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Cipolla v. Board of Review


April 28, 2009


On appeal from a Final Decision of the Board of Review, Department of Labor, No. 155,447.

Per curiam.


Submitted December 2, 2008

Before Judges Wefing and LeWinn.

Claimant appeals from a Final Decision of the Board of Review affirming a decision of the Appeal Tribunal denying her request for a waiver of a determination that she was responsible for refunding $12,532 in unemployment compensation benefits she had received. After reviewing the record in light of the contentions advanced on appeal, we reverse and remand for further proceedings.

Claimant was employed by Verizon, New Jersey, for thirty-three years. She resigned effective November 22, 2003, under an Enhanced Income Security Plan ("Plan") Verizon had announced to its employees. Verizon's efforts to reduce its workforce through such early retirement programs have spawned a number of appeals to this court with respect to the eligibility of participating employees to collect unemployment compensation benefits. Heller-Follin v. Bd. of Review, No. A-4315-05 (App. Div. June 18, 2008); Lukaszewski v. Bd. of Review, No. A-4052-05 (App. Div. June 18, 2008); Hallaert v. Bd. of Review, No. A-3720-05 (App. Div. June 18, 2008); Gourley v. Bd. of Review, No. A-3701-05, (App. Div. June 18, 2008) (consolidating the issue with respect to twenty former employees of Verizon).

At the time of claimant's resignation in accordance with Verizon's announced Plan, N.J.A.C. 12:17-9.6 was in effect. This regulation provided:

(a) Notwithstanding any other provision of this subchapter, when an employer has a written voluntary layoff and/or early retirement incentive policy or program in effect during a reduction-in-force that permits or induces an employee to leave work so that another employee may continue to work, the following applies:

1. The individual who participates in the program will not be subject to disqualification for voluntarily leaving work in accordance with N.J.S.A. 43:21- 5(a); and

2. The individual must otherwise meet all of the other eligibility requirements of the Unemployment Compensation Law to be eligible to receive unemployment insurance benefits.

Claimant applied for unemployment compensation benefits following her resignation from Verizon and by notice dated January 2, 2004, was informed that she had been found eligible for benefits. She received a total of $12,532 in unemployment compensation benefits.

At some point a determination was made that claimant was not eligible for those benefits. The record before us does not contain a copy of the notification to claimant to that effect. According to the Department's brief, in July 2005 it demanded claimant refund the benefits she had received. Claimant filed a request for a waiver of refund. She has appealed from a denial of that waiver.

The record before us is entirely unclear as to the basis upon which claimant was declared ineligible for unemployment compensation benefits. We are aware that this court struck down as invalid the regulation permitting an employee who resigned as part of an early retirement incentive program to collect unemployment compensation benefits. In re Adoption of N.J.A.C. 12:17-9.6, 395 N.J. Super. 394, 410 (App. Div. 2007). That decision, however, was not issued until several years after claimant was apparently declared ineligible. It thus could not have served as the basis for her ineligibility.

Our decision in Gourley, supra, contains a detailed history with respect to the claims for unemployment compensation benefits of twenty former Verizon employees who had sought unemployment compensation benefits following their resignation under Verizon's retirement incentive program. No. A-3701-05 (slip op. at 25-41). That decision refers to a July 28, 2005, decision of the Appeal Tribunal which concluded that those Verizon employees were not entitled to unemployment compensation benefits despite the language of N.J.A.C. 12:17-9.6. Id. (slip op. at 22-24). The Board of Review affirmed the Appeal Tribunal in 2006. Id. (slip op. at 24-25). Neither the decision of the Appeal Tribunal nor that of the Board of Review, however, could have been the basis for claimant's disqualification since, as with In re Adoption, they came several years after claimant was declared ineligible.

The issue which confronts us, however, is not whether claimant was eventually correctly declared ineligible but whether she is liable to refund the entirety of the benefits she received. N.J.A.C. 12:17-14.2 sets forth three limited circumstances under which a waiver of recovery may be granted. These are: first, "[w]here the claimant is deceased" or, secondly, "[w]here the claimant is disabled and no longer able to work" or, finally, "[w]here the recovery of the overpayment, as determined by the Director with the Controller's concurrence, would be patently contrary to the principles of equity."

Here, claimant's request for a waiver was denied because, in the words of the Appeal Tribunal, claimant could "maintain the ability to obtain her minimum necessities of food, shelter, and medicine" even in the face of repayment. In our judgment, "the principles of equity" in a context such as this require more than a bare calculation of dollars and cents.

N.J.A.C. 12:17-14.2(d) provides that in determining whether demanding a refund of unemployment benefits paid would be "patently contrary" to equitable principles, "the Director and Controller shall consider whether the terms of a reasonable repayment schedule would result in economic hardship to the claimant." That language does not, by its terms, restrict the consideration to solely economic factors.

The Board relies upon Bannan v. Bd. of Review, 299 N.J. Super. 671 (App. Div. 1997), and Fischer v. Bd. of Review, 123 N.J. Super. 263 (App. Div. 1973). We consider both cases distinguishable. The claimant in Bannan retired after working twenty-nine years for E.I. Dupont. 299 N.J. Super. at 673. He then took a position as a security guard, and an employee at a local unemployment office told him that would not affect his entitlement to unemployment benefits. Id. at 673-74. That information proved to be incorrect, and claimant had to refund the benefits he had received. Id. at 674. We noted the competing interests of an individual who relied on advice from a Department employee and the need to protect the fiscal integrity of the fund and found the latter outweighed the former. Id. at 675. Here, however, claimant did not rely on the advice of an individual employee; she relied on the position officially adopted by the Department of Labor in a duly promulgated regulation. The record to this point contains no indication that claimant should have been aware that this regulation was subject to challenge.

In Fischer, the claimant worked as a commissioned sales representative for a securities dealer. 123 N.J. Super. at 265. After being laid off, she applied for and received unemployment compensation benefits. Ibid. She was later declared ineligible for unemployment compensation benefits and ordered to refund the amount she had received, a determination this court affirmed.

Id. at 266. We noted that she had originally been found eligible because her employer had erroneously declared her commissions to be earnings for purposes of the unemployment compensation statute. Ibid. As with Bannan, supra, nothing within the Fischer opinion indicates that the claimant proceeded on the basis of a publicly promulgated legal position adopted by the Department which was later repudiated.

We have alluded to the deficiencies in the present record. We do not know the circumstances which led to the initial declaration that claimant was ineligible to receive unemployment compensation benefits. We do not know whether claimant was aware of N.J.A.C. 12:17-9.6 at the time she decided to resign and whether the regulation was a factor in her decision. We do not know how the date of that declaration compares with the first declaration that N.J.A.C. 12:17-9.6 was invalid. Nor do we know whether the Department has pursued a consistent policy with respect to seeking refunds from all Verizon employees who resigned in connection with Verizon's Plan and received unemployment compensation benefits. A fuller record should be developed in connection with the proceedings on remand.

The Final Decision of the Board of Review is reversed and the matter is remanded for further proceedings in accordance with this opinion. We do not retain jurisdiction.


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