July 15, 2008
IN THE MATTER OF JAMES FLAGG, APPELLANT,
CITY OF NEWARK, RESPONDENT.
On appeal from a Final Administrative Decision of the Merit System Board, DOP Docket No. 1997-3428.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: October 24, 2007
Before Judges Cuff, Lihotz and Simonelli.
Appellant James Flagg worked for the City of Newark as a truck driver. He worked at night and held a job with a private employer during the day. Appellant's City job, the night position, was his primary job as it provided his health and pension benefits. Flagg lost his public employment in 1996, when convicted of a criminal offense for on-the-job actions, but was reinstated in 2002. The issue in this appeal is limited to Flagg's claim for back pay.
During the last twelve years, this matter has been the subject of two reported opinions.*fn1 We review a final order of the Merit System Board (Board) that modified the sanction from removal to a six-month suspension but denied back pay. We affirm in part, reverse in part, and remand for calculation of a back pay award and consideration of appellant's application for attorneys' fees.
The facts and procedural history preceding this appeal are described by the Supreme Court in its 2002 opinion. Flagg, supra, 171 N.J. at 566-68. The Supreme Court held that good cause existed to allow waiver of the statutory forfeiture provision, that the county prosecutor abused his discretion by not seeking a waiver of the forfeiture provision, and that termination of Flagg's public employment was not warranted by the facts. Id. at 577, 580. Flagg was reinstated to his position by the City of Newark. The issue of what, if any, back pay should be awarded to him was transmitted to the Office of Administrative Law as a contested case.
On January 11, 2005, an administrative law judge (ALJ) issued an initial decision in which he concluded that Flagg should be suspended for six months and receive back pay from March 6, 1997 to May 13, 1998. The ALJ found that Flagg had attempted to find substitute employment but none was available.
The Board accepted the initial decision concerning the duration of the suspension but ordered that Flagg was not entitled to any back pay pursuant to N.J.A.C. 4A:2-2.10. In reaching this result, the Board held that Flagg was entitled to back pay for the period following his six month suspension. It found, however, that the City established that suitable employment existed in the local economy and that Flagg failed to demonstrate that he engaged in a diligent search for substitute employment following his suspension on March 7, 1997, and until December 31, 2000. This finding is based on the Board's assessment of the evidence presented by the City and Flagg, particularly the testimony of Flagg's daughter.
The Board then held that Flagg could receive mitigated back pay from January 1, 2001 to May 6, 2002. However, the Board held that Flagg mitigated his losses when he left the day job that he held at the time of his termination and obtained other employment at a higher rate of pay, and he was not entitled to any back pay as a result. The Board explained its ruling as follows:
The record reveals that Flagg had a second full-time job with John Palitto while he was employed by Newark. Therefore, pursuant to N.J.A.C. 4A:2-2.10(d)3 the earnings from his position with Palitto are not deductible from his gross base pay award. However, the record reveals that the appellant did not stay in that position. Rather, the record reveals that in 1996 he earned $22,458 with Palitto; in 1997 he earned $25,912 with Great Northern Recycling (Great Northern); in 1998 he earned $28,360 with Great Northern; in 1999 he earned $31,334 with Great Northern; in 2000 he earned $30,262 with Great Northern and $1,771 with Manella & USA Sanitation, Inc. (Manella); in 2001 he earned $36,939.75 with Manella and $3,300 with F. Basso, Jr., Rubbish Removal Inc. (Basso); and in 2002 he earned $26,080 with Basso. The 2002 per diem rate for his employment with Basso was $99.92 for a total of $8,892.88 for the time period of January 1, 2002 to May 6, 2002 . . . . It is noted that Flagg testified that Great Northern had taken over Palitto. Moreover, the W-2 statements provided by Flagg reveal that Palitto and Great Northern had the same address. Consequently for purposes of back pay, his employment with Palitto and Great Northern will be considered a single employment, which means it cannot be considered mitigation since this position was Flagg's "second job." However, Flagg testified that he had left Great Northern for a better paying position with Manella. Therefore, the [Board] finds that once the appellant left Great Northern for a better paying position with Manella, N.J.A.C. 4A:2-2.10(d)3 is no longer controlling since Flagg no longer held the same employment as when he was removed by Newark. Once Flagg left his "second job," he, in essence, had no job and any job he secured thereafter would (1) show evidence of a job search; and (2) count as mitigation towards any amount of back pay owed. Therefore, any earnings from Manella and Basso are to be considered for mitigation purposes. To find otherwise would unjustifiably reward an employee who could continually switch positions, but maintain a "second job" that could not be used for mitigation purposes.
The net result of this analysis and application of the mitigation rule was a finding that Flagg was entitled to no back pay.
