In Re

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4636-14T3

APPROVED FOR PUBLICATION

IN RE N.J.A.C. 12:17-2.1. May 1, 2017

________________________________ APPELLATE DIVISION

Argued March 6, 2017 – Decided May 1, 2017

Before Judges Sabatino, Nugent and Haas.

On appeal from a regulation promulgated by

the New Jersey Department of Labor and

Workforce Development.

Alan H. Schorr argued the cause for

appellants Schorr & Associates, P.C. and

National Employment Lawyers Association –

New Jersey (Schorr & Associates, P.C.,

attorneys; Mr. Schorr, on the briefs).

Alan C. Stephens, Deputy Attorney General,

argued the cause for respondent New Jersey

Department of Labor and Workforce

Development (Christopher S. Porrino,

Attorney General, attorney; Melissa Dutton

Schaffer, Assistant Attorney General, of

counsel; Mr. Stephens, on the brief).

The opinion of the court was delivered by

SABATINO, P.J.A.D.

The heart of 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 ("the

Department"). 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.

For the reasons that follow, we invalidate the portion of

the challenged regulation defining simple misconduct. We do 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,

as explained in this opinion, 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."

2 A-4636-14T3

Consequently, the Department's final agency action adopting

the definition of simple misconduct within N.J.A.C. 12:17-2.1

must be set aside as arbitrary and capricious.1 We do so without

prejudice to the Department pursuing the adoption of a

substitute regulation that cures these defects and conforms with

the overall statutory scheme.

I.

A.

The framework and history of the statute and related case

law dating back to 1936 is eloquently set forth in Judge Lisa's

opinion in Silver, supra, 430 N.J. Super. at 48-56. We

incorporate by reference that background here. Some highlights

from Silver bear repeating.

To begin with, we detailed in Silver:

From its inception in 1936 until 2010,

New Jersey's Unemployment Compensation Law

has provided for disqualification for

benefits for employees discharged for

"misconduct" or "gross misconduct" connected

with the work. N.J.S.A. 43:21-5(b); see L.

1936, c. 270, § 5. The statute defines

"gross misconduct" as "an act punishable as

a crime of the first, second, third or

fourth degree," but it does not define the

term "misconduct." Ibid. Appropriately,

1 Appellants also challenge the adoption of N.J.A.C. 12:17-9.1, -

9.2, -10.1, -10.3 through -10.9, and -21.2. We see no reason to

invalidate those regulations, which do not include the

problematic definition of "simple misconduct" discussed in this

opinion.

3 A-4636-14T3

the sanctions for gross misconduct are

greater than for simple misconduct. Ibid.

In 2010, the Legislature added a third

category in section 5(b), "severe

misconduct." L. 2010, c. 37, § 2, eff. July

1, 2010. As we will explain, this was

intended as an intermediate form of

misconduct, requiring greater culpability

than simple misconduct, but less than gross

misconduct, and with an intermediate level

of disqualification from collecting

unemployment benefits. The amendatory

provision does not define severe misconduct,

but contains a non-exclusive list of

examples. See N.J.S.A. 43:21-5(b).2

[Silver, supra, 430 N.J. Super. at 48-49.]

As we then explained in Silver, case law has attempted to

fill in the gap left by the omission from the Act of an express

definition of "simple misconduct":

In 1956, our Supreme Court held that

employees were guilty of misconduct for

engaging in a work stoppage, in violation of

2 As Silver explained, under the statute, proven "misconduct" by

an employee "results in disqualification for the week that the

employee was discharged and seven additional weeks." Supra, 430

N.J. Super. at 49 n.4 (citing N.J.S.A. 43:21-5(b)). By

comparison, to be eligible for unemployment benefits after being

discharged for "severe misconduct," an employee "must first

become reemployed for a period of at least four weeks and earn

at least six times the employee's weekly unemployment benefit

rate." Ibid. (citing N.J.S.A. 43:21-5(b)). Lastly, the most

severe degree of employee behavior under the statute, termed

"gross misconduct," results in "no benefits from the account of

the employer against whom the gross misconduct occurred and

requires at least eight weeks of new employment and wages

totaling at least ten times the weekly benefit rate before the

claimant can collect unemployment compensation." Ibid. (citing

N.J.S.A. 43:21-5(b)).

