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McClain v. Board of Review

Supreme Court of New Jersey

April 29, 2019

Patricia J. McClain, Appellant-Respondent,
v.
Board of Review, Department of Labor, Respondent-Appellant, and Learning Edge Academy, Inc., and Kids Choice Academy, Respondent. Cynthia M. Blake, Appellant-Appellant,
v.
Board of Review, Department of Labor, Respondent-Respondent, and Laurel Healthcare, LLC, Respondent.

          Argued January 14, 2019

          On certification to the Superior Court, Appellate Division, whose opinion is reported at 451 N.J.Super. 461 (App. Div. 2017).

         On certification to the Superior Court, Appellate Division, whose opinion is reported at 452 N.J.Super. 7 (App. Div. 2017).

          Melissa Dutton Schaffer, Assistant Attorney General, argued the cause for the Department of Labor in both cases (Gurbir S. Grewal, Attorney General, attorney; Melissa Dutton Schaffer, of counsel, and Peter H. Jenkins, Deputy Attorney General, and Christopher Weber, Deputy Attorney General, on the briefs).

          Alan W. Lesso argued the cause for appellant in Blake v. Bd. of Review (South Jersey Legal Services, Inc., attorneys; Alan W. Lesso, Kenneth M. Goldman and Cassandra Stabbert, on the briefs).

          Kenneth M. Goldman argued the cause for respondent in McClain v. Bd. of Review (South Jersey Legal Services, Inc., attorneys; Kenneth M. Goldman, Alan W. Lesso and Cassandra Stabbert, on the briefs).

          Alan H. Schorr argued the cause for amicus curiae National Employment Lawyers Association of New Jersey in both cases (Schorr & Associates, attorneys; Alan H. Schorr and Adam L. Schorr, on the brief).

          ALBIN, J., writing for the Court.

         Under New Jersey's Unemployment Compensation Law (UCL or Act), N.J.S.A. 43:21-1 to -71, an employee terminated from employment after working a certain number of weeks is ordinarily entitled to unemployment insurance (UI) benefits. An employee who voluntarily leaves her employment without just cause, however, is not entitled to such benefits. N.J.S.A. 43:21-5(a). The Legislature recognized the inequity facing those employees who served a substantial period with one employer and then voluntarily left for an equal or better opportunity with another employer, only to be terminated shortly afterwards. To redress that problem, the Legislature in 2015 passed an amendment to N.J.S.A. 43:21-5(a), which ensured that an employee who was qualified for UI benefits during her first employment would not be disqualified from such benefits if terminated shortly after beginning her second employment.

         In these consolidated appeals, each employee -- Patricia McClain and Cynthia Blake, respectively -- accepted an offer of employment from a second employer only to have the offer rescinded before the start date, but after resignation from the first position. The question is whether in such a circumstance, the employee, whose offer is rescinded through no fault of her own, is entitled to UI benefits pursuant to N.J.S.A. 43:21-5(a).

         McClain and Blake both filed for unemployment insurance benefits with the New Jersey Department of Labor. In both cases, the Deputy Director of Unemployment Insurance denied their claims. In both cases, the Appeal Tribunals affirmed because McClain and Blake did not commence their new employment within seven days of leaving their former employer, thus disqualifying them for benefits under N.J.S.A. 43:21-5(a). The Board of Review affirmed the Appeal Tribunal in both cases. McClain and Blake separately appealed.

         In McClain's case, the appellate panel reversed. 451 N.J.Super. 461, 464-65 (App. Div. 2017). The panel's plain reading of N.J.S.A. 43:21-5(a) led it to conclude that so long as the employee accepts the job offer, which is set to begin within seven days of leaving the first employer, she is entitled to UI benefits if the offer is rescinded and she is rendered unemployed. Id. at 469-73. The panel determined that the clear language of the statute governs and is supported by the legislative history and the remedial purposes of the UCL. Id. at 470-74. The Court granted the Board of Review's petition for certification. 232 N.J. 377 (2018).

