Severe Misconduct Disqualification Eliminated from NJ Unemployment
I am pleased to report that the New Jersey legislature has finally repealed the extraordinarily unfair and misapplied severe misconduct disqualification standard in the State’s unemployment statute. Governor Christie and his lieutenants had concocted, in 2008, this additional mode of disqualifying applicants as a revenue raising, budget balancing tactic.
Governor Murphy signed this bill on August 24, 2018 and it takes effect immediately. The new law corrects many unworkable and unfair provisions of the unemployment statute, such as:
- There are no longer three tiers of misconduct disqualification (“simple”, “severe” and “gross”);
- There will now be only two tiers of misconduct (“misconduct” and “gross misconduct”);
- The misconduct disqualification will be shortened from 8 weeks to 6 weeks;
- The only total disqualification will be for “gross misconduct,” which requires the commission of an act that rises to the level of a crime;
- It includes a more cogent definition of “misconduct.” The bill provides that “Misconduct” means conduct which is improper, intentional, connected with the individual’s work, within the individual’s control, not a good faith error of judgment or discretion, and is either a deliberate refusal, without good cause, to comply with the employer’s lawful and reasonable rules made known to the employee or a deliberate disregard of standards of behavior the employer has a reasonable right to expect, including reasonable safety standards and reasonable standards for a workplace free of drug and substance abuse.” and
- The employer has the burden of proof to demonstrate “misconduct.” Prior to a determination by the Department of misconduct, the employer must provide written documentation demonstrating that the employee’s actions constitute misconduct or gross misconduct.
I am particularly pleased to see the revisions regarding the burden of proof necessary to establish misconduct. I have represented many employees who were wrongfully denied the receipt of critical unemployment benefits based on their own testimony when the employer failed to appear. Moreover, the Department will not be able to rule against the claimant employee without adequate written documentation from the employer.
Should you have any questions regarding the above changes in the NJ State Unemployment statute, please contact a knowledgeable New Jersey employment lawyer.
Worker Who Quits for a Better Job May Still Get Unemployment Benefits
I was pleased to read that the NJ Appellate Division gave a fair reading to a recent amendment to the NJ unemployment compensation statute in order to award benefits to a displaced worker.
In McClain v. Board of Review, the Appellate Division overturned the New Jersey Board of Review’s denial of unemployment benefits to Patricia McClain who left her job as a teacher at one private school to take a job at another – but then found herself unemployed after the second school rescinded its offer of employment.
McClain applied for unemployment benefits after she learned that her new job offer had been rescinded. Her claim was denied and she appealed. The Appeal Tribunal affirmed the denial of benefits, holding that she was disqualified from receiving unemployment compensation benefits because she left her first job “voluntarily without good cause attributable to such work.” The Appeal Tribunal also noted that there is a recently enacted exemption from the disqualification for an individual who voluntarily leaves work with one employer to accept from another employer employment which commences not more than seven days after the individual leaves employment with the first employer, if the employment with the second employer has weekly hours or pay not less than the hours or pay of the employment of the first employer [and the employee is terminated from the second job.] The Appeal Tribunal determined McClain was not covered by the exemption because she did not actually commence employment with the second employer within seven days of her last day of employment at the first employer. She was scheduled to start with the second employer within the seven days, but that offer was rescinded before she could start. The Appeal Tribunal determined McClain was not covered by the exemption because she did not actually commence employment with the second employer within seven days of her last day of employment with the first employer.
The Board of Review, on appeal, also denied McClain’s application for unemployment benefits on the same grounds.
The three-judge Appellate Division panel, disagreed, and held that “a claimant need not actually start the new employment to be exempt from disqualification.” The Court said the issue was a question of interpretation, and added that the statute should be interpreted liberally so as not to penalize workers who leave one job for another that pays better. They also noted that 26 other states have adopted similar statutes and interpreted them similarly. Finally, the Court noted that there was nothing in the legislative record to support the imposition of a condition that a claimant begin working the new job within seven days in order to be eligible for benefits.
I usually blog about New Jersey unemployment cases and determinations but there is an interesting case that was just decided in New York that is worth noting. Although the legal standard for entitlement to unemployment benefits differs between the states, both New Jersey and New York ultimately look to see how much “control” the business exercises over the worker in making its determination on how the relationship should be classified. The more control a business has over the worker in the nature and manner of the work performed, the more likely it is that he or she will be considered an employee who is entitled to unemployment benefits.
In the New York case, Yoga Vida NYC, Inc. v. Commissioner of Labor, No. 130 (N.Y. Oct. 25, 2016), the New York State Court of Appeals issued a rare decision, concluding that the employer yoga studio did not exercise sufficient control over certain of its instructors to create an employment relationship, thereby disqualifying the workers for unemployment compensation benefits.
