In Re
A-4636-14T3
| N.J. Super. Ct. App. Div. | May 1, 2017Background
- In 2015 the New Jersey Department of Labor promulgated N.J.A.C. 12:17-2.1, providing the first codified definitions of "simple misconduct," "severe misconduct," and "gross misconduct" under the Unemployment Compensation Act.
- The regulation defines "simple misconduct" by incorporating Am. Jur. language that mixes intentional conduct terms (e.g., "willful," "evil design") with "negligence in such degree or recurrence as to manifest culpability, wrongful intent, or evil design."
- Appellants (Schorr & Associates, P.C. and NELA–NJ) challenged the rule as inconsistent with statutory scheme and controlling case law, arguing the negligence language undermines the required intent elements for misconduct.
- The Appellate Division reviewed the regulation in light of Silver v. Board of Review, which interpreted the Act to require willfulness, deliberateness, intention, or malice for misconduct and recognized the 2010 statutory tier of simple, severe, and gross misconduct.
- The court found the regulation internally inconsistent and confusing: it blends negligent conduct with intent-based concepts and creates overlap between "simple" and "severe" misconduct, producing arbitrary application.
- The court invalidated only the portion of N.J.A.C. 12:17-2.1 defining "simple misconduct," stayed the ruling 180 days to allow the Department to adopt a corrected definition, and left other challenged provisions intact.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the regulation's definition of "simple misconduct" | Regulation improperly mixes negligence with intent terms; creates an oxymoron and violates Silver and Beaunit Mills; arbitrary and capricious | Regulation is presumptively valid, consistent with statute and case law; should be upheld | Definition of "simple misconduct" set aside as arbitrary and capricious; Department given 180 days to revise |
| Whether "negligence" language can define misconduct | Plaintiffs: negligence (even recurrent) cannot substitute for willful, deliberate, or malicious conduct required by case law | Department: intended to capture severe or gross negligence; language consistent with Am. Jur. and agency expertise | Court: mixing negligence with intent terms is confusing and incompatible with Silver; regulation fails to preserve required distinction |
| Overlap between "simple" and "severe" misconduct | Plaintiffs: regulation permits conduct (e.g., "evil design") to be treated as only simple misconduct, undermining statutory gradation | Department: severe misconduct requires additional finding of deliberate and malicious conduct, preventing overlap | Court: the definitions as written are circular and permit overlap; demarcation is unclear and must be redrafted |
| Remedy and scope of review | Plaintiffs: seek invalidation of flawed definition; other regs may remain | Department: urged deference and upholding of regs | Court: set aside only the problematic definition, stayed 180 days for revision; other regulations left intact |
Key Cases Cited
- Silver v. Board of Review, 430 N.J. Super. 44 (App. Div. 2013) (interpreting misconduct to require willfulness, deliberateness, intention, or malice and construing statutory three-tier scheme)
- Beaunit Mills, Inc. v. Board of Review, 43 N.J. Super. 172 (App. Div. 1956) (formulated the Am. Jur. standard distinguishing negligence from wanton or willful disregard for unemployment misconduct)
- Bogue Elec. Co. v. Board of Review, 21 N.J. 431 (1956) (Supreme Court decision emphasizing deliberate breach of important employer obligation as misconduct)
- Smith v. Board of Review, 281 N.J. Super. 426 (App. Div. 1995) (split panel illustrating distinction between willful disregard and negligent conduct)
- Parks v. Board of Review, 405 N.J. Super. 252 (App. Div. 2009) (refused to disqualify employee for absences caused by excusable circumstances; reinforced need for intent)