NJASA

New Jersey Legislature Amends Unemployment Compensation Law to Clarify the Definition of Misconduct for Purposes of Disqualification from Benefits

New Jersey’s Unemployment Compensation Law (UCL)¹ is intended to provide income security to former eligible employees through the payment of unemployment insurance benefits when those individuals become involuntarily unemployed.² In the context of public school employment, an individual would be involuntarily unemployed if s/he were separated from employment due to a non-renewal of his/her employment contract, and/or if s/he were separated from employment due to a reduction in force. On the other hand, in general, when an otherwise eligible employee voluntarily resigns from his/her position with an employer, that individual will not be entitled to unemployment benefits.³ Similarly, an employee who is terminated from employment due to “misconduct” will not be entitled to unemployment benefits.

The problem prior to August 24, 2018, when the amendments to the UCL were signed into law and became effective,⁴ was determining what “misconduct” was. Prior to August 24, 2018, there were three types of misconduct: simple misconduct; severe misconduct; and gross misconduct.⁵ Each type of misconduct had its own implications for how long the individual would be disqualified from being able to receive future benefits.⁶ Each of these three types of misconduct also had its own definition, and those definitions also had terms with their own separate meanings.⁷ As a result, determining whether an individual engaged in simple misconduct or severe misconduct was sometimes difficult. In fact, the New Jersey Superior Court, Appellate Division invalidated the definition of “simple misconduct” because it “illogically and confusingly mixe[d] in concepts of ‘negligence’ with intent-based concepts such as ‘willful disregard,’ ‘evil design,’ ‘wrongful intent,’ and similar states of mind.”⁸

As a result of the Appellate Division’s decision, along with other court decisions, and the lack of a clear definition of misconduct, the Legislature determined to amend the UCL and provide a clear definition. Under the amended UCL, “misconduct” is now defined as:

. . . 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.⁸

While the definition of misconduct was clarified and removed the category of “severe misconduct,” the UCL retained the “gross misconduct” standard which disqualifies individuals from receiving benefits if they were discharged for the commission of a first, second, third, or fourth degree crime in connection with their work.¹⁰ 

If a school employee has been terminated for misconduct and applies for unemployment insurance benefits, the burden of proof is on the board, as the employer, to demonstrate that the employee’s actions constituted misconduct or gross misconduct.¹¹ In order to do so, the board must provide the Department of Labor and Workforce Development (DOL) with written documentation demonstrating the former employee’s misconduct or gross misconduct, and must provide the documentation prior to any benefits determination.¹²

The Legislature also amended the UCL’s disqualification period for a discharge for misconduct. When an employer demonstrates that a former employee was terminated for misconduct, s/he is disqualified for receiving benefits from the week s/he was discharged and for the next five (5) weeks.¹³ After the disqualification period ends, s/he may be eligible to receive benefits. Previously, the disqualification period was seven weeks. If a former employee is discharged for proven gross misconduct, s/he may technically be disqualified from receiving unemployment benefits indefinitely. In order to overcome a gross misconduct disqualification, the individual must return to work for at least eight weeks, earn ten (10) times his/her weekly benefit rate, and thereafter become involuntarily unemployed.¹⁴

School administrators must be mindful of situations in which they are discharging individuals for misconduct. In order to be prepared to defend a former employee’s claim for unemployment benefits, school administrators must ensure that they have written documentation demonstrating the misconduct or gross misconduct. This written documentation may include performance evaluations, correspondence including emails, witness statements, police reports, tenure charges, arbitrator awards, and judgments of conviction. It is important to work closely with the board attorney to make sure all relevant information is documented in order to be able to present such evidence to the DOL. As always, questions regarding the UCL and claims for benefits should be directed to the board attorney.

Endnotes

¹ Pub. L. 1936, ch. 270.

² See N.J.S.A. 43:21-2; N.J.A.C. 12:17-1.1(a).

³ See N.J.S.A. 43:21-5(a).

⁴ Pub. L. 2018, ch. 112 (effective August 24, 2018).

⁵ N.J.S.A. 43:21-5(b) (2017); N.J.A.C. 12:17–2.1 (defining “misconduct”).

⁶ For example, an individual, who was discharged for simple misconduct, was disqualified from receiving unemployment compensation benefits for the week in which the misconduct occurred and for the seven weeks that immediately follow. See Washington v. Board of Review, 2016 WL 6156210 (App. Div. 2016).

⁷ “Gross misconduct” is defined as “an act punishable as a crime of the first, second, third, or fourth degree under the New Jersey Code of Criminal Justice .  .  .  .”  N.J.A.C. 12:17–2.1. “Severe misconduct” is defined as “an act which (1) constitutes ‘simple misconduct,’ as that term is defined in this section; (2) is both deliberate and malicious; and (3) is not ‘gross misconduct.’” “Simple misconduct” is defined as “an act which is neither ‘severe misconduct’ nor ‘gross misconduct’ and which is an act of wanton or willful disregard of the employer's interest, a deliberate violation of the employer’s rules, a disregard of standards of behavior that the employer has the right to expect of his or her employee, or negligence in such a degree or recurrence as to manifest culpability, wrongful intent, or evil design, or show an intentional and substantial disregard of the employer's interest or of the employee’s duties and obligations to the employer.” Id. 

⁸ In re N.J.A.C. 12:17-2.1, 450 N.J.Super. 152, 156 (App. Div. 2017).

⁹ N.J.S.A. 43:21-5(b) (as amended).

¹⁰ See id.

¹¹ Id.

¹² Id.

¹³ Id.

¹⁴ See N.J.S.A. 43:21-5(a) and (b).