Counsel and the Unemployment Process

Counsel and the Unemployment Process

As employment lawyers practicing in tough economic times, we are receiving more inquiries from discharged employees about representation before the Division of Unemployment and Temporary Disability Insurance. Although there is a statute, N.J.S.A. 43:21-17, that specifically recognizes a claimant’s right to legal counsel, the administrative rules of the Department of Labor provide that the unemployment division must approve all requests for counsel fees. However, the employee is responsible for his or her legal fees since the unemployment benefits statute does not shift fees.

The factors that will be used to evaluate fee requests include:

1. The amount of time spent on the case;

2. The complexity of the case;

3. The services performed as recorded on a fee authorization
form submitted to the Division’s Board of Review; and

4. The results achieved (that is, favorable or unfavorable).

Preparing for a contested unemployment compensation hearing can be as complicated as preparing for a judicial non-jury trial and often is done quickly and without the benefit of adequate discovery. In many instances the market value of our legal services easily exceeds the amount of available compensation. Also, the Department of Labor’s fee awards generally reflect the limited economic recoveries available to claimants.

As a result we generally cannot afford to become formally involved in unemployment matters. We can provide employees with guidance and advice on how to participate in the unemployment process, which generally involves a minimal fee. Also, where the unemployment claim is part of a larger employment dispute, we may enter the case with an eye toward obtaining discovery or insights about the employer’s position.

We use to be concerned that an unfavorable unemployment compensation result would hurt a claim for wrongful discharge. However, in Olivieri v. Carpet, Inc., 186 N.J. 511 (2006) the New Jersey Supreme Court held that the unsuccessful results of unemployment compensation proceedings would not prohibit an employee from bring a legal action for wrongful discharge. This means that there is less need for participation by counsel in unemployment proceedings in order to protect other claims against the employer.

One issue that seems to be recurring is the claim that the discharge was based upon employee “misconduct”. If misconduct is established the employee is barred from receiving unemployment compensation for the week in which the discharge took place and for the five following weeks. N.J.S.A. 43:21-5(b). However, the term “misconduct” is often misunderstood. Misconduct is more than inadequate job performance that provides good cause for discharge. Parks v. Bd. of Review, 405 N.J. Super. 252, 254 (App. Div. 2009). To warrant this temporary disqualification from benefits, misconduct must be “improper, intentional, connected with one’s work, malicious, within the [employee’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.” N.J.A.C. 12:17-10.2(a). Conduct that is inadvertent, unintentional or negligence that does not amount to a wanton disregard of consequences is not “misconduct.” Demech v. Bd. of Review, 167 N.J. Super. 35 (App. Div. 1979). It is the employer’s burden to prove misconduct. N.J.A.C. 12:17-10.2(b).

If you have questions about unemployment compensation, severance agreements and claims for wrongful termination, please contact Tom Barron at 856 642 6445 or at tbarron@barpostlaw.com.

***The information included in this newsletter is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.