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Defining Severe Misconduct when Denying Unemployment Benefits

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In 2010, the New Jersey State Legislature and Governor Chris Christie revised New Jersey’s Unemployment Compensation Law to combat the significant increase in funds needed to pay unemployment benefits as a result of the rise in the unemployment rate in New Jersey.

To achieve this problem of fast-depleting funds for unemployment benefits, the state created a new category of conduct, called “severe misconduct,” which would allow the state to disqualify employees from receiving unemployment benefits.

The prior two categories of misconduct which could be assessed were: “simple misconduct” and “gross misconduct.” Simple misconduct includes actions that are improper, intentional, malicious, or exhibit a willful disregard of the employer’s interest, a deliberate violation of the employer’s rules, a disregard of standards of behavior which the employer has the right to expect, or negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design. Simple misconduct disqualifies the individual from disability for eight weeks (the week in which the misconduct occurred and seven weeks immediately following that).

Gross misconduct includes acts that are criminal, in the first, second, third, or fourth degree under the New Jersey Code of Criminal Justice. Employees fired for gross misconduct are disqualified from receiving any unemployment benefits.

The revisions implemented by the State in 2010 regarding “severe misconduct” failed to define severe misconduct, but included examples, such as: repeated violations of an employer’s rules, repeated lateness or absences after a written warning, falsification of records, physical assault or threats, misuse of benefits, sick time, or leave, theft of company property, excessive use of intoxicants or drugs on work premises, or where the behavior is malicious and deliberate.

However, in the government’s haste to amend the law to reduce the amount of unemployment benefits being paid out, the Legislature failed to revise the definition of “simple misconduct,” and indeed, the examples provided for “severe misconduct” were expansive enough to include conduct that was not even bad enough to constitute simple misconduct. Further, this “intermediate” category of misconduct did not come with an intermediate penalty. A finding of severe misconduct effectively disqualified the employee from receiving any unemployment benefits.

While this has led to nearly three years of uncertainty and an unknown number of undeserving disqualifications from unemployment compensation, the New Jersey Courts have finally stepped in to try to clarify the new law in the case of Silver v. Board of Review. In that case, the Court explained, that “[i]t 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.” Therefore, as a result, the Court construed the examples provided in the amendment to apply only to repeated conduct which was done intentionally, deliberately, and with malice.

Further, there is currently a bill pending in the Senate which would further define the three categories of misconduct. This definition would, in many ways, correspond with the Court’s explanation of severe misconduct as acts committed with malice and deliberate disregard for property, safety or life, theft, threats of or actual physical assault, or repeated simple misconduct after written warnings occurring so frequently that they cause substantial disruption of the employer’s operations or property or other severe damage.

While the Court’s decision is helpful towards clarifying the law, it would be more beneficial to have one comprehensive statute that provided definitions of the different categories of misconduct. However, this bill, though passed by the Assembly, has been pending approval of the Senate since 2012.

McLaughlin & Nardi’s New Jersey employment attorneys are experienced in fighting for employees in unemployment hearings and appeals and can aid terminated employees in attempting to obtain unemployment benefits. To learn more about what we can do to help, please e-mail, visit our website, or contact one of our New Jersey employment lawyers at (973) 890-0004.