Yoga Vida, a Manhattan-based yoga studio, offers classes taught by both staff instructors, classified as employees, and non-staff instructors, classified as independent contractors. The NYS Unemployment Insurance Appeal Board held that the non-staff instructors were misclassified as independent contractors and that Yoga Vida was therefore responsible for paying additional unemployment contributions. Yoga Vida appealed to the Appellate Division, which affirmed the determination of the Appeal Board. The NYS Court of Appeals reversed, finding that the non-staff instructors were not employees because Yoga Vida did not exercise sufficient control “over the results produced and the means used to achieve the results.”
The Court relied on the following in support of its decision:
- The instructors made their own schedules and chose how they were paid – either hourly or on a percentage basis;
- The non-staff instructors were only paid if a certain number of students attended their classes (the staff instructors were paid regardless of whether anyone attended a class);
- Yoga Vida did not restrict the non-staff instructors from teaching at other studios;
- The instructors were not required to attend staff meetings or receive training.
The Court found that the “incidental control” the studio exercised over the non-staff workers, such as determining if the instructors had the proper licenses; publishing a master schedule on its web site; providing space for the classes; and providing a substitute instructor, if necessary – did not warrant a finding of employee status. The Court did not view as dispositive that the studio generally determined the fee it charged to students and collected it directly from the students. Finally the Court held that students providing feedback on the non-staff instructors did not render the instructors employees.
Employers and workers need to understand that all employment classifications determinations are fact-dependent. I recommend that businesses conduct a self-assessment of their independent contractor models, with the supervision of counsel, to determine the risk of a classification challenge from their independent contractors or government agencies.
On September 15, 2015, Rina Traub, Esq. was featured on “Know Your Rights NJ” in a program discussing unemployment insurance. This program, which is available for viewing here, is produced by Princeton Community Television. Ms. Traub described New Jersey’s unemployment insurance program in detail, including the basics of qualifying for benefits and appealing adverse determinations from the Department of Labor.
Know Your Rights New Jersey, 9 15 from Princeton Community Television on Vimeo.
If you have questions regarding your entitlement to unemployment insurance benefits, or have been denied benefits, contact a knowledgeable employment attorney to discuss your options.
The New Jersey Department of Labor has settled a lawsuit that claimed applicants for unemployment benefits have been wrongfully denied counsel and other due process rights. As part of the Consent Order that lays out the terms of the settlement, the Department agrees to address its procedures for telephone hearings and other proceedings.
Each claim for unemployment has three possible stages where notifications are sent out: (1) a notification of the initial fact-finding interview; (2) notice of a hearing before an appeal tribunal, which is sent out if the claimant challenges the initial eligibility finding; and (3) notice of hearing before the Board of Review, which is the next and final step in the internal process before the matter goes to an appellate court.
The class action lawsuit claimed that notices sent at the first and third stages of the above process lack any notification that the claimant has a right to counsel. The lawsuit pleadings claimed that, even worse, claims examiners routinely instructed claimants that they do not have the right to counsel, and affirmatively prevented them for doing so. This is quite troubling, given that attorneys ensure that the rights of claimants are protected and instruct their clients on what they can legally accomplish.
As part of the settlement, the Department agreed, among other measures, to update its’ written notifications and direct claims examiners to advise claimants of their rights, particularly the right to be represented by an attorney or non-lawyer. The Department also agreed to circulate an administrative directive to the examiners, who will be required to read a statement outlining what role attorneys may play in the hearing, including the ability to make objections, provide documentary evidence or offer a closing statement. Moreover, where the ex-employee and the employer are both attending the hearing, the examiner must advise of the attorney’s right to ask questions of the other side, according to the directive.
It’s about time that the Department cleans up its unemployment benefits procedure. As a practitioner who regularly represents claimants before the Department, I have personally witnessed the widespread violations of people’s rights, at a time when they are unemployed and the most vulnerable. Hopefully, these hard fought for changes will vastly improve the system.
Four more New Jersey’s cities, Paterson, East Orange, Passaic, and Irvington, have adopted paid sick leave ordinances similar to the one which was passed in Jersey City late last year. These laws make it mandatory for employers with more than 10 employees to pay employees for up to five sick days per year. The state legislature is currently considering a bill which would extend paid sick leave to employers state-wide.
Proponents of the bill point to the fact that there are 1.2 million New Jerseyans who currently do not get paid if they take a sick day, which results in a big hit to our economy. At the same time, studies have shown there is no significant downside to employers, a large majority of whom have reported no negative consequences to their profits.
This kind of common-sense legislation will benefit New Jersey’s working families and employers and we wholeheartedly support it.