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New Jersey Supreme Court Clarifies Exceptions to the Unemployment Compensation Law’s Disqualification Rule for Voluntarily Leaving Employment

New Jersey Unemployment Compensation Law (N.J.S.A. 43:21-4) provides that an unemployed individual who meets an earnings and employment duration threshold is eligible to receive unemployment benefits if he or she “is able to work, and is available for work, and . . . actively seeking work.”  An individual’s eligibility for benefits is subject to disqualification conditions outlined in N.J.S.A. 43:21-5.  One such condition (N.J.S.A. 43:21-5(a)) states that an individual is ineligible for benefits if he or she leaves work “voluntarily without good cause attributable to such work and for each week thereafter until [he or she] becomes reemployed and works eight weeks in employment.”  Accordingly, an individual may voluntarily leave work and remain eligible for benefits so long as the individual can show that he or she left work with “good cause attributable to such work.”  The inquiry does not end there.

What constitutes “good cause attributable to such work” is a fact-specific inquiry.  The New Jersey Department of Labor and Workforce Development has promulgated regulations that seemingly address particular circumstances under which an individual will be found to have left work with “good cause attributable to such work.”  Pursuant to N.J.A.C. 12:17-9.3(b), for example, “[a] n individual who leaves a job due to a physical and/or mental condition or state of health which does not have a work-connected origin but is aggravated by working conditions will not be disqualified for benefits for voluntarily leaving work without good cause ‘attributable to such work,’ provided there was no other suitable work available which the individual could have performed within the limits of the disability.”  Notably, the regulation does not include a requirement that the individual notify his or her employer of the health condition and inquire as to the availability of “other suitable work.”

Another exception to the disqualification rule was added in 2015, when the Legislature amended N.J.S.A. 43:21-5(a) to allow an individual who voluntarily leaves employment to be eligible for unemployment benefits if he or she does so to accept employment elsewhere, begins the other employment within seven days, and his or her “weekly hours or pay [is] not less than the hours or pay of the employment of the first employer.”  The amendment essentially protects an employee who voluntarily leaves employment for another job with at least the same hours or pay, but is terminated prior to working the requisite eight weeks to become eligible for unemployment benefits.

With the backdrop of this legislative and regulatory history, in Margo S. Ardan v. Board of Review, the New Jersey Supreme Court, in a 4-3 majority opinion, recently clarified two issues surrounding the application of the above two exceptions to the disqualification rule for voluntarily leaving employment.  First, the Court explained what a claimant must prove to demonstrate the unavailability of “other suitable work” under N.J.A.C. 12:17-9.3(b).  Second, the Court concluded that the 2015 amendment to N.J.S.A. 43:21-5(a) was not retroactive.  While the Court’s latter holding concerning the retroactivity of the 2015 amendment will likely have little impact on employers, the Court’s decision with regard to a claimant’s required evidentiary showing under N.J.A.C. 12:17-9.3(b) may increase the number of employees who seek accommodations for health problems aggravated by working conditions.  These requests may give rise to an employer’s obligation to engage in the interactive process under the Americans with Disabilities Act (ADA) and the New Jersey Law Against Discrimination (LAD) to determine whether the employee can be accommodated.

Plaintiff Ardan, who suffered “chronic neck, lower-back, and left-knee pain,” began working at a medical center as a registered nurse in September 2010.  Her job duties required her to “walk substantial distances,” and to bend and lift, which aggravated her ailments.  Ardan neither requested less arduous work nor informed her employer of her condition while employed.  In 2012, she resigned from her position at the medical center and accepted a desk job as a healthcare communicator to ease the strain on her body without significantly reducing her wages.  After seven weeks at her new job, Ardan was terminated.

Ardan applied for unemployment benefits.  The Deputy Director of the Division of Unemployment and Disability Insurance denied her application, and the Appeal Tribunal, the Board of Review, and the Appellate Division all subsequently upheld the denial.  The appellate panel, in particular, concluded that Ardan did not offer sufficient proof regarding the unavailability of “other suitable work” under N.J.A.C. 12:17-9.3(b), which it interpreted to require notice to the employer and employee inquiry regarding an alternative position to accommodate the condition.  The panel also found that the 2015 amendment to N.J.S.A. 43:21-5(a) was not retroactive.  The Court granted Ardan’s petition for certification.

