New Jersey Appellate Court Clarifies Important Definition of “Misconduct” by Employees

New Jersey employment laws protect the rights of employees in a wide range of areas, including workers’ right to unemployment compensation, subject to various conditions. State agencies and the courts are charged with ensuring that employers and the state fairly apply the rules regarding eligibility for unemployment compensation. The New Jersey Superior Court, Appellate Division, recently invalidated part of a rule adopted by the state’s Department of Labor and Workforce Development (LWD). The challenged rule defined “misconduct,” in the context of unemployment, in a way that the court found “arbitrary and capricious.” In re N.J.A.C. 12:17-2.1, No. A-4636-14T3, slip op. at 3 (N.J. App., May 1, 2017). A consistent definition of “simple misconduct,” the court held, is required to protect workers’ rights.

The New Jersey Unemployment Compensation Law (UCL) states that eligible individuals shall receive benefits for a set period of time after they become “unemployed,” within the meaning established by the statute. See N.J. Rev. Stat. §§ 43:21-3, 43:21-19(m)(1). Benefits are paid from an unemployment insurance program funded by payroll tax deductions and employer contributions. In order to obtain benefits, an individual must file a claim with LWD. See N.J. Rev. Stat. §§ 43:21-4, 43:21-6.

An individual may be disqualified from eligibility for unemployment benefits if they were “suspended or discharged for misconduct” by their previous employer. Id. at § 43:21-5(b). The employer has the opportunity to respond to a former employee’s unemployment claim, including with allegations of misconduct. The statute identifies three levels of “misconduct”:  simple, severe, and gross misconduct. The challenged LWD rule, codified at N.J.A.C. 12:17-2.1, defines the three levels of misconduct.

“Gross misconduct,” according to the LWD rule, involves one or more acts considered a crime under New Jersey law. “Severe misconduct,” while not criminal in nature, “is both deliberate and malicious.” “Simple misconduct” has the most complicated definition, including acts that involve a “wanton or willful disregard of the employer’s interest,” as well as “negligence” that indicates “culpability, wrongful intent, or evil design.” The court focused on the “simple misconduct” definition in its opinion.

The court cites a prior decision that reviewed the history of the UCI, noting that the statute originally only identified “misconduct” and “gross misconduct” as grounds for disqualification. N.J.A.C., slip op. at 3, citing Silver v. Board of Review, 61 A.3d 958 (N.J. App. 2013). In 2010, the Legislature added “severe misconduct” and changed “misconduct” to “simple misconduct.” Courts have attempted to “fill in the gap left by the omission…of an express definition of ‘simple misconduct.’” N.J.A.C. at 4.

The court’s decision in Silver included a statement of concern over the lack of “a codified rule that distinguishes ‘simple misconduct’ from the more stringent intermediate concept of severe misconduct’…or the most extreme category of ‘gross misconduct.’” Id. at 2. The LWD rule resulted from this statement, but the court found its definition of “simple misconduct” to be invalid. In combining “negligence” with “intent-based concepts such as ‘willful disregard,’” the rule is “illogical[] and confusing[],” and it overlaps or exceeds the definition of “severe misconduct.” Id. The court set this portion of the rule aside but allowed the LWD 180 days to adopt a new definition.

To speak to a employment lawyer about a legal matter in New Jersey or New York, contact the Resnick Law Group today online, at 973-781-1204, or at (646) 867-7997.

More Blog Posts:

New Jersey Appellate Division Upholds State Law Prohibiting Hiring Discrimination Based on Unemployment, The New Jersey Employment Law Firm Blog, February 26, 2014

Youth Unemployment in New Jersey, Nationwide On the Rise, The New Jersey Employment Law Firm Blog, August 29, 2011

Bill Would Ban Unemployment Discrimination in New York, The New Jersey Employment Law Firm Blog, June 6, 2011

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