         In Blake's case, the appellate panel affirmed the Board of Review's decision to deny Blake UI benefits because Blake voluntarily quit her job with her first employer and never started her second employment due to the rescinded offer. 452 N.J.Super. 7, 10-11 (App. Div. 2017). The panel construed the phrase "employment which commences" to mean that the employee must actually begin work with the second employer to be entitled to UI benefits. Id. at 12. The Blake panel believed that the first employer's UI account would be charged for UI benefits paid to a claimant who became unemployed as a result of the second employer's rescission of the job offer, id. at 13-16, and concluded that the first employer would have difficulty "challeng[ing] whether the claimant actually had received an offer of employment and what were its terms," id. at 16. The Court granted Blake's petition for certification. 233 N.J. 296 (2018).

         HELD: Based on its interpretation of N.J.S.A. 43:21-5(a), the Court concludes that McClain and Blake are entitled to UI benefits because (1) they qualified for UI benefits at their former employment at the time of their departure, (2) they were scheduled to commence their new jobs within seven days of leaving their former employment, and (3) their new job offers were rescinded through no fault of their own before the start date.

         1. In enacting the UCL, the Legislature declared that "economic insecurity due to unemployment is a serious menace to the health, morals, and welfare of the people of this state" and that the general welfare of the state required the "setting aside of unemployment reserves to be used for the benefit of persons unemployed after qualifying periods of employment." N.J.S.A. 43:21-2. The UCL is social legislation that provides some income for the worker earning nothing, because he is out of work through no fault or act of his own. Because of the remedial purpose of the UCL, it is to be construed liberally in favor of allowance of benefits. (pp. 12-13)

         2. The general rule under the UCL is that an employee who leaves "work voluntarily without good cause attributable to such work" is disqualified from receiving UI benefits until she is reemployed for a defined number of weeks. See N.J.S.A. 43:21-5(a). Before 2015, that general exclusion of UI benefits for a voluntary quit extended to an employee who held a long-term job and left it for an equal or better employment opportunity, only to be terminated shortly after beginning work. To ameliorate that harsh result, the Legislature amended N.J.S.A. 43:21-5(a) to protect employees who accept new employment set to begin within seven days of leaving their former employer. The Board of Review and McClain and Blake give dueling plain-language interpretations of N.J.S.A. 43:21-5(a). In the Board's view, the triggering event for UI benefit eligibility is the commencement of the new employment; in McClain and Blake's view, it is the acceptance of new employment. The Board contends that, under the statute, entitlement to UI benefits requires that the employee actually begin work with the new employer within seven days. McClain and Blake claim that entitlement to UI benefits merely requires that an employee accept an offer of employment scheduled to begin seven days after leaving her former employment. That interpretation allows for the granting of UI benefits when the new employer rescinds the offer before the employee begins work. Concluding that a plain reading of the statute yields two plausible interpretations, the Court reviews the legislative history of N.J.S.A. 43:21-5(a) and notes that it does not provide the necessary clarity to give meaning to the disputed language. (pp. 13-18)

         3. Presented with ambiguous statutory language and inconclusive legislative history, the Court looks to the underlying objective of the UCL and the equitable purpose of the amendment. McClain and Blake fall within the category of workers the Legislature intended to protect by the amendment. Under the Blake panel's interpretation, McClain and Blake could have collected UI benefits if they had commenced their new jobs and were fired the next day, but instead they are disqualified from collecting benefits because their offers were rescinded just days before starting their new jobs. That absurd result is not one that the Legislature likely envisioned or intended and is completely at odds with the enlightened purposes of the UCL. (pp. 18-19)

