New Jersey Employers Face Imminent Changes to Unemployment Compensation Law, Including Mandatory Reporting, Appeals, and Penalties

On November 3, 2022, Governor Phil Murphy signed into law a number of substantial changes to New Jersey’s Unemployment Compensation Law (UCL). This article highlights the significant amendments to the UCL that will take effect on July 31, 2023. Among the amendments is a new obligation imposed upon New Jersey employers to provide the New Jersey Department of Labor and Workforce Development (NJDOL) with required separation information any time an employer operating in New Jersey discharges an employee.

Quick Hits

• Employers are required to provide NJDOL with specified information to make benefit determinations.
• Employers that fail or refuse to furnish information may be liable for significant fines.
• Changes to the Unemployment Compensation Law will take effect on July 31, 2023.

Filing Requirements and Separation Information Reporting Requirement (N.J.S.A. 43:21-6(a))

For most employers, the critical takeaway from the new law, P.L. 2022, Chapter 120, will be two brand-new reporting obligations.

First, the NJDOL will provide employers with a new form containing “directions” that enumerate what specific information, “sufficient to enable the [NJDOL] to make a benefit determination,” an employer must provide to the NJDOL “immediately and simultaneously … by electronic means” when it separates an employee. An immediate takeaway is that employers will be expected to submit separation information regardless of whether a claim for benefits is filed by the separated employee.

Additionally, employers will also be required to “immediately and simultaneously” send to the NJDOL a copy of the NJDOL’s Form BC-10 given to the separated employee. Employers have always needed to provide a BC-10 to separated employees, but were not previously required to submit this document to the NJDOL.

The law envisions that employers will transmit both the separation information and the Form BC-10 to the NJDOL electronically. Employers will be required to provide a designated contact email to correspond with the NJDOL, although the law states that the NJDOL may permit an alternative method for employers if electronic means are not available.

Amendments to Initial Determination Procedure (N.J.S.A. 43:21-6(b))

New Initial Benefits Determination Deadlines

The law also adjusts many deadlines related to the unemployment process. Deputies of the NJDOL’s Division of Unemployment and Temporary Disability Insurance will now notify the claimant’s employers, and obtain any missing separation information within seven calendar days of receiving the employer’s separation information, or the filing of the claimant’s claim, whichever date came first.

While deputies previously had two weeks to obtain any missing benefits information, the NJDOL must now make all initial benefits determinations within three weeks from the date the NJDOL receives the benefits claim.

Role of Required Separation Information

Also, as expected, the law gives separation information an increased role in the overall benefits determination process. NJDOL deputies must consider the employer’s separation information when examining a benefits claim. Further, the NJDOL will give all claimants copies of the separation information provided to the NJDOL, along with an opportunity to respond.

Consequences for Failure to Provide Separation Information

If the employer fails to provide the separation information within seven days after receiving the electronic notice or request, a deputy then will decide the claim based on any available evidence.

Employers may provide separation information late, and, after providing the claimant a chance to respond to separation information, the NJDOL can alter the determination and order payments for workweeks after the separation information was received.

However, if an initial determination is made without the separation information (because the employer did not provide it), benefits are paid immediately, and any initial or subsequent determinations about charges to the employer’s account paid before the employer’s submission of the separation information become incontestable.

Adjusting Time to Appeal Initial Determination 

Previously claimants and employers could appeal initial benefits determinations within seven days of receiving the notice of determination, or within ten days of the notices’ mailing date. Now, claimants may appeal initial benefits determinations within twenty-one days of mailing, but employers may only appeal the initial determination within seven days of confirmed receipt by any means, including by email.

The law now also likely forbids untimely appeals of initial benefits determinations altogether in so far as it states that “an appeal concerning an initial determination shall not be filed after whichever is applicable of the seven-day or 21-day period.”

It is unlikely that late appeals will be excused through showing good cause why the appeal was not timely filed. Errors in the critical components of the initial determination may be forever waived if not timely appealed, such as the claimant’s eligibility unemployment benefits and, if eligible, whether the claimant is disqualified from receiving benefits (for instance, because of resignation or gross misconduct).

Adjusting Benefits After Appeal Process

Where the employer timely appeals the initial determination, any benefits payable during the appeal are paid as they accrue in accordance with the initial determination.

If those payments eventually exceed the amount determined in the appeal, the payments are considered an “overpayment” (subject to provisions of N.J.S.A. 43:21-16, discussed below), including the requirement that any claimant who made a “knowing, fraudulent nondisclosure or misrepresentation” will be “liable to repay the full amount of the overpayment.”

If the appeal concerns disqualification, then benefits will be withheld only for the disqualifying period while the appeal is pending. If the appeal finds the claimant was not disqualified, benefits are paid for the period of disqualification, except for any week where the claimant failed to give the NJDOL the required weekly certification demonstrating eligibility for benefits.

Untimely Appeals of Benefits Charges by the Employer

An employer that has made an untimely appeal may still challenge the amount of a benefit determination, provided that if the NJDOL reduces the benefits amount after the employer’s untimely appeal, that reduction is only effective from the point after the appeal is resolved, and any overpayment of benefits during the appeal will be charged to the employer’s account.

Subsequent Benefits Determinations

The NJDOL may also make subsequent benefits determinations when applicable, and “[a]ny change in the allowance, amount, or other characteristic of benefits” in that subsequent determination is “appealable in the same manner and under the same limitations” as the initial determination.

However, if that subsequent determination will end or reduce the benefits provided in the initial determination, the claimant will now get a full explanation why, and the opportunity to appeal within seven calendar days following receipt of that explanation.

If the claimant appeals during that period, the initial determination benefits are still paid. If the claimant does not appeal, or the appeal is resolved against the claimant (i.e., overpayment or disqualified) those overpayments are subject to N.J.S.A. 43:21-16 (discussed below).

Amendments to Penalties and Overpayment Liability (N.J.S.A. 43:21-16)

The law imposes stiff fines for failing to provide this new separation information to the NJDOL.

Fines for Failure to Provide Separation Information

Previously, employers could only be subject to a modest $25 fine for every ten days that the employer failed to provide benefits-related information to the NJDOL. However, under the new law, an employer that […] “willfully fails or refuses to furnish any reports or information … including [separation information],” is liable for a $500 fine, or 25 percent of the “amount fraudulently withheld.” In addition, “each such false statement or representation or failure to disclose a material fact, and each day of such failure or refusal shall constitute a separate offense.”

 Adjusting Overpayment Liability

The law also makes some serious changes to an employer’s liability for benefit overpayments; overpayment liability is now based on a new “allocation of fault” determination.

Specifically, if the overpayment resulted only from the NJDOL’s or employer’s failures, then the claimant is not liable for repayment. Erroneous benefits payments also will not be corrected if the erroneous payment was made because the employer failed to provide the separation information.

Conclusion

The new law’s changes imposing new reporting requirements, substantially curtailing employer’s abilities to appeal benefits determinations, unfavorably allocating overpayment liability, and greatly increasing penalties should concern all New Jersey employers. Employers may want to review their unemployment processes in light of these changes.

Ogletree Deakins’ Morristown office will continue to monitor the NJDOL for guidance regarding the amendments to the Unemployment Compensation Law—including the new form with directions for providing the specified information—and will post updates on the New Jersey and Wage and Hour blogs as additional information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.