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Wednesday, May 17, 2017

IN RE N.J.A.C. 12:17-2.1 A-4636-14T3

IN RE N.J.A.C. 12:17-2.1
This appeal involves a challenge to the validity of a regulation, N.J.A.C. 12:17-2.1, adopted in 2015 by the Department of Labor and Workforce Development. In that regulation, the Department defines, for the first time in codified form, the concept of "simple misconduct" by an employee that can limit his or her eligibility for unemployment benefits under the Unemployment Compensation Act ("the Act"), N.J.S.A. 43:21-1 to -56. The Department's adoption of the regulation attempted to respond to concerns this court expressed in Silver v. Board of Review, 430 N.J. Super. 44 (App. Div. 2013), regarding the need for a codified rule that distinguishes "simple misconduct" from the more stringent intermediate concept of "severe misconduct" as defined by the Legislature in a 2010 amendment to N.J.S.A. 43:21-5(b), or the most extreme category of "gross misconduct" defined in the statute.
The court invalidates the portion of the challenged regulation defining simple misconduct. It does so because the definition illogically and confusingly mixes in concepts of "negligence" with intent-based concepts such as "willful disregard," "evil design," "wrongful intent," and similar states of mind. The regulation is also flawed because it defines "simple misconduct" in certain respects as encompassing employee conduct that is at least as extreme or venal or perhaps more so than "severe misconduct."
Consequently, the Department's final agency action adopting a definition of simple misconduct within N.J.A.C. 12:17-2.1 is reversed as arbitrary and capricious, without prejudice to the Department pursuing the adoption of a substitute regulation that cures these defects and conforms with the overall statutory scheme.