4 A-4636-14T3

a no-strike clause in their collective

bargaining agreement, which provided that

the employer shall immediately discharge any

employee in violation of the clause. Bogue

Elect. Co. v. Bd. of Review, 21 N.J. 431,

433-34 (1956). Without attempting to define

"misconduct" broadly, the Court held that a

deliberate breach of the collective

bargaining agreement could not be deemed a

circumstance causing involuntary

unemployment, the hazard intended by the

Legislature to be protected against, and

thus, within the spirit and policy of the

unemployment law, it constituted misconduct.

Id. at 436.

A few months later, a panel of this

court was confronted with a similar

situation, in which employees were fired as

a result of a work stoppage, but in which

the collective bargaining agreement did not

contain a no-strike provision. Beaunit

Mills, Inc. v. Bd. of Review, 43 N.J. Super.

172, 176-80 (App. Div. 1956), certif.

denied, 23 N.J. 579 (1957). Because of

that material factual distinction, the panel

was required to define "misconduct" within

the meaning of the unemployment law. It did

so thusly:

[Silver, supra, 430 N.J. Super. at 49.]

We then quoted in Silver from the following instructive passages

found in Beaunit Mills:

What does the statutory [term]

misconduct signify? Obviously it cannot mean

"mere mistakes, errors in judgment or in the

exercise of discretion, or minor but casual

or unintentional carelessness or negligence,

and similar minor peccadilloes." It cannot

mean mere inefficiency, unsatisfactory

conduct, failure of performance as the

result of inability or incapacity,

inadvertence in isolated instances, or good

5 A-4636-14T3

faith errors of judgment. Boynton Cab Co.

v. Neubeck, 237 Wis. 249, 296 N.W. 636

(1941); Kempfer, Disqualifications for

Voluntary Leaving & Misconduct, 55 Yale Law

J. 147, 162-166 (1945). In our opinion, the

statement in 48 Am. Jur., Social Security,

Unemployment Compensation, etc., § 38 at 541

(1943), suggests the fair intendment of the

statute:

[Silver, supra, 430 N.J. Super. at 49-50

(quoting Beaunit Mills, supra, 43 N.J.

Super. at 182).]

At this point, as we further noted in Silver, Beaunit Mills

quoted this portion of the Am. Jur. treatise:

Misconduct within the meaning of an

unemployment compensation act excluding from

its benefits an employee discharged for

misconduct must be an act of wanton or

willful disregard of the employer's

interest, a deliberate violation of the

employer's rules, a disregard of standards

of behavior which the employer has the right

to expect of his employee, or negligence in

such degree or reoccurrence as to manifest

culpability, wrongful intent, or evil

design, or show an intentional and

substantial disregard of the employer's

interest or of the employee's duties and

obligations to the employer.

[Id. at 50 (quoting Beaunit Mills, supra, 43

N.J. Super. at 183 (quoting 48 Am. Jur. §38

at 541)).]

Silver then explained:

Applying those principles, we held [in

Beaunit Mills] that, because the employees

"were engaged in a concerted activity in

good faith for their mutual aid and

protection," and with an "absence of evil

intent or willful desire to injure the

6 A-4636-14T3

employer," under all of the circumstances,

the employees were not guilty of misconduct

connected with the work within the meaning

of section 5(b). Id. at 183, 185.

Subsequent case law, although sparse,

has made clear that the Beaunit Mills

standard for defining misconduct is not

limited to a literal and isolated reading of

the Am. Jur. passage quoted above. The

definition also includes the discussion in

Beaunit Mills preceding the Am. Jur. passage

we have also quoted.

[Silver, supra, 430 N.J. Super. at 48-50

(emphasis added).]

