By:  Ty Hyderally, Esq., Jennifer Vorih, Esq., and Adela Barbura

The Superior Court of New Jersey, Appellate Division, recently ruled in favor of an employee who was wrongfully denied part-time earnings by the New Jersey Department of Labor, Division of Unemployment Insurance (the “DOL”). Karen McKnight v. Bd. of Rev., Dept. of Labor, et al., 2023 N.J. Super. LEXIS 70. The issue before the Appellate Division was “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.” McKnight, 2023 N.J. Super. LEXIS 70, *1.

To supplement loss wages after being laid off from her full-time job at Toys “R” Us, the Plaintiff, Karen McKnight (“McKnight”), applied for unemployment benefits while continuing to work her part-time job at Wegmans. After receiving benefits based on both her full-time and part-time earnings since July 5, 2018, McKnight received a monetary redetermination from the DOL on May 23, 2019, informing her that the part-time wages from Wegmans would be excluded from the calculation of benefits. Additionally, the DOL claimed that the benefits McKnight had received for the weeks between June 30, 2018, through May 4, 2019 were overpayments, and ordered McKnight to repay $6,099.

McKnight argued that the DOL’s monetary redetermination and denial of part-time benefits punishes employees maintaining part-time jobs and rewards employers for laying off employees. Citing N.J.S.A. 43:21-19 and N.J.A.C. 12:17-9.2, McKnight argued that these statutes allowed her to establish base weeks using income from both of her employers. N.J.S.A. 43:21-19 contains a “calendar week option that allows unemployed individuals with a history of multiple concurrent employers to establish base[] weeks from each employment.” McKnight, at *7. N.J.A.C. 12:17-9.2 provides for, “eligibility upon separation from full-time and part-time employment.” Id.

The Appeal Tribunal (the “Tribunal”) determined that, due to her part-time earnings at Wegmans, McKnight was not unemployed and was thus ineligible to receive benefits. The Board of Review (the “Board”) agreed with the Tribunal and further stated that N.J.S.A. 43:21-19 and N.J.A.C. 12:17-9.2 did not apply to McKnight, as she “cannot be considered unemployed with respect to her job with [Wegmans].” Id. Further, the Board determined that McKnight was required to repay $6,277 in benefits received. Id. at *1.

McKnight appealed to the Appellate Division, which reversed and remanded for a recalculation of benefits. Id. at *1. In reaching its decision, the Appellate Division discussed the statutory language of N.J.S.A. 43:21-19(t)(3) and opined that the court’s role is “to discern and effectuate the intent of the Legislature.” Id. at *13 (quoting Saccone v. Bd. of Trs., Police & Firemen’s Ret. Sys., 219 N.J. 369, 380 (2014). The Court found the language of N.J.S.A. 43:21-19(t)(3) to be ambiguous, and thus relied on “extrinsic sources,” including the statute’s history and purpose, “to determine the Legislature’s intent.” Id. at *16 (citing In re Kollman, 210 N.J. 557, 568 (2012)).

Under the New Jersey Unemployment Compensation Law (the “Act”), N.J.S.A. 43:21, the DOL must determine whether McKnight is eligible for unemployment benefits. N.J.S.A. 43:21-4. To be eligible, McKnight must have been “separated, or unemployed, from work from a base year employer.” Id. at *13-14. As defined in N.J.S.A. 43:21-19(m)(1)(A), unemployment means “any week in which the claimant is not engaged in full-time work and with respect to which his remuneration is less than his weekly benefit rate[.]” Id. at *14. While the Board found that McKnight was eligible for unemployment benefits for her previous full-time job at Toys “R” Us, they believe McKnight’s part-time wages should not be included in calculating her average weekly wage benefis.

“The purpose of the [Act] is to provide some income for the worker earning nothing, because he is out of work through no fault or act of his own.” Id. at *16 (quoting Utley v. Bd. of Rev., 194 N.J. 534, 543 (2008). Viewing the remedial purpose of the Act, the Appellate Court held that the redetermination of McKnight’s funds and DOL’s request for the $6,099 refund were “in violation of the Act’s express legislative policies.” Id. at *17. Based on the DOL’s interpretation, individuals laid off by a full-time employer would be punished for maintaining part-time jobs, a theory that goes completely against the Act’s intent. Furthermore, the Appellate Division emphasized that the DOL’s interpretation of the Act “seriously frustrates one of the main objectives of the [Act], which is to encourage persons to work[.]” Id. (quoting Wojcik v. Bd. of Rev., 58 N.J. 341, 346 (1971)). This interpretation would leave McKnight with no benefits at all and Toys “R” Us, the full-time employer, would have zero consequences despite causing McKnight’s unemployment.

The Appellate Division’s ruling is a major win for unemployed New Jerseyans who maintain part-time jobs, and solidifies consequences for employers who have layoffs.

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