Incarceration is Not a Per Se Bar to Unemployment Benefits

Haley v. Board of Review, ___ N.J. ___ (2021). Here are the basic facts of this appeal as Justice Solomon summarized them in his opinion for the Court in this case:

“Authorities arrested Clarence Haley for serious offenses and ordered that he be detained pretrial. One week later, Haley’s mother contacted his employer, Garden State Laboratories (Garden State), requesting on Haley’s behalf that his job be preserved. Eight weeks after that, a grand jury declined to indict Haley and the prosecutor dismissed all charges against him. In the interim, Garden State terminated Haley’s employment.

Following his release from detention, Haley filed an application for unemployment benefits. The Department of Labor and Workforce Development (Department) denied Haley’s application on the ground that Haley voluntarily left his job with Garden State without good cause attributable to work. The Appeal Tribunal, Board of Review, and Appellate Division affirmed the Department’s decision. “

The Supreme Court reversed by a 6-1 vote. In outlining the standard of review, Justice Solomon stated that the Court will “defer to an agency’s interpretation of both a statute and implementing regulation, within the sphere of the agency’s authority, unless the interpretation is plainly unreasonable.” The Court would not, however, be bound by an agency interpretation that is “contrary to legislative objectives.” Justice Solomon went on to note that the Unemployment Compensation Law, N.J.S.A. 43:21-5(a) (“UCL”), which disqualifies from unemployment benefits a person who “has left work voluntarily without good cause attributable to such work,” and an implementing regulation, N.J.A.C. 12:17-9.1(e)(10), which provides that “[a]n individual’s separation from employment shall be reviewed as a voluntarily leaving work issue where the separation was for the following reasons including, but not limited to . . . [i]ncarceration,” are to be liberally construed in favor of allowing benefits.

Citing repeated entries from the New Jersey Register, Justice Solomon observed that incarceration and the other circumstances mentioned in the regulation were not intended to “automatically result in a finding of voluntarily leaving work without good cause attributable to the work.” Instead, “the relevant circumstances” are to be given a “fact-sensitive analysis.” Justice Solomon also cited prior decisions from the Court so holding.

The regulation states that incarceration and the other situations listed are to be “reviewed as a voluntarily leaving work issue,” but incarceration “is not, in and of itself, an absolute bar to unemployment benefits.” Since the required review and fact-sensitive analysis did not occur, but the agency instead simply denied benefits, the Court reversed and remanded for further proceedings.

Justice Albin, in dissent, cited the same prior opinions of the Court as had the majority. But those cases led him to conclude that there was no reason for a remand. He would have held that ” all exonerated employees who lose their jobs because of their pretrial detention are entitled to unemployment benefits under the UCL. That holding would advance the socially remedial purposes of the UCL rather than leave the employees doubly victimized–first by a wrongful detention that causes their unemployment and then by a government indifferent to their financial distress.” But that reasoning did not persuade the majority.