On appeal, Flagg does not contest the length of the suspension. He contests the decision that he is not eligible for any back pay. He argues that the Board misapplied the governing standard and that he is entitled to at least the difference between his lost earnings from his municipal employment and any earnings from a lesser job.
This appeal requires us to determine not only whether the Board applied the appropriate legal principles but also the applicability of the regulation that governs the receipt of back pay when the disciplined employee maintained two jobs, one in the public sector and one in the private sector, at the time the disciplinary action effecting the public employment was initiated.
N.J.S.A. 11A:2-22 provides that "[t]he [Board] may award back pay, benefits, seniority and reasonable attorneys fees to an employee as provided by rule." N.J.A.C. 4A:2-2.10 provides in relevant part:
(a) When a disciplinary penalty has been reversed, the [Board] shall award back pay, benefits, seniority or restitution of a fine. Such items may be awarded when a disciplinary penalty is modified.
(d) Back pay shall include unpaid salary, including regular wages, overlap shift time, increments and across-the-board adjustments. Benefits shall include vacation and sick leave credits and additional amounts expended by the employee to maintain his or her health insurance coverage during the period of improper suspension or removal.
3. The award of back pay shall be reduced by the amount of money which was actually earned or could have been earned during the separation.
This court explained this rule in O'Lone v. Department of Human Services, 357 N.J. Super. 170 (App. Div. 2003). We held that the Board may not deny back pay for the period between removal and reinstatement solely on the ground that the employee failed to seek substitute employment. Id. at 174. The Board must determine whether suitable substitute employment existed, which the employee could have obtained, if he had made a diligent search. Ibid. In doing so, the employer has the initial burden to demonstrate that the employee failed to seek substitute employment or that there were jobs in the local economy that a person with the qualifications and experience of the disciplined employee could obtain, if they made a diligent effort to obtain substitute employment. Id. at 181. If the employer satisfies this evidentiary burden, the burden of proof shifts to the disciplined employee to establish that suitable substitute employment was unavailable or that the employee could not obtain such employment despite diligent efforts to do so. Ibid.
We discern no basis to disturb the Board's findings that the City satisfied its initial burden of proof and that Flagg failed to establish that he made diligent efforts to obtain substitute employment. These findings are supported by sufficient credible evidence in the record. In re Taylor, 158 N.J. 644, 656 (1999). It is not our function to second-guess the agency, L.T. v. New Jersey Department of Human Services, 134 N.J. 304, 320 (1993), especially an agency vested with special expertise. Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 588 (2001). Therefore, we affirm the ruling that Flagg failed to mitigate his back pay damages between March 7, 1997 and December 31, 2000 and is not entitled to back pay for this period of time.
Next, we must examine whether Flagg is disqualified for back pay after he left his day job with Palitto/Great Northern. Here, it is undisputed that Flagg was employed by the City of Newark for twenty-nine years as a truck driver and worked between 5 p.m. and 1 a.m. He also worked for a series of privately owned and operated recycling facilities in the City during the day, usually between 6:00 a.m. and 3:00 p.m. In 2000, four years after removal from his public employment, Flagg left his position at Great Northern and commenced employment at Manella. In 2001, he left Manella and commenced employment with Basso. His work duties and hours were the same as his prior employment with Palitto/Great Northern. The only difference was the hourly rate. N.J.A.C. 4A:2-2.10(d)3 provides:
The award of back pay shall be reduced by the amount of money which was actually earned or could have been earned during the separation. If an employee also held other employment at the time of the adverse action, the earnings from such other employment shall not be deducted from the back pay. However, if the employee increased his or her work hours at the other employment during the back pay period, earnings from such additional hours shall be subtracted from the back pay award.
The Board confines the other employment to the precise job held at the time of discipline. In other words, the disciplined employee must remain in the same second job throughout the period he has been suspended or removed from the public payroll. If the disciplined employee obtains a new "second" job, any earnings from the new or substituted second job will mitigate any back pay obligation. This strict interpretation of the regulation does not correspond with the purpose of back pay awards or with the text of this provision.
The purpose of back pay awards are to make the employee whole and to compensate the employee for his rightful wages. Decker v. Bd. of Educ. of Elizabeth, 153 N.J. Super. 470, 475 (App. Div. 1977), certif. denied, 75 N.J. 612 (1978); see also Grasso v. W. N.Y. Bd. of Educ., 364 N.J. Super. 109, 121 (App. Div. 2003) ("The purpose of back pay is to compensate complainants to the fullest extent possible at the employment status they would have achieved, but for the unlawful discrimination."), certif. denied, 179 N.J. 312 (2004); In re Galloway Twp. Bd. of Educ., 157 N.J. Super. 74, 83 (App. Div. 1978) (noting back pay orders in NLRB cases are designed to vindicate the public policy of the statute by making employees whole for losses suffered on account of an unfair labor practice).