Our opinion in Silver went on to distill guiding principles

from several reported New Jersey cases that have applied Beaunit

Mills. In particular, Silver noted, id. at 50, that in Demech

v. Board of Review, 167 N.J. Super. 35 (App. Div. 1979), we

reversed the Department's denial of benefits to a supermarket

employee who had thrown a roast at a co-worker out of

frustration and anger caused by the co-worker's inappropriate

conduct towards her. "Because the employee's conduct was

provoked by the co-employee, was unthinking and spontaneous, and

was not intended to and did not cause injury to the co-employee,

it did not qualify as misconduct under the Beaunit Mills

standard." Silver, supra, 430 N.J. Super. at 51 (citing Demech,

supra, 167 N.J. Super. at 38-39). In this regard, Silver quoted

this key passage from our opinion in Demech: "All that the

statute undertakes to penalize is deliberate and willful

7 A-4636-14T3

disregard of standards of conduct an employer has a right to

expect." Ibid. (emphasis added) (quoting Demech, supra, 167

N.J. Super. at 41).

Silver next addressed our opinion in Smith v. Board of

Review, 281 N.J. Super. 426 (App. Div. 1995), a case in which a

hospital orderly was discharged for misconduct because he had

brought food to a pre-surgery patient, contrary to a nurse's

instructions. Silver, supra, 430 N.J. Super. at 51 (citing

Smith, supra, 281 N.J. Super. at 428). The majority of this

court's panel in Smith upheld the denial of benefits because the

orderly's behavior amounted to "a 'willful disregard of the

employer's best interest,' thus constituting misconduct." Ibid.

(emphasis added) (quoting Smith, supra, 281 N.J. Super. at 430).

The third member of the panel dissented in Smith, because he

regarded the evidence as insufficient to support a "willful

disregard" of the hospital employer's policies, and instead

signified "only negligent" conduct. Ibid. (citing Smith, supra,

281 N.J. Super. at 438 (Brochin, J.A.D., dissenting)). We

explained in Silver that this split within the Smith panel

illustrates "[t]he critical distinction between intentional and

deliberate conduct on the one hand and negligent or inadvertent

conduct on the other[.]" Ibid. (emphasis added).

8 A-4636-14T3

As a further example of "the need for deliberate or

intentional conduct" to be proven to disqualify an employee for

benefits, Silver also discussed Parks v. Board of Review, 405

N.J. Super. 252 (App. Div. 2009). Id. at 51-52. In Parks, the

claimant was terminated from his job because of what was deemed

to be "excessive absenteeism" after four absences from work.

Id. at 52. The record in Parks reflected that all four absences

had been occasioned by family illnesses or emergencies. Ibid.

(citing Parks, supra, 405 N.J. Super. at 255). Given these

circumstances, this court reversed the Department's denial of

benefits to Parks, applying the Beaunit Mills standard. Ibid.

(citing Parks, supra, 405 N.J. Super. at 254).

As we highlighted in Silver, the panel in Parks observed

that disqualification for benefits under the Act "is warranted

only when the employee's conduct that resulted in his or her

discharge had the ingredients of willfulness, deliberateness and

intention." Ibid. (internal citations omitted). "[B]ecause the

employee's absences were the result of excusable circumstances,

they could not meet the Beaunit Mills standard of deliberate or

intentional violations of the employer's rules." Ibid.

(emphasis added) (citing Parks, supra, 405 N.J. Super. at 256).

We also briefly noted in Silver two other reported opinions

illustrating the concept of "misconduct." Both of those cases

9 A-4636-14T3

factually involved "intentional acts of insubordination." Ibid.

(emphasis added) (citing Borowinski v. Bd. of Review, 346 N.J.

Super. 242, 246 (App. Div. 2001), and Broderick v. Bd. of

Review, 133 N.J. Super. 30, 31 (App. Div. 1975)).

Continuing to trace the relevant history, Silver then noted

that the Department in 2003 promulgated a rule – a predecessor

to the 2015 regulation now challenged before us – which

attempted to define "misconduct" under the Act. That 2003 rule

provided:

For an act to constitute misconduct, it must

be improper, intentional, connected with

one's work, malicious, and within the

individual's control, and is either a

deliberate violation of the employer's rules

or a disregard of standards of behavior

which the employer has the right to expect

of an employee.

