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What constitutes “Severe Misconduct” under New Jersey Unemployment Law?

In 2010, the New Jersey legislature amended New Jersey Unemployment Benefits law to include a new basis for disqualification of benefits called “severe misconduct”. Prior to the change in law, a claimant could be denied from receiving unemployment benefits if he or she was terminated for “misconduct” or “gross misconduct.” Misconduct is defined by the regulations as an act that is “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. Gross misconduct is defined by law as a termination caused by the claimant as a committing a crime of the first, second, third or fourth degree under the New Jersey Code of Criminal Justice.

While adding “severe misconduct” as a new basis for unemployment benefits disqualification, the Legislature did not define what “severe misconduct” means, and instead set forth a non-exclusive list of examples of what could be severe misconduct. These examples include “repeated violations of an employer’s rule or policy; repeated lateness or absences after the applicant receives a written warning from their employer; falsification of records; physical assault or threats that do not constitute gross misconduct; misuse of benefits or sick time; abuse of leave; theft of company property; excessive use of drugs/alcohol on the job; theft of time; or where the behavior is malicious and deliberate but is not considered gross misconduct.
Since the amendment to the unemployment law, our New Jersey unemployment lawyers have seen far too many cases in which the lack of a clear definition of severe misconduct has resulted in an unjust and unfair result for our clients. A lot of confusion for Appeal Tribunal examiners stems from the fact that last statutory example of severe misconduct (where the behavior is malicious and deliberate but is not considered gross misconduct) is in fact a lesser standard than the regulations definition of misconduct.

For approximately three (3) years, no New Jersey court wrote any decisions concerning the change in law. However, finally, in the case Silver v. Board of Review, decided March 21, 2013, the Appellate Division reviewed and analyzed the change in unemployment benefits law and provided some guidance as to the applicability of the new law, including the difference between misconduct and severe misconduct. In acknowledging that there is no definition regarding “severe misconduct” in the statute, the Appellate Division in Silver stated “it seems to us fundamental that the term “misconduct,” should have the same meaning throughout N.J.S.A. 43:21-5(b) and its implementing regulation. The Appellate Division further stated:

Two examples of severe misconduct listed in the 2010 amendment describe, if read literally, conduct that would not necessarily be deliberate, intentional, or malicious (“repeated violations of an employer’s rule or policy,” and “repeated lateness or absences after a written warning”). However, light of the history we have described, it is obvious that the Governor and Legislature intended to create severe misconduct as a gap-filler between simple misconduct and gross misconduct. It would make no sense to allow for conduct with a lower level of culpability (such as mere inadvertence or negligence) to qualify as severe misconduct and carry with it a harsher sanction than simple misconduct. Such a result would be absurd and clearly contrary to the legislative intent…

In Silver, the Appellate Division reversed the Board of Review’s decision disqualifying the claimant Ms. Silver for “severe misconduct.” Although Silver decision has provided the Department of Labor and all unemployment claimants more guidance concerning the meaning of “severe misconduct”, there still remains no clear definition of “severe misconduct.” Fortunately, there is a bill pending (A1874) that would amend N.J.S.A. 43:21-5 of the New Jersey Unemployment law to include clear definitions for both simple misconduct and severe misconduct. All New Jersey citizens are encouraged to contact their state representatives to assure this bill is passed.