McKnight v. Bd. of Review

476 N.J.Super. 154

298 A.3d 13

Karen MCKNIGHT, Appellant,

v.BOARD OF REVIEW, DEPARTMENT OF LABOR, Toys "R" US - Delaware, Inc., and Wegmans Food Markets, Inc., Respondents.

DOCKET NO. A-3067-20

Superior Court of New Jersey, Appellate Division.

Argued April 17, 2023

Decided July 3, 2023

Alan H. Schorr, Cherry Hill, argued the cause for appellant (Schorr & Associates, PC, attorneys; Alan H. Schorr and Christine A. Cross, on the briefs).

Ian Fiedler, Deputy Attorney General, argued the cause for respondent Board of Review (Matthew J. Platkin, Attorney General, attorney; Donna Arons, Assistant Attorney General, of counsel; Jana R. DiCosmo, Deputy Attorney General, on the brief).

Before Judges Gooden Brown, DeAlmeida, and Mitterhoff.¹

The opinion of the court was delivered by

MITTERHOFF, J.A.D.

Appellant Karen McKnight appeals from the Board of Review's (the "Board") August 26, 2022 final agency decision, which held her liable to return an overpayment of $6,277 for unemployment benefits she was allegedly ineligible to receive for the weeks ending June 30, 2018 through May 4, 2019, pursuant to N.J.S.A. 43:21-16(d). The central issue on appeal is whether a claimant, who is otherwise separated from full-time employment, may include wages received from a part-time position, which they continue to maintain, in the calculation of their average weekly wage for purposes of unemployment benefits. We conclude that the exclusion of the wages contravenes the legislative purpose of the unemployment benefits statute and is arbitrary as legally unsupported.

We therefore reverse and remand for a recalculation of benefits.

We discern the following facts from the record. Appellant was employed full time at Toys "R" Us, where she started working on September 27, 1981. She was also employed part time at Wegmans Food Market ("Wegmans"), where she started working in September of 2011.

In June 2018, Toys "R" Us closed and appellant was permanently laid off after twenty-one years of employment. Thereafter, on June 24, 2018, appellant applied for unemployment benefits to supplement the loss of income from her full-time job while she continued to work part time at Wegmans with no reduction in hours.

On July 5, 2018, appellant received an initial benefit determination from the New Jersey Department of Labor, Division of Unemployment Insurance (the "Division"), which established a weekly benefit rate of $452, a partial weekly benefit rate of $542, and a maximum benefit amount of $11,752. This initial benefit determination included both appellant's full-time and part-time wages.

Each week thereafter, appellant certified for benefits and reported her earnings from her part-time job. Appellant collected partial unemployment benefits from June 30, 2018 to May 5, 2019; she was paid her partial benefit rate of $542 per week less her actual earnings at Wegmans.

On May 23, 2019, appellant received a monetary redetermination, which excluded her income from Wegmans in the calculation of her benefits; this reduced appellant's weekly benefit rate to $304, her partial benefit rate to $364, and her maximum benefit amount to $7,904. Due to the change in her partial benefit rate, appellant also received a request for refund, advising her that the redetermination rendered her liable for a refund in the amount of $6,099 in overpayments received as benefits for the weeks ending June 30, 2018 through May 4, 2019.

On June 5, 2019, appellant appealed the Division's redetermination, and a hearing was held before the Appeal Tribunal (the "Tribunal") on November 13, 2019. There, appellant admitted to underreporting the earnings she received from Wegmans for the weeks ending July 7, 2018 through July 28, 2018, and for the weeks ending August 18, 2018 through September 29, 2018, leading to an overpayment totaling $342. However, appellant testified that she had paid that money back at the time of the hearing.

In a decision mailed on November 14, 2019, the Tribunal determined that appellant "was not considered unemployed" and was, therefore, "ineligible" to receive benefits for the weeks ending July 7, 2018 through July 28, 2018, and for the weeks August 18, 2018 through September 29, 2018. Thus, the Tribunal held appellant liable for a refund in the sum of $342, received as benefits for the subject weeks.

On March 26, 2020, appellant appealed the Tribunal's decision to the Board, arguing that the Division incorrectly removed appellant's part-time earnings from her benefit calculation. On June 17, 2020, the Board remanded the matter to the Tribunal, stating only that "there [was] need for additional testimony from [appellant] concerning benefits received on a claim dated June 24, 2018, to ascertain her liability for refund[.]"