[Id. at 52-53 (quoting N.J.A.C. 12:17-

10.2(a)).]

As we explained in Silver, "[b]y its plain terms," the 2003

regulation "prescribe[d] a two-prong standard to establish

misconduct." Id. at 53. "First, the conduct must be improper,

intentional, connected with the work, malicious, and within the

employee's control." Ibid. "Second, the conduct must also be

either a deliberate violation of the employer's rules or a

disregard of the standards of behavior which the employer has

the right to expect." Ibid.

10 A-4636-14T3

Silver observed that the test articulated in the 2003

version of the rule "is more stringent than the Am. Jur. passage

quoted in Beaunit Mills." Ibid. The test "incorporates the

other features of the Beaunit Mills analysis, as further

elucidated and reiterated in subsequent case law." Ibid. We

stressed in this regard that Beaunit Mills "built upon a

foundation laid by the Supreme Court in Bogue, the rationale of

which hinged upon the incongruity of allowing benefits to 'a

group of employees [who] deliberately violate a [clearly

important] basic provision of a collective bargaining

agreement.'" Ibid. (quoting Bogue, supra, 21 N.J. at 436).

The Legislature, with the input of an intervening

conditional veto by the Governor, expanded the Act in 2010,

inserting the intermediate category of "severe misconduct."

Ibid. (citing revised N.J.S.A. 43:21-5(b)). We pointed out in

Silver that the statutory amendment provided no definition for

severe misconduct, but it did give some illustrative examples.

Ibid. Those examples included the following:

Examples of severe misconduct include, but

are not necessarily limited to, the

following: repeated violations of an

employer's rule or policy, repeated lateness

or absences after a written warning by an

employer, falsification of records, physical

assault or threats that do not constitute

gross misconduct as defined in this section,

misuse of benefits, misuse of sick time,

abuse of leave, theft of company property,

11 A-4636-14T3

excessive use of intoxicants or drugs on

work premises, theft of time, or where the

behavior is malicious and deliberate but is

not considered gross misconduct as defined

in this section.

[Id. at 54 (quoting N.J.S.A. 43:21-5(b), as

amended by L. 2010, c. 37, § 2, eff. July 1,

2010).]

As of the time of our opinion in Silver, the Department had

not yet adopted new regulations to distinguish simple misconduct

from severe misconduct. Ibid. A proposed regulation had been

attempted in 2010, but expired without action. A second

attempt, which was then underway when Silver was decided,

eventually culminated with the 2015 regulation that is now

before us.

Pending the final adoption of such new regulations, we

reasoned in Silver that it is "fundamental" that the term

"misconduct" should have "the same meaning throughout N.J.S.A.

43:21-5(b) and its implementing regulation." Id. at 55.

Following that principle, Silver looked to two of the examples

of "severe misconduct" set forth in the 2010 statutory

amendment, i.e., "repeated violations of an employer's rule or

policy" and "repeated lateness or absences after a written

warning," which, "if read literally," would describe "conduct

that would not necessarily be deliberate, intentional, or

12 A-4636-14T3

malicious." Ibid. However, we eschewed such a rigid and

literal interpretation of those examples.

We noted "it is obvious that the Governor and Legislature

intended to create severe misconduct as a gap-filler between

simple misconduct and gross misconduct." Ibid. (emphasis

added). We added that "[i]t would make no sense to allow for

conduct with a lower level of culpability (such as mere

inadvertence or negligence) to qualify as severe misconduct and

carry with it a harsher sanction than simple misconduct." Ibid.

"Such a result would be absurd and clearly contrary to the

legislative intent, as expressly set forth in the Governor's

Conditional Veto Message, S1813, L. 2010, c. 37." Ibid.

