Alan Schorr’’s Employment Case of The Week ending March 8, 2013

Russell v. Board of Review, 2013 WL 811405 (App. Div. March 6. 2013)

The Appellate Division got it completely wrong in one the first cases to reach the Appellate Division on the issue of the interpretation of the new “severe misconduct” disqualification standard for unemployment.

Terrell D. Russell was a cleaner with New Jersey Transit Bus Operations (NJT). He was discharged in January 2011 because his absences exceeded the point system in effect by NJT. Russell did not contest that he exceeded the maximum points allowed, but explained that he was generally late to work because of child care issues. Russell’s mother worked night shift and he could not leave in the morning if his mother returned from her work late. The employer had previously warned him about his absenteeism and lateness, and admittedly, he had never explained to NJT the reasons for his repeated lateness.

Russell was initially held disqualified for benefits under the new “severe misconduct” statute. The Appeal Tribunal upheld the disqualification, and the Board of Review thereafter affirmed. Appeal to the Superior Court Appellate Division followed, and the Appellate Division confirmed the disqualification. In doing so, the Appellate Division made a series of illogical and backward rulings which merit discussion here.

First, the Appellate Division misunderstood the burden of proof, which should have been on the employer, not Mr. Russell. The Court erroneously cited Brady v. Bd. Of Review, 152 N.J. 197, 218 (1997) for the proposition that the burden to establish a right to unemployment is upon the employee. The Court simply got it wrong. Brady was a voluntary quit case, and in cases in which an employee has quit, the burden does rest upon the employee. However, in cases involving misconduct, the burden is always upon the employer. N.J.A.C. 12:17-10.2(b) expressly provides that “to sustain disqualification under this section [misconduct], the burden of proof is on the employer to show that the employee’s actions constitute misconduct.” Here, the employer did not even file a brief.

Then, the Appellate Division failed to appreciate that the standard for complete disqualification for severe misconduct should be a higher standard than the standard for “simple” misconduct, which only carries an eight week penalty. A brief history is important.

The original bill, S-1813, was innocuous legislation, intended only to reduce unemployment taxes to employers for tax year 2011. The bill went through all the proper channels and public committee hearings and received bi-partisan support. The bill easily passed both houses in May, although curiously the record reflects 32 abstentions in the Assembly. But Governor Christie issued a conditional veto, insisting that the reduction in unemployment taxes must be coupled with a reduction in unemployment benefits. The Governor proposed an intermediate tier of disqualification for “severe misconduct”, carrying a penalty of complete disqualification. However, this new standard is not a middle tier at all. The new law purports to insert an “intermediate” standard of “severe misconduct” which also carries the penalty of total disqualification, which means that it is not an intermediate penalty at all, since it carries the same penalty as gross misconduct. Furthermore, the standard for severe misconduct is actually lower and broader than the standard for simple misconduct, which means that any employee terminated for any kind of misconduct, including conduct that was not formerly considered misconduct at all, will now be totally disqualified from collecting unemployment benefits.

The Appellate Division here erroneously found that it was the Legislature’s intent to have a lower standard to prove severe misconduct than simple misconduct. It is completely illogical to assume that the Legislature intended for complete disqualification due to severe misconduct to have a lower standard of misbehavior than an eight week penalty for simple misconduct. Furthermore, although Governor Christie’s veto tasked the Department of Labor to write new regulations, they have not done so. Accordingly, we only have a definition of “misconduct” which states:

For an act to constitute misconduct, it must be improper, intentional, connected with one’s work, malicious, and within the individual’s control, and is either a deliberate violation of the employer’s rules or a disregard of standards of behavior which the employer has the right to expect of an employee. N.J.A.C. 12:17-10.2 (a).

Our Courts have repeatedly held that excessive absenteeism occasioned by family emergencies does not constitute misconduct. See, e.g. Parks v. Board of Review, 405 N.J. Super, 252 (App. Div. 2009). The Court here rejected that case here, holding that Parks is not dispositive because the new “severe misconduct” statute lists “repeated lateness or absences after a written warning” as an example of severe misconduct.

Logic would seem to dictate that if behavior does not rise to the statutory definition of “misconduct”, it could not possibly rise to the level of “severe misconduct”. Yet, the Appellate Division has made that ruling, and in doing so, has turned unemployment law upside down. There are a few other cases in the pipeline that will hopefully give a different panel the opportunity to find a different result. As of the writing of this article, Mr. Russell had not decided whether to appeal to the Supreme Court. Legislators, most notably Senator Barbara Buono, have tried to pass Legislation to fix this very poorly written statute. The bill, S-147/A3707, has already passed the Assembly and is waiting for the Senate Committee to put to it through. Hopefully, the Legislature will succeed where the Court has failed, and some sensibility will return to unemployment law.

Appellant’s counsel: William B. Hildebrand

Respondent Board of Review’s counsel: Jeffrey S. Chiesa, Attorney General, Lisa N. Lackay on the brief

Appellate Court Judges: Sabatino and Fasciale.