On appeal from the Appellate Division of the Superior Court, whose opinion is reported in 9 N.J. Super. 101.
For reversal -- Justices Heher, Oliphant and Burling. For affirmance -- Justices Case and Ackerson. The opinion of the court was delivered by Heher, J. Case, J. (dissenting). Ackerson, J., concurs herein.
The subject of controversy here is the validity of the contribution rate assigned to the plaintiff employer for the year 1942 under R.S. 43:21-1, et seq.
The employers' rate of contribution to the fund created by this statute for the alleviation of economic insecurity due to involuntary unemployment, by the maintenance of purchasing power during periods of unemployment, is based on benefit experience. Benefits paid out of the fund on the subject employer's behalf constitute a basic factor in the computation of the rate. Under subsections 7 (c), (3) and (4) of the act, the employer either retains his basic rate of 2.7%, or is assigned a merit rate of 1.8% or 0.9%, or a penalty rate of 3.6%, depending on his employment experience. The excess of contributions by the employer over benefits paid, related to wages upon which contributions had been made during the experience period, determines the "reserve ratio" by which the merit rate is established. Where the employer's contributions for the test period are less than the benefits charged against his account, the rate is 3.6%; where the reserve ratio is less than 7.5%, the rate is 2.7%; where the reserve ratio equals or exceeds 7.5%
but is less than 10%, the rate is 1.8%; and where the reserve ratio equals or exceeds 10%, the rate is 0.9%.
The plaintiff employer's contribution rate for the years 1942 and 1943 was fixed by the defendant Commission at 3.6%. This was on the hypothesis that plaintiff's contributions during the experience period totalled $48,929.26, and the benefits paid amounted to $98,203.34. On this basis, the rate was properly fixed at 3.6%. But plaintiff protested that its account had been illegally charged with benefits paid, and petitioned for a hearing and a recomputation. On April 1, 1948, after hearing held, the Commission resolved the issue adversely to plaintiff. The Appellate Division reversed the determination for what was deemed to be a failure of notice prescribed by subsection 6 (b) of the act. 9 N.J. Super. 101 (1950). The cause was certified here for appeal on the Commission's application.
The primary issue is whether there was a failure of decision and of notice directed by subsection 6(b) of the act as it then was (c. 270 of the Session Laws of 1936, R.S. 1937, 43:21-6(b)) which constituted an impairment of plaintiff's substantial rights and compels a disallowance of all benefits paid to plaintiff's former employees in computing the experience or merit rate under the statutory formula, even though it is conceded that all such benefit payments were valid and were made pursuant to the Commission's peremptory duty in the fulfillment of the statutory public relief policy.
This was the procedure followed by the Commission during the period in question: The initial claim for benefits filed with the Commission by the employee detached from service was checked against all pertinent record data and information in the possession of the Commission; and when the examination revealed no grounds for disputing the validity of the claim, there was dispatched to the employer Form B-11, entitled "Notice to Employer of Claim for Benefits," advising the employer of the making of the claim for benefits and that the "Wage records on file in this office indicate that said worker is eligible for such benefits," and "If you have any
objections to payment of this claim, check the appropriate item in the adjoining column and return original copy within seven days from date" to the Commission at Trenton. The column questions were designed to elicit all possible grounds of ineligibility. And there was endorsed on the back of the notice a printed statement that its purpose was to discover "any facts that might disqualify the claimant or render him ineligible." Such was the unvaried practice in the case of the plaintiff employer. It is admitted that plaintiff received such notices; and there is no contention that any of the benefit payments in question were made without such prior notice. There was no response to any of the notices so given plaintiff, nor did plaintiff return any of the separation notices prescribed by the Commission's regulations, which called for an immediate statement by the employer of grounds for disqualification, related to the separation from employment, for the good and sufficient reason that the claimants were under no disqualification. This was acknowledged by Garnier, plaintiff's comptroller, who was in charge of all notices of claims for benefits and all matters relating to employment experience and the contribution rate chargeable to plaintiff. He testified that he "really paid no attention" to the notices B-11, because plaintiff's was "a seasonal business," the plant was "shut down January, February and March, and sometimes April," and "we had no employment; there was no objection I could make." The witness acknowledged that he would have known if any of the claimants for benefits during this period was disqualified, and that he was aware at the time that many of the claimants, including his own son, were receiving weekly benefits, indicating that their claims for benefits had been allowed. It was then the Commission's practice to send a notice of the deputy's disposition of the claim for benefits only to employers who had responded to the notice B-11 or had given a separation notice in accordance with the Commission's regulations.
In June, 1942, plaintiff was given notice of its experience rate for the then current year, the ...