Summarizing these principles, Silver expressed the

following guidance to both the Department and to litigants:

Therefore, we must construe these two

examples of severe misconduct as requiring

acts done intentionally, deliberately, and

with malice. Because these two examples of

severe misconduct require repeated

violations, such a construction would render

the conduct more egregious than simple

misconduct, which could result from a single

such violation committed intentionally and

with malice. We understand "intentional"

and "malicious" as used in the regulation to

include deliberate disregard of the

employer's rules or policies, or deliberate

disregard of the standards of behavior that

the employer has the right to expect of an

employee. This interpretation comports with

the amended statutory scheme, which lists

three levels of misconduct, each dependent

13 A-4636-14T3

upon the employee's relative degree of

culpability.

[Id. at 55-56 (emphasis added).]

Silver applied these principles to the facts in that case.

The claimant, a teacher at a vocational school, had violated her

employer's policy by failing to collect back pens from her

students at the end of class. Id. at 47. The teacher had

failed to do so six times. Ibid. After being warned by her

employer that another such infraction would lead to her

termination, she violated the policy a seventh time and was

fired. Ibid. The Department disqualified the teacher from

collecting benefits, concluding that she had been discharged for

severe misconduct. Ibid.

We reversed the agency determination in Silver, concluding

that not only did the record fail to support a finding of

"severe" misconduct, but also failed to demonstrate "simple"

misconduct. Id. at 58. As we wrote in Silver, the hearing

examiner made no finding that the teacher had "intentionally or

deliberately disregarded the employer's rule for collecting pens

after a class[,]" and, indeed, "the record would not support

such a finding." Id. at 57. Instead, the claimant adequately

explained the circumstances of her failure to account for all

of the pens in the classroom environment. Ibid. Her employer

"did not refute her assertion that she was trying to comply with

14 A-4636-14T3

the rule." Ibid. "She was simply unable to do so." Ibid.

Consequently, it was "clear" to us in Silver that the claimant's

conduct "was a result of negligence or inadvertence, not

intentional or deliberate disregard of the employer's rule."

Ibid.

We then criticized the Department for its "fragmented

approach" in how it applied to Silver the portion of the Beaunit

Mills standard contained in the Am. Jur. passage:

To find misconduct, the agency relied

on the portion of the Beaunit Mills standard

contained in the Am. Jur. passage. In our

view, that fragmented approach has never

been what was intended by Beaunit Mills, as

described in our subsequent opinions, and

reliance on it constituted legal error.

Under the correct Beaunit Mills analysis,

appellant's conduct did not constitute

misconduct because it lacked the requisite

elements of wil[l]fulness, deliberateness,

intention, and malice. More important, her

conduct did not satisfy the agency's own

definition of misconduct, which is

controlling, and which, in our view, appears

to have been designed to express the

entire Beaunit Mills standard.

[Id. at 58.]

In reaching this result in Silver, we acknowledged the

considerate deference that an administrative agency such as the

Department deserves in applying legislative standards within its

sphere of responsibility. Ibid. Even so, and giving due

respect to an agency's expertise, "ultimately the interpretation

15 A-4636-14T3

of statutes and regulations is a judicial, not administrative,

function and we are not bound by the agency's interpretation."

Ibid. (citing Mayflower Secs. Co. v. Bureau of Sec., 64 N.J. 85,

96 (1973)).

B.

Following Silver, the Department promulgated the new

regulations that are now before us. The relevant history is as

follows.

On August 18, 2014, the Department published proposed

amendments related to "Claims Adjudication – Voluntarily Leaving

Work and Misconduct[.]" See 46 N.J.R. 1796(a) (Aug. 18, 2014).

Appellants, Schorr Associates, P.C. and the National Employment

Lawyers Association, submitted written objections to the

proposals in a letter dated September 17, 2014. Legal Services

of New Jersey also submitted written objections in a letter

dated October 17, 2014.

A public hearing on the proposed amendments was held on

September 5, 2014. At that hearing, an attorney presented oral

objections to the proposals. No one else testified at the

hearing.

