The Silver Standard is No Silver Lining for NJ Employers

New Jersey’s unemployment compensation law has always disqualified individuals from collecting unemployment benefits if they were fired for engaging in misconduct.  However, the misconduct standard recently and significantly changed making it much more difficult for employers to argue for benefit disqualification.

On September 9, 2013, the Appellate Division in Tarnowski v. Board of Review confirmed this change by reversing and remanding a Board of Review unemployment benefits decision because the Board failed to consider Silver v. Board of Review, 430 N.J. Super. 44, 53 (App. Div. 2013), the March 21, 2013 decision which established the new standard.  Under the new standard, Employers have a high burden to prove even simple misconduct, and limited relief when such misconduct is proven.

Misconduct

“Misconduct” at its lowest level is defined as an act which 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.

The Court in Silver converted the misconduct definition into a two-prong test (the “Silver Standard”) for determining whether an employee’s behavior constituted misconduct.  For the Department of Labor to find misconduct, an employee’s actions:

1. Must be improper, intentional, connected with the work, malicious, and within the employee’s control; and
2. Must also be either a deliberate violation of the employer’s rules or a disregard of the standards of behavior which the employer has the right to expect.

The NJDOL will disqualify an employee terminated for simple misconduct from receiving unemployment benefits for up to eight (8) weeks.  Thus, an employer proving intentional misconduct will disqualify an employee from benefits for only a short period of time.

Severe Misconduct

“Severe misconduct” is not defined, and the NJDOL has not yet adopted new regulations to distinguish misconduct from severe misconduct.  This category, added by a 2010 amendment, was intended as an intermediate form of misconduct, requiring greater culpability than simple misconduct, but less than gross misconduct.  While New Jersey’s unemployment compensation law does not offer a definition, it does provide a list of examples, which include, but are not limited to:

• Repeated violations of an employer’s rule or policy,
• Repeated lateness or absences after a written warning,
• Falsification of records,
• Physical assault or threats that do not rise to the level of gross misconduct,
• Misuse of sick time, abuse of leave, and
• Excessive use of intoxicants or drugs on work premises.

Until new regulations are enacted to define severe misconduct, the NJDOL will rely on a combination of the Silver Standard and the list of examples set forth by statute to determine whether an employee has committed severe misconduct.

The NJDOL will disqualify an employee terminated for severe misconduct from receiving unemployment benefits for an indefinite period of time until he or she is re-employed for at least four (4) weeks, has earned at least six (6) times his or her weekly benefit rate, and becomes separated through no fault of his or her own.

Gross Misconduct

“Gross misconduct” is defined as the commission of a criminal act in at least the fourth degree under the New Jersey Code of Criminal Justice.  Prosecution or conviction for the criminal act is not required.

The NJDOL will disqualify an employee terminated for gross misconduct from receiving any unemployment benefits for an indefinite period of time until he or she is re-employed for at least eight (8) weeks, has earned at least ten (10) times his or her weekly benefit rate, and becomes separated through no fault of his or her own.

For more information on the Silver Standard or other employee termination issues, please contact Dena B. Calo, Esq., Director of the Human Resources Practice Group and Partner in the Employment Law & Litigation Group, at dcalo@genovaburns.com, or Joshua E. Knapp, Esq., Associate in the Employment Law & Litigation Group, at jknapp@genovaburns.com.