Articles Posted in Unemployment Benefits

In Haley v. Bd. of Review, DOL, 2021 N.J. LEXIS 223* (Decided March 17, 2021) our New Jersey Supreme Court held that pretrial detention is not an absolute bar to receiving unemployment compensation benefits for the time following dismissal of the criminal charges and release from detention. Based on the specific facts presented, the Court concluded the Unemployment Compensation Law (UCL) and its regulatory analogs required the New Jersey Department of Labor and Workforce Development Department (DWLD) to review the totality of the circumstances surrounding claimant Haley’s detention and release to determine whether he “left work voluntarily.” Because this was not done, the Court ordered the DWLD to do so.

Between May and December 2017, the claimant Clarence Haley was employed. In December 2017, authorities arrested Haley, charging him with a number of serious offenses. Haley was jailed pretrial, and his employer was informed of Haley’s predicament by his mother, who requested them to keep his job open because he intended to get the charges dismissed shortly. Two months after his arrest, a grand jury declined to indict Haley and the prosecutor dismissed all charges releasing Haley from detention. Thereafter, Haley filed an application for unemployment benefits arguing he was entitled to unemployment insurance benefits because his pretrial incarceration was not a voluntary departure from employment. The DLWD denied the application, finding that Haley left his job voluntarily for personal reasons. The Appeal Tribunal, Board of Review, and Appellate Division each affirmed. The New Jersey Supreme Court granted certification.

Under the UCL, an individual who “has left work voluntarily without good cause attributable to such work” is “disqualified for benefits” until certain conditions are met. N.J.S.A. 43:21-5(a). N.J.A.C. 12:17-9.1(e) provides guidance as to what may, upon review, be deemed “voluntarily” leaving work. The reasons for leaving work set forth in N.J.A.C. 17-9.1(e) is a fact-sensitive analysis and has observed that it did not “intend that this rule automatically result in a finding of voluntarily leaving work without good cause attributable to the work when the leaving was due to the reasons listed.” It has stated, regarding separation through incarceration, that “the relevant circumstances of the individual’s incarceration will be considered in deciding the voluntary or involuntary nature of the separation.”  Relatedly, incarceration – like the other reasons listed under N.J.A.C. 12:17-9.1(e) — is not, in and of itself, an absolute bar to unemployment benefits. Haley v. Bd. of Review, DOL, 2021 N.J. LEXIS 223, at *18 -*19.

The unemployment rate in the United States has soared to 14.7%, the highest since the Great Depression of the 1930s, and is expected to continue to increase. In just the past few weeks alone, more than 1 million people have filed unemployment claims in New Jersey. In response to this pandemic caused economic crisis, the United States Congress created the Payroll Protection Program (PPP), a loan program originating from the Coronavirus Aid, Relief and Economic Security (CARES) Act. PPP is designed to provide a direct incentive for small businesses to keep their employees on payroll. Under PPP, loans granted by the Small Business Administration (SBA) to businesses will be forgiven if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

More specifically, PPP requires the employer to pay out at least 75% of the monies loaned in payroll. Because of this, many employers believe they can recall furloughed employees back to work at only 75% of the employees’ prior wage. This is very pleasant news for workers who while on unemployment have been receiving supplemental CARES Act unemployment insurance stimulus monies of $600.00 per week together with traditional unemployment insurance benefits. The maximum unemployment insurance benefit rate in New Jersey is currently $713.00 per week. This means many in New Jersey are collecting $1,313.00 per week (this comes to a yearly wage rate of $68,276) while home on unemployment. It is fair to state that this is likely more money than many of these workers have ever earned in wages during their adult life. Against this backdrop, consider the reaction of these same unemployed workers when notified they must return to work and accept a 25% pay cut because their employer who just received their PPP loan monies has no financial means other than the PPP loan to make payroll. Consequently, many furloughed employees called back to work face the ugly prospect of not only having to give up their traditional unemployment insurance benefits plus the $600 in weekly stimulus monies they’ve been receiving, but also must now endure a 25% cut in pay upon returning to work. Such a horrifying turn of events would leave an affected New Jersey worker to wonder whether they can refuse to return to work under such circumstance and continue to receive his/her unemployment benefits.  As is often the case, the answer depends on the controlling facts.

Generally, an individual will be disqualified from benefits if he or she fails to accept suitable work. N.J.A.C. 12:17-11.5(a). However, suitability of work in terms of wages means 80% of the individual’s average weekly wage, including the value of the individual’s benefits, during the base year of pay. Id. Moreover, no work may be deemed suitable, and an individual will not be disqualified for benefits because of his or her refusal to accept work if the wages, hours, or other conditions of work offered are substantially less favorable than those prevailing for similar work in the labor market area. N.J.A.C. 12:17-11.5(b).

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