September 29, 2011
MIDLAND PARK BOARD OF EDUCATION, APPELLANT,
BOARD OF REVIEW, DEPARTMENT OF LABOR AND WILLIAM G. SHLALA, RESPONDENTS.
On appeal from the Board of Review, Department of Labor, Docket No. 250,163.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 12, 2011
Before Judges Ashrafi and Fasciale.
In 2002, William Shlala retired from public school employment and began receiving a pension from the Teachers' Pension and Annuity Fund. In 2008, the Midland Park Board of Education (Midland Park) hired Shlala under a statute that permits temporary hiring of a school administrator without requiring the employee's re-enrollment in the pension fund. As a result, Shlala was permitted by law to receive both his pension from the teachers' pension fund and wages from Midland Park for his new, temporary employment.
After his temporary term of employment ended, Shlala applied for and received unemployment compensation benefits. Midland Park now appeals the ruling of the Board of Review, Department of Labor and Workforce Development, that confirmed Shlala's entitlement to the unemployment compensation benefits. Because the Board of Review did not err in its application of existing law to the undisputed facts in this matter, we affirm its decision.
Shlala was a public school employee for more than twenty years. He worked for four different school districts other than Midland Park. He retired in 2002 and began receiving a pension of approximately $4,000 per month from the teachers' pension fund.
In August 2008, Shlala entered into a written one-year contract with Midland Park to work as Interim Director of Special Services. Retired members of the teachers' pension fund who return to employment in a public school in New Jersey must normally re-enroll in the pension fund and cannot collect a pension at the same time as their new employment. See N.J.S.A. 18A:66-53.2(a). In 2001, however, the Legislature amended the law to allow an exemption from these restrictions for a qualified administrator who is appointed to a temporary position in a school district for a maximum of two years.*fn1 According to the parties, the purpose of the amendment was to fulfill a critical need for qualified administrators in public school districts.
This provision of the law permitted Shlala to continue to receive his pension payments during the one-year period that he was employed by Midland Park as an interim administrator. At the same time, Midland Park paid Shlala wages of $575 per day, and a stipend of $4,200 upon completion of his contract term.
Immediately after his contract employment with Midland Park ended in July 2009, Shlala filed a claim for unemployment compensation benefits. The Division of Unemployment Insurance determined that Shlala was eligible for benefits of $584 per week, up to a maximum of $15,184, based on his one year of employment with Midland Park. As the employer during the base year period for the claim, Midland Park's unemployment compensation account was charged with the benefits paid to Shlala. See N.J.S.A. 43:21-7(c); N.J.A.C. 12:16-19.1.
Midland Park appealed the determination of Shlala's eligibility for benefits to the Department's Appeal Tribunal and subsequently to the Board of Review, both of which upheld the determination in favor of Shlala. Consequently, Shlala could collect up to $15,184 in unemployment compensation in addition to the contractual compensation he received from Midland Park, and while also collecting his approximate $4,000 per month in pension benefits from the teachers' pension fund.
In its appeal before this court, Midland Park makes two primary arguments. It asserts that the Board of Review's decision is contrary to the public interest and the spirit and purpose of New Jersey's unemployment compensation statutes and, therefore, must be reversed as a matter of public policy. Midland Park also contends that the Board of Review erroneously failed to offset Shlala's unemployment benefits by his pension payments pursuant to N.J.S.A. 43:21-5(a) and N.J.A.C. 12:17-8.2.
"In reviewing the decision of a state agency, charged with enforcing the laws and regulations governing the disbursement of unemployment benefits, this Court's appellate authority is limited to determining whether the agency acted arbitrarily, capriciously, or unreasonably." Lourdes Med. Ctr. v. Bd. of Rev., 197 N.J. 339, 360 (2009). Under this limited standard, the court's review is restricted to four inquiries:
(1) whether the agency's decision offends the State or Federal constitution;
(2) whether the agency's action violates express or implied legislative policies;
(3) whether the record contains substantial evidence to support the findings on which the agency based its action; and
(4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors. [Brady v. Bd. of Rev., 152 N.J. 197, 210-11 (1997) (quoting George Harms Constr. Co. v.
N.J. Tunpike Auth., 137 N.J. 8, 27 (1994)).]
When the issue on appeal concerns an agency's interpretation of a statute it is charged with enforcing, the "reviewing court should strive to 'give substantial deference to'" the agency's interpretation. In re Application of Virtua-West Jersey Hosp. Voorhees for a Certificate of Need, 194 N.J. 413, 423 (2008) (quoting Saint Peter's Univ. Hosp. v. Lacy, 185 N.J. 1, 15 (2005)); accord In re Freshwater Wetlands Prot. Act Rules, 180 N.J. 415, 431 (2004); N.J. Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 561 (1978). However, a court "is not 'bound by the agency's interpretation' . . . because it is the responsibility of a reviewing court to ensure that an agency's administrative actions do not exceed its legislatively conferred powers." Virtua-West, supra, 194 N.J. at 422 (quoting Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973)).
We reject Midland Park's plea that we reverse the Board of Review's decision based on public policy even if it interpreted correctly the applicable statutes and regulations. Public policy is expressed through the Legislature's enactments. Our function is to apply statutes and regulations, and to interpret them if ambiguous, not to disregard them if we think they are unwise. See State v. Madden, 61 N.J. 377, 389 (1972) ("We must enforce the legislative will if it is within constitutional limits whether we approve of the legislative intent or not.")