On appeal, the Court addressed whether Ardan had shown that her situation fell within the scope of N.J.A.C. 12:17-9.3(b).  This required the Court to determine whether she had presented sufficient evidence that there was “no other suitable work available which [she] could perform within the limits of her disability.”  Rejecting an interpretation of the regulation that would always require a claimant to notify her employer and request an accommodation to prove the absence of “other suitable work,” the Court interpreted the regulation as calling for “an individualized determination” – meaning that in some cases, sufficient proof of the unavailability of “other suitable work” would only need to consist of evidence of the claimant’s medical condition, combined with proof of a job’s physical demands, the “small size of the workplace,” or any other “relevant factors,” whereas other circumstances would require a claimant to prove the absence of “other suitable work” by presenting evidence that she both notified her employer and inquired about an accommodation before leaving the job voluntarily.  The Court did not explain when such notice and inquiry would be required.

Applying the above standard, the Court concluded that Ardan failed to proffer sufficient evidence to prove the unavailability of “other suitable work.”  She had not submitted objective evidence that her former employer had no position available to accommodate her to which she could have been assigned.  Nor had she investigated or sought her employer’s assistance in pursuing a less arduous position.  Consequently, the Court characterized Ardan’s belief that there were no suitable positions at the hospital to accommodate her condition as “premised on nothing but speculation.”

Next, the Court addressed whether the 2015 amendment to N.J.S.A. 43:21-5(a) applied retroactively to Ardan’s claim.  An amendment is retroactive if the Legislature expresses its intent that the law apply retroactively; the amendment is curative; or the parties’ expectations warrant it.  After reviewing the amendment’s legislative history, the Court found no evidence that the Legislature intended retroactive application.  The amendment was also not curative because the Legislature did not amend the statute to correct an error or ambiguity.  Retroactive application was similarly not warranted by the parties’ expectations because, when the matter was being decided on appeal, the parties’ expected that the outcome would be determined by the statutory and regulatory scheme then in existence, under which Ardan was disqualified.

The Court’s opinion in Ardan incentivizes an employee to seek an accommodation from his or her employer prior to leaving a job for health reasons.  Because the Court did not adopt a bright-line rule requiring an employee to always request an accommodation from his or her employer to make the evidentiary showing required by N.J.A.C. 12:17-9.3(b), it remains unclear when an employee must apprise her employer of the need for an accommodation to prove the unavailability of “other suitable work.”  Cautious employees who are seeking to preserve their eligibility for unemployment benefits will notify employers of their condition and seek an accommodation.  When these discussions occur, employers should be aware of their obligations under the ADA and LAD to engage in the interactive process to determine whether the employee can be accommodated.  Failure to do so may result in a disability discrimination claim.  

©2018 Epstein Becker & Green, P.C. All rights reserved.

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About this Author

Patrick G. Brady, epstein becker green, labor employment, erisa, wage
Member

Patrick G. Brady is a Member of the Firm in the Labor and Employment practice, in the firm's Newark office. He has worked extensively on complex wage and hour and other employment litigation and ERISA, WARN Act, and Family Leave Act matters.

Mr. Brady's experience includes:

Representing employers in class action and collective action litigation involving FLSA/state wage and hour issues

Representing employers in wrongful discharge, sexual harassment, breach of contract, discrimination/...

973-639-8261
James Sawczyn, litigation, discrimination, Epstein Becker Green, Law Firm
Associate

JAMES J. SAWCZYN is an Associate in the Employment, Labor, and Workforce Management practice, in the Newark office of Epstein Becker Green.

Mr. Sawczyn:

  • Assists with the defense of employers in state and federal courts in single-plaintiff and class action disputes involving claims of discrimination, harassment, wrongful termination, whistleblowing, and other employment-related issues
  • Counsels employers on Fair Labor Standards Act (FLSA) wage and hour laws and the classification of workers
  • Assists in the negotiation of collective bargaining agreements
973-848-7728