NJ Supreme Court Clarifies Impact of Pretrial Detention on Unemployment Compensation

In Haley v. Board of Review (A-71-19/084123) (Decided March 17, 2021), the Supreme Court of New Jersey held that pretrial detention premised on charges that are later dismissed is not a separation from work that automatically disqualifies an applicant from unemployment benefits under the Unemployment Compensation Law (UCL). It further held that the New Jersey Department of Labor (DOL) was required to review the totality of the circumstances surrounding Plaintiff Clarence Haley’s detention and release to determine whether he “left work voluntarily,” which it failed to do.

Facts of Haley v. Board of Review

Between May and December 2017, Garden State Laboratories (Garden State) employed Clarence Haley. In December, authorities arrested Haley, charging him with a number of serious offenses. Haley was detained pretrial. One week after his arrest, Haley’s mother telephoned Garden State and requested that Haley’s position remain open while he contested the charges, but Garden State terminated Haley’s employment. Two months after his arrest, a grand jury declined to indict Haley. The prosecutor dismissed all charges and permitted Haley’s release from detention.

Haley filed an application for unemployment benefits. The Department of Labor and Workforce Development (the Department) denied the application, finding that Haley left his job voluntarily for personal reasons. Under the state’s Unemployment Compensation Law (UCL), an individual who “has left work voluntarily without good cause attributable to such work” is “disqualified for benefits” until certain conditions are met. N.J.A.C. 12:17-9.1(e) provides guidance as to what may, upon review, be deemed “voluntarily” leaving work. As relevant to the case, N.J.A.C. 12:17-9.1(e)(10) provides separation from work due to incarceration is “reviewed as a voluntarily leaving work issue.”

The Appeal Tribunal, Board of Review, and Appellate Division each affirmed. The Appellate Division, citing Fennell v. Board of Review, 297 N.J. Super. 319 (App. Div. 1997), concluded that the UCL was amended in 1961 to disqualify applicants who leave work for purely personal reasons, and that incarceration is a purely personal reason.

NJ Supreme Court’s Decision in Haley v. Board of Review

The New Jersey Supreme Court of New Jersey reversed. It held that Haley’s pretrial detention, premised on dismissed charges, was noy a “voluntarily leaving work issue” under the UCL.

“We conclude that pretrial detention is not an absolute bar to receiving unemployment compensation benefits for the time following dismissal of the charges and release from detention because N.J.A.C. 12:17-9.1(e)(10) specifically provides that ‘[i]ncarceration’ shall

be ‘reviewed as a voluntarily leaving work issue,’” the court wrote. “Based on the specific facts presented by this appeal, the UCL and N.J.A.C. 12:17-9.1(e)(10) required the Department to review the totality of the circumstances surrounding Haley’s detention and release to determine whether he ‘left work voluntarily.’”

In reaching its decision, the court emphasized “incarceration” — like the other reasons listed under N.J.A.C. 12:17-9.1(e) — is not, in and of itself, an absolute bar to unemployment benefits. Accordingly, under the court’s existing precedent and the Department’s own guidance, the Department was required to make a fact-intensive review of the totality of the circumstances surrounding Haley’s detention and release to determine whether he “left work voluntarily.”

“The fact-sensitive analysis here would have to go beyond whether Haley was ‘falsely imprisoned’ or ‘involved in a case of mistaken identity’ to consider that authorities arrested Haley, the court ordered him to be detained pretrial, the grand jury declined to indict, and the charges against him were dismissed,” the court advised. It further noted that Haley had been detained for about two months when he was released from detention and took steps to retain his job, both of which were factors that should be taken into account.

“Our decision today is guided by the notion that the UCL is remedial and the principle that N.J.A.C. 12:17-9.1(e) is not inflexible. We find that Haley’s arrest and detention were ‘not the end, but only one important part of the inquiry’ under N.J.A.C. 12:17-9.1(e)(10),” the court wrote. It then remanded the case back to the Department for proceedings consistent with its opinion.

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