A second hearing was held before the Tribunal on July 17, 2020, in which appellant argued that the Department of Labor's regulations required them to include all earnings for purposes of calculating base year earnings. In a decision mailed on July 23, 2020, the Tribunal again determined that appellant was "not considered unemployed" and held her liable for a refund in the amount of $342, received as benefits for the weeks ending July 7, 2018 through July 28, 2018, and from August 18, 2018 through September 29, 2018. In so doing, the Tribunal conceded that it was "not aware of any regulation or law that requires the Division to place [appellant]’s part-time wages on hold." Nevertheless, the Tribunal concluded that the Division's action "in placing [appellant]’s wages on hold from [Wegmans]" was "not unreasonable," "since [appellant] was still employed by [Wegmans] with no reduction in hours of work when the claim dated [June 24, 2018] was filed."

On August 10, 2020, appellant appealed to the Board for a second time, arguing that the decision of the Tribunal must be reversed as it was not supported by regulation or law. In a decision mailed on December 9, 2020, the Board again remanded the matter to the Tribunal, stating only that "there [was] need for additional testimony to ascertain [appellant]’s liability for refund, and for the ... Tribunal to properly address the arguments presented by [appellant]’s attorney concerning the legality of" the Division's redetermination.

A third hearing was held before the Tribunal on January 29, 2021. In advance of that hearing, appellant's attorney sent the Tribunal certain sections of the New Jersey Unemployment Compensation Law ("UCL" or the "Act"), N.J.S.A. 43:21-1 to -71, and associated regulations in support of appellant's position. Specifically, appellant's attorney sent the Tribunal N.J.S.A. 43:21-19 and N.J.A.C. 12:17-9.2.

In a decision mailed on March 9, 2021, the Tribunal again refused to consider the wages earned from appellant's part-time job at Wegmans, reasoning that the Board "has historically held that the legislature did not intend to base benefits for unemployment on earnings with an employer who is still employing the claimant." The Tribunal went on to state:

Herein, [appellant] contended she should be able to use the wages for both employers. The intent was not to allow a claimant to continue to work for an employer who is still employing the claimant under the same terms and charging that employer's account for unemployment benefits paid. Therefore, [Wegmans] was properly placed on hold and the wages removed as those wages could not be used to establish the monetary entitlement on the claim dated [June 24, 2018].

Thus, the Tribunal determined that appellant was liable for a refund of the overpayment in the sum of $6,099, received as benefits for the weeks ending June 30, 2018 through April 6, 2019.

On March 16, 2021, appellant appealed the Tribunal's decision to the Board a third time. On June 24, 2021, the Board rejected appellant's arguments, stating:

The appellant's contention that N.J.S.A. 43:21-19(t)(3) and N.J.A.C. 12:17-9.2 should be applied in this case to allow the [appellant] to establish base weeks from both employers[ ] is rejected. N.J.S.A. 43:21-19(t)(3) refers to the calendar week option that allows unemployed individuals with a history of multiple concurrent employers to establish base[ ] weeks from each employment. N.J.A.C. 12:17-9.2 provided for eligibility upon separation from full-time and part-time employment. Conversely, the [appellant] in this case cannot be considered unemployed with respect to her job with [Wegmans].

Ultimately, the Board modified the Tribunal's decision by declaring that appellant was never unemployed and was, therefore, not eligible for benefits in the first place. In so doing, the Board held appellant liable for a refund in the amount of $6,277 for benefits received for the weeks ending June 30, 2018 through May 4, 2019, which represented the entirety of appellant's unemployment benefits.

In February 2020, appellant was notified by the U.S. Department of Treasury, Bureau of Fiscal Service that $3,184 of her federal tax refund was being applied to her debt with the Division. In March 2020, appellant was notified that $3,700 of her state tax refund was also being applied to her debt with the Division. In total, the Division received $6,884 from appellant's tax refunds, which is $607 more than what she allegedly owed.

On July 1, 2021, appellant appealed to this court. Subsequently, we granted the Board's motion for remand to allow further development and clarification of the record. In a revised decision mailed on August 26, 2022, the Board reaffirmed its June 24, 2021 decision, this time relying on two unpublished cases for support.² The Board's decision also added the following reasoning:

Without question, any benefit determination including [appellant]’s base period earnings from Wegman[ ]s in the [appellant]’s weekly benefit rate, would result in charges being assessed against that employer. ... Since [appellant] had not suffered a lack of work from Wegmans upon her initial filing for benefits, allowing [appellant] to collect unemployment benefits using wages

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