New Jersey's Unemployment Compensation Law, N.J.S.A. 43:21-1 to -24.30, and its implementing regulations specifically address the situation where an individual who qualifies for unemployment benefits is receiving a pension. An offset statute, N.J.S.A. 43:21-5a, provides in pertinent part:
The amount of benefits payable to an individual for any week which begins in a period with respect to which such individual is receiving a governmental or other pension . . . which is based on the previous work of such individual shall be reduced, but not below zero, by an amount equal to the amount of such pension . . . which is reasonably attributable to such week; . . . provided further that . . . the Commissioner of Labor and Workforce Development may prescribe in regulations which are consistent with the federal Unemployment Tax Act any of the following:
a. The requirements of this section shall only apply in the case of a pension . . . under a plan maintained or contributed to by a base period or chargeable employer . . . . [(emphasis added).]
Thus, the statute does not disqualify one receiving a pension from also receiving unemployment benefits. Instead, it provides for an offset. If the pension and the unemployment benefits derive from the same employer and for an overlapping period of work, the unemployment compensation benefits are reduced. See Giesler v. Bd. of Rev., 315 N.J. Super. 28, 32 (App. Div. 1998) ("The purpose of the pension offset statute is to prevent an individual who is retired . . . at a time when he or she is entitled to full pension benefits from collecting both unemployment benefits and retirement benefits based on the same prior work period." (emphasis added)). The offset does not apply unless the pension plan is maintained or contributed to by the same employer who is chargeable for the unemployment claim.
The New Jersey statute also makes specific reference to the Federal Unemployment Tax Act, 26 U.S.C.A. §§ 3301-3311, which requires such an offset provision in state laws. See 26 U.S.C.A. § 3304(a)(15). The federal law states that the benefit reduction shall apply only if the pension payment is made under a plan maintained or contributed to by the employer who is chargeable for the unemployment compensation benefits and only when the new work for that employer affects the claimant's pension rights. See 26 U.S.C.A. § 3304(a)(15)(A)(i).
As authorized by N.J.S.A. 43:21-5a, the Commissioner of Labor and Workforce Development has promulgated regulations consistent with the federal law, including the following:
Benefit reduction due to receipt of pension from base period or chargeable employers (a) When a pension is received from a base period or chargeable employer, benefits shall be reduced if the pension . . . is under a plan maintained or contributed to by such employer. [N.J.A.C. 12:17-8.1.]
In this case, the Appeal Tribunal concluded that "[n]o pension reduction applies as the claimant is not receiving a pension from a base year employer, in accordance with N.J.A.C. 12:17-8.1." The Board of Review adopted the Appeal Tribunal's opinion and additionally reasoned that "no further deductions, towards his pension benefits, were made out of the claimant's paycheck earned in employment with any Board of Education subsequent to his retirement in 2002. The base year wages did not increase or have an effect on the pension."
Midland Park argues unpersuasively that, for purposes of applying N.J.A.C. 12:17-8.1(a), the State of New Jersey rather than Midland Park should be considered Shlala's employer under both the pension offset statute and the unemployment compensation law. Specifically, Midland Park focuses on the fact that the State contributes funds to the teachers' pension fund on behalf of public school employers, not local boards of education.
We agree with the Board of Review and Shlala that the chargeable employer in this case for purposes of unemployment compensation law was Midland Park and not the State. Midland Park paid his wages and deducted unemployment tax contributions from his paychecks. It was Shlala's work with Midland Park in 2008-09 that entitled him to unemployment benefits, but it was not Shlala's work with Midland Park that entitled him to his pension benefits.
Furthermore, Midland Park made no contributions to the teachers' pension fund. See N.J.S.A. 18A:66-18; N.J. Educ. Ass'n v. State, 412 N.J. Super. 192, 196-97 (App. Div.) (three sources for the teachers' pension fund: "(1) contributions from employee wages; (2) contributions from the general revenue of the State; and (3) the return earned by these contributions when invested in the fund"), certif. denied, 202 N.J. 347 (2010). Nor can it be said that Midland Park "maintained" the teachers' pension fund. A local school board's duties under N.J.S.A. 18A:66-32 to deduct pension contributions of its employees, to pay them over to the teachers' pension fund, and to provide records and reports of such deductions and payments are not the equivalent of maintaining the teachers' pension fund.
Even if Midland Park and the State could be considered a single employer, the implementing regulations exempt Shlala from any offset of his unemployment benefits because his 2008-09 employment at Midland Park did not affect his pension. The State regulations provide:
If the remuneration for services performed for the employer during the base year by the individual does not affect eligibility for, or increase the amount of, the pension . . . then the individual's unemployment benefits shall not be reduced by the amount of the pension. [N.J.A.C. 12:17-8.1(b).]
This regulation is consistent with federal law. See 26 U.S.C.A.
Here, Shlala's pension entitlement and payments were not altered by his employment with Midland Park. Midland Park makes a purely speculative and irrelevant argument that Shlala's pension would have been affected if he had remained in the employ of Midland Park for more than two years after his retirement. The fact is that he was employed for only one year without effect on his pension rights or benefits.
In sum, we conclude that the Board of Review correctly interpreted and applied the relevant statutes and regulations to Shlala's claim for unemployment benefits.
It is not the unemployment compensation law alone but the exemption provided in N.J.S.A. 18A:66-53.2(b) for re-employment of retired school administrators that has provided an opportunity for Shlala to collect additional public school wages and unemployment compensation at the same time as he collects a government pension. That amended statute permits simultaneous collection of wages from a school district and continuing payment of pension benefits. We find no ambiguity in the statute.
Returning to Midland Park's public policy argument, "[t]o the extent that the legislative will is evident, it is our duty to follow it." Mortimer v. Bd. of Rev., 99 N.J. 393, 401 (1985). We do not substitute our judgment for that of the Legislature and the implementing agency where constitutional provisions do not bar their actions. If a statute or regulation is unwise or contrary in its application to what was intended, it is within the power of our co-equal branches of government to amend it.