In the instant case, plaintiff was removed from his position with the Sanitation Division in which he worked from 5:00 p.m. to 1:00 a.m. During this time he also maintained a second full-time position during the day with a recycling facility. He worked at that job from approximately 6:00 p.m. to 3:00 a.m. When he was improperly terminated, plaintiff was denied wages that he was rightfully entitled to receive from his sanitation job. Plaintiff's change of daytime employers did not interfere with the hours that he had previously worked during his sanitation job. Allowing his daytime position to mitigate his sanitation position back pay does not make him whole. His employment by Manella or Basso did not interfere with his City employment or with any other night position he might obtain. If he had been reinstated immediately, he would have earned his daytime salary in addition to his earnings from the City. If he obtained substitute night employment, his day job with Manella or Basso would not have been effected at all.
The reference to "additional hours" in N.J.A.C. 4A:2-2.10(d)3 supports the interpretation that the focus of the additional employment is not on the type of employment, the identity of the second employer, or the secondary position. The focus is on whether the secondary employment would have prevented the employee from working at the position from which he was discharged. The approach that considers whether the second job's hours conflict with the employee's initial employment hours has been adopted by several states.
For example, Illinois looks to whether the secondary employment is "inconsistent" or "incompatible" with the original employment. People ex rel. Bourne v. Johnson, 205 N.E.2d 470, 472-73 (Ill. 1965). Thus, if the employee could not have done the secondary work "at the same time that he was performing his duties" in the position he was discharged from, then the sums earned should be deducted from the back pay award. Bourne, supra, 205 N.E.2d at 472 (quoting Spurck v. Civil Serv. Bd., 42 N.W.2d 720, 728 (Minn. 1950)). If the employee had been "engaged in work consistent with the wrongfully terminated duties, there would have been no deduction." Ibid. Consequently, the Illinois Supreme Court has held that "the amount recoverable [for back pay] is to be reduced by [the employee's] other earnings during the period of separation insofar as such income would have been incompatible with performance of his duties to his erring employer." Id. at 473; see City of Hialeah v. Willey, 227 So. 2d 725, 727 (Fla. Dist. Ct. App. 1969) (finding that revenue from a part-time business was not deductible from a back pay award because the business was not incompatible with the employee's obligations to the discharging employer); see also In re Arbitration between Lackawanna and AFSCME, 414 N.Y.S.2d 638, 641 (N.Y. Sup. Ct. 1979) (the focus was on whether a second job interferes with an employee's first job)
Moreover, the test for incompatibility is not the amount of earnings from the secondary employment, but the existence of conflicting hours or duties between the two jobs. Bd. of Educ., Springfield, supra, 463 N.E.2d at 1311-12; but see Noltemeier v. State of Illinois, 38 Ill. Ct. Cl. 107, 114 (Ill. Ct. Cl. 1981) (finding any increase in employee's earnings from his secondary employment "which resulted from the increased time claimant had to devote to it during the layoff" would off-set the back pay award). The Illinois Supreme Court did note that a showing of lack of diligence in seeking additional employment during the hours formerly occupied by the original position may alter the mitigation effects, but the Court did not expand on that point further. Bourne, supra, 205 N.E.2d at 473.
We do not read N.J.A.C. 4A:2-2.10(d)3 to bar a disciplined employee who is entitled to back pay from changing his secondary job during the period of removal or suspension. The regulation allows earnings from a secondary job to mitigate a back pay obligation when the new or substituted secondary job has duties or hours incompatible with the public position. Neither the hours nor duties of Flagg's City employment were incompatible with Manella or Basso. The income earned from these positions should not be set-off against his back pay award.
We, therefore, reverse and remand for entry of the appropriate back pay award. In its final decision, the Board calculated the back pay owed to Flagg from January 1, 2001 to May 6, 2002, as $45,366.95.
The Board shall also consider Flagg's application for attorneys' fees. We recognize that counsel fees are authorized only when "'an employee has prevailed on all or substantially all of the primary issues.'" Walcott v. City of Plainfield, 282 N.J. Super. 121, 128 (App. Div. 1995) (quoting N.J.A.C. 4A:2-2.12(a)). In this case, Flagg has prevailed in part on his claim for back pay. The Board should consider whether he is entitled to any counsel fee award pursuant to N.J.A.C. 4A:2-2.12.
Affirmed in part, reversed in part and remanded for entry of back pay order and consideration of attorneys' fees.