New Jersey Abandons Severe Misconduct Disqualification of Unemployment Benefits

In yet another legislative win in favor of New Jersey workers, Governor Murphy has signed a bill eliminating the controversial severe misconduct disqualification for unemployment benefits.   As of Friday, August 24, 2018, the severe misconduct disqualification has been repealed from the New Jersey unemployment law.  The bill also makes other significant changes to unemployment law concerning misconduct.  The change of law is being viewed by plaintiff employment attorneys as another legislative victory for New Jersey employees.

The History of Severe Misconduct

The severe misconduct disqualification was first enacted into law in 2010 and created a new total disqualification of unemployment benefits as a more severe penality than that of simple misconduct’s temporary seven (7) week disqualification. Prior to the 2010, a claimant would be disqualified for six weeks if it was found that they committed misconduct and could only be totally disqualified from receiving unemployment benefits if it was found that the termination was for gross misconduct.  Gross misconduct is when the claimant is terminated as a result of committing a criminal act, such as stealing, assault and other conduct punishable by criminal law.

The enactment of the severe misconduct disqualification immediately caused significant confusion amongst New Jersey unemployment lawyers, appeals examiners and judges because the new law did not come with clear or workable definition of “severe misconduct”.  This is because of instead of defining the severe misconduct disqualification, the law provided “examples” of types of conduct that could be considered severe misconduct.  Specifically, the law read:

Examples of severe misconduct include, but are not necessarily limited to the following: repeated violations of an employer’s rule or policy, repeated lateness or absences after a written warning by an employer, falsification of records, physical assault or threats that do not constitute gross misconduct as defined in this seciotn, misuse of benefits, misuse of sick time, abuse of leave, theft of company property, excessive use of intoxicants or drugs on work premises, theft of time, or whether the behavior is malicious and deliberate but is not considered gross misconduct as defined in this section.

One of the main criticisms of the new severe misconduct statute had to do with the example of when the “behavior is malicious and not deliberate but is not considered gross misconduct.”  This is definition was viewed by many New Jersey unemployment lawyers, appeals examiners and judges as being more lenient that the simple misconduct despite the later having the lesser sanction.  Simple misconduct was defined at the time as the “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.” Unemployment lawyers, claimants, examiners and judges were left to figure out how conduct with a lower level of culpability would qualify for severe misconduct and carry with it a harsher penality than that of simple misconduct.

The Appellate Division attempted to address the problem in 2013 in a case called Silver v. Board of Review.  In this case, the court construed the severe misconduct disqualification as being a gap-filler between simply misconduct and gross misconduct.  The court further found that severe misconduct required a repeated violation of an employer’s rule or policy and that emphasized that any misconduct must include both intentional conduct that rises to the level of malice and a deliberate violation of rules or disregard of standards of behavior.  While some other cases later also attempted to further clarify the severe misconduct definition, the legislative took no action to change or clarify the law until recently.

The New “Misconduct” Law

While eliminating severe misconduct, the new misconduct law also calls for other changes to New Jersey unemployment law.  This includes eliminating the simple misconduct disqualification in favor of creating a single “misconduct” disqualification.  It also changes the disqualification timeframe to a 5 week disqualification for those who have been found to have committed misconduct.  Finally, the new unemployment law provides for a new definition of “misconduct” which is:

[b]ehavior, other than gross misconduct, conduct which is improper, connected with the individual’s work, malicious, 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. Misconduct includes: (1) repeated failure, without good cause, to comply with instructions of the employer which are lawful, resasonable, and not requiring the employee to perform services beyond the scope of the employee’s customary job duties: (2) falslification of an employment application or other record required by the employer to determine the employee’s qualifications or suitability for the job or omitting information which created a material misrepresentation of the employee’s qualifications or suitability for the job; (3) tardiness without good cause which is chronic or excessive and repeated after written warnings from the employer; and (4) repeated unauthorizatd absences without good cause, such as illness or other compelling personal circumstances, or unjustified failure to provide notice prior to the unauthorized asbsences.  An individual’s failure to meet standards regarding quality or quantity of work shall not be considered misconduct unless the employer demonstrates to the division that the standards are reasonable and that the individual deliberatively performned below the standards.  “Misconduct” does not include advertence or ordinary negligence is isolated instances, or inefficiency or failure to perform as the result of inability or incapacity.

The new misconduct law also makes clear that the employer maintains the burden of proof to sustain a finding of misconduct against a former employee.  In order to meet their burden of proof, the employer must now provide “written documentation written at or immediately following the time of misconduct demonstrating that the employee’s actions constitute simply misconduct or gross misconduct.” This new written documentation requirement will undoubtedly change the focus of how unemployment attorneys and claimaints handle their appeals by requiring that the employer show written proof for there to be a finding of misconduct.

 

Unfortunately for some employees, it appears the new misconduct law will not apply retroactively to terminations that occurred prior August 24, 2018.  However, for terminations after August 24, 2018 that are not caused by gross misconduct, there will no longer be any indefinitely disqualifications for those employees who are terminated under the new definition of misconduct.  Most importantly, the eight years of confusion caused by the now deceased severe misconduct disqualification is over and we now have in place a more clear and workable definition of misconduct.