Schorr & Associates’ Employment Case of The Week ending March 10, 2017

Acevedo v. Flightsafety International, Inc., __ N.J. Super. __; 2017 N.J. Super. LEXIS 29 (N.J. Appellate Division, March 6, 2017)

The New Jersey Appellate Division, in a published opinion, made it clear this week that unemployment benefits may not be deducted from the back pay portion of a discrimination verdict.  Although the law has been established for a long time, this has been an issue that continually confuses trial judges because in civil cases other than discrimination, unemployment benefits are routinely deducted.  This published case will put to rest any confusion in the future.

Co-Plaintiff Rex Fornaro (Ms. Acevedo settled before trial) filed a disability discrimination and retaliation claim against his employer, a flight training school.   He prevailed at trial and was awarded back pay of about $83,000.  The trial judge reduced the award by $14,000, representing 50% of the unemployment compensation that Mr. Fornaro received.  There were other issues addressed in an unpublished opinion relating to attorney’s fees and other claimed trial errors, but the published opinion only focused on the unemployment issue, where the Appellate Division reversed and reinstated the full back pay.

New Jersey has a collateral source statute, N.J.S.A. 2A:15-97, which requires that income from collateral sources like unemployment be deducted from back pay in civil cases.  But cases under the New Jersey Law Against Discrimination have long been an exception.  The Appellate Division, in this opinion affirmed that discrimination Plaintiffs are exempt from the Collateral Source Rule.

The reasoning for this exception is that the NJLAD is remedial legislation intended to eradicate the cancer of discrimination, protect employees, and deter employers from engaging in discriminatory practices.  The Appellate Division stated that “shifting the benefit of unemployment compensation from the wronged employee to the discriminating employer does not serve the LAD’s deterrent purpose.”

The Court pointed to Model Civil Jury Instruction 2.33A(8), which since 1993 has provided that unemployment compensation should not be deducted, but the cases footnoted only include a Law Division case from 1974 and a Third Circuit case from 1983.  So now we have a brand new published New Jersey Appellate case that should permanently resolve this confusion.

The trial judge in this case will be retiring on May 4, 2017.  The entire plaintiff employment Bar wishes her a happy and peaceful retirement.

Trial Judge: Francine A. Schott, J.S.C.
Appellate Judges: Reisner, Koblitz and Sumners