. Thus, simple negligence or absenteeism beyond the employee’s control can never be “severe misconduct” because it does not satisfy the definition of “misconduct”. The Appellate Division placed the blame for this squarely upon the Board of Review, holding that it “ignored its own definition of ‘misconduct’”.

The Appellate Division singled out the examples being used by the DOL for mass disqualifications and redefined them. With regard to “repeated violations of an employer’s rule or policy” and “repeated lateness or absences after a written warning,” the Appellate Division ruled that these examples must also satisfy the misconduct definition and therefore require that the repeated violations of policies or repeated absences must be deliberate, intentional, and malicious.

Hopefully, the Senate will quickly pass the pending Bill S147 so that we finally have a comprehensible statute. Until then, the Courts have done their job and have provided us with a clear set of guidelines for future unemployment claims.

Special thanks and congratulations to Zach Wall, who did a great job writing two briefs that were extensively relied upon by the Court. Zach is one of the most knowledgeable and successful unemployment practitioners in New Jersey, and it showed in his excellent work on this case.

Claimant-Appellant’s counsel: Alan H. Schorr, Zachary R. Wall on the briefs, Alan H. Schorr & Associates, P.C.

Respondent County of Middlesex counsel: Benjamin D. Leibowitz, Deputy County Counsel

Respondent Board of Review: Jeffrey S. Chiesa, Attorney General, Alan C. Stephens on the statement in lieu of brief.

Appellate Court Judges: Ashrafi (did not participate in oral argument), Hayden and Lisa.

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