         4. The Court concludes that McClain and Blake are entitled to UI benefits. The Blake panel mistakenly believed that the "first employer would bear the financial consequences of any benefits awarded" if the new employer rescinded the offer before the employee's start date. N.J.S.A. 43:21-7(c)(1) makes clear that an employer's UI account is not charged when an employee voluntarily quits her employment. The Court also rejects the Blake panel's conclusion that the last clause of the amendment is inconsistent with an interpretation of N.J.S.A. 43:21-5(a) that extends UI benefits to employees whose accepted job offers are rescinded before the start date. The provision on which the panel relied merely dictates that when an employee gives notice that she will quit her job on a specific date, that is the date from which to calculate the seven-day period before she begins her job. Last, the Court does not harbor the concerns expressed by the Blake panel about the difficulty of exposing the hypothetical employee who might feign a rescinded offer to qualify for UI benefits because the employee must satisfy the burden of establishing that she is entitled to UI benefits through an adversarial process. (pp. 20-24)

         The judgment of the McClain panel is AFFIRMED, the judgment of the Blake panel is REVERSED, and the matters are REMANDED to the Board of Review for further proceedings.

          CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE ALBIN's opinion.

          OPINION

          ALBIN, JUSTICE.

         Under New Jersey's Unemployment Compensation Law (UCL or Act), N.J.S.A. 43:21-1 to -71, an employee terminated from employment after working a certain number of weeks is ordinarily entitled to unemployment insurance (UI) benefits. An employee who voluntarily leaves her employment without just cause, however, is not entitled to such benefits. N.J.S.A. 43:21-5(a). The Legislature recognized the inequity facing those employees who served a substantial period with one employer and then voluntarily left for an equal or better opportunity with another employer, only to be terminated shortly afterwards. Those employees terminated by the second employer were denied UI benefits because they had not worked the requisite time at the second job, despite long-term service at their previous employment.

         To redress that problem, the Legislature in 2015 passed an amendment to N.J.S.A. 43:21-5(a), qualifying an employee to receive UI benefits if she "voluntarily leaves work with one employer to accept from another employer employment which commences not more than seven days after the individual leaves employment with the first employer." See L. 2015, c. 41, § 1 (modifying N.J.S.A. 43:21-5(a)) (eff. May 4, 2015). The amendment ensured that an employee who was qualified for UI benefits during her first employment would not be disqualified from such benefits if terminated shortly after beginning her second employment. Ibid.

         In the two consolidated appeals before us, each employee accepted an offer of employment from a second employer only to have the offer rescinded before the start date -- leaving her jobless. The question is whether in such a circumstance, the employee, whose offer is rescinded through no fault of her own, is entitled to UI benefits pursuant to N.J.S.A. 43:21-5(a).

         Two Appellate Division panels have reached diametrically opposite answers to that question based on divergent interpretations of N.J.S.A. 43:21-5(a). One panel concluded that the acceptance of an offer of employment to commence within seven days after leaving the first employer -- not the actual start of new employment -- triggers the UI benefit protections of N.J.S.A. 43:21-5(a). McClain v. Bd. of Review, 451 N.J.Super. 461, 464-65 (App. Div. 2017). Another panel concluded that the employee must actually begin working for the second employer within the seven-day period to be entitled to UI benefits. Blake v. Bd. of Review, 452 N.J.Super. 7, 11 (App. Div. 2017).

         Both appellate panels present plausible interpretations of N.J.S.A. 43:21-5(a). However, only the McClain panel's interpretation is consistent with the remedial purposes of the UCL, an Act we have "construed liberally in favor of allowance of benefits." Yardville Supply Co. v. Bd. of Review, 114 N.J. 371, 374 (1989). The objective of the Act is to provide some income to an employee out of work through no fault of her own. Utley v. Bd. of Review, 194 N.J. 534, 543 (2008). Providing UI benefits to an employee who voluntarily leaves her first employment based on an equal or better offer from a second employer, who then rescinds the offer before the start date of her new employment, fulfills the Legislature's objective in amending N.J.S.A. 43:21-5(a). We therefore determine that the two employees in the cases before us have earned the right to UI benefits.

         Accordingly, we affirm the judgment of the McClain panel, reverse the judgment of the Blake panel, and remand for ...


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