The proposed amendments were adopted "with non-substantial

changes" on April 16, 2015, codified at N.J.A.C. 12:17-2.1, -

9.1, -9.2, -10.1, -10.3 through -10.9, and -21.2, and N.J.A.C.

16 A-4636-14T3

12:17-10.2 was repealed. See 47 N.J.R. 1009(a) (May 18, 2015).

The amendments at the core of the present appeal read as

follows:

12:17-2.1 Definitions

The following words and terms, when used in

this chapter, shall have the following

meanings, unless the context clearly

indicates otherwise.

. . . .

"Gross misconduct" means an act punishable

as a crime of the first, second, third, or

fourth degree under the New Jersey Code of

Criminal Justice, N.J.S.A. 2C:1-1 et seq.

. . . .

"Malicious" means when an act is done with

the intent to cause injury or harm to

another or others or when an act is

substantially certain to cause injury or

harm to another or others.

. . . .

"Misconduct" means simple misconduct, severe

misconduct, or gross misconduct.

. . . .

"Severe misconduct" means an act which (1)

constitutes "simple misconduct," as that

term is defined in this section; (2) is both

deliberate and malicious; and (3) is not

"gross misconduct."

1. Pursuant to N.J.S.A. 43:21-5, as

amended by P.L. 2010, c. 37, such acts

of "severe misconduct" shall include,

but not necessarily be limited to, the

following: repeated violations of an

17 A-4636-14T3

employer's rule or policy, repeated

lateness or absences after a written

warning by an employer, falsification

of records, physical assault or threats

that do not constitute "gross

misconduct," misuse of benefits, misuse

of sick time, abuse of leave, theft of

company property, excessive use of

intoxicants or drugs on work premises,

or theft of time; except that in order

for any such act to constitute "severe

misconduct," it must also (1)

constitute "simple misconduct"; and (2)

be both deliberate and malicious.

"Simple misconduct" means an act which is

neither "severe misconduct" nor "gross

misconduct" and which is an act of wanton or

willful disregard of the employer's

interest, a deliberate violation of the

employer's rules, a disregard of standards

of behavior that the employer has the right

to expect of his or her employee, or

negligence in such degree or recurrence as

to manifest culpability, wrongful intent, or

evil design, or show an intentional and

substantial disregard of the employer's

interest or of the employee's duties and

obligations to the employer. Nothing

contained within this definition should be

construed to interfere with the exercise of

rights protected under the National Labor

Relations Act or the New Jersey Employer-

Employee Relations Act.

[N.J.A.C. 12:17-2.1 (emphasis added).]

Appellants timely appealed the Department's final agency

decision promulgating these new regulations. Fundamentally,

they contend that the regulations are inconsistent with the

policies of the Act in many respects, and are arbitrary and

capricious.

18 A-4636-14T3

Most centrally, appellants contend that the inclusion of

"negligence" concepts within the definition of simple misconduct

in N.J.A.C. 12:17-2.1 is contrary to case law, including Silver,

Beaunit Mills, and the overall statutory scheme. They assert

that the concept of what amounts to "intentional negligence"

encompassed within the new regulation is an oxymoron, and

incapable of sensible or fair application. They further urge

that the regulatory definition of misconduct should not

eliminate a predicate ingredient of malice. To support these

various arguments, appellants point to several recent

unemployment cases in which, in the their view, agency personnel

inappropriately denied, at least initially, benefits to

claimants whose conduct was no more culpable than simple

negligence.

The Department counters that the new regulations are

presumptively valid, consistent with the terms of the statute

and case law, and neither arbitrary nor capricious. It urges

that we uphold the regulations without any modification.

II.

We start our consideration of the merits with a recognition

of the principles of appellate judicial review of administrative

agency decisions we previously applied in Silver, and likewise

apply here. It is well-established that, when reviewing an

19 A-4636-14T3

agency's adoption of a regulation on appeal, the scope of review

is "both narrow and deferential." In re Adoption of N.J.A.C.

5:96, 215 N.J. 578, 629 (2013) (internal citations omitted).

Because an agency has been delegated certain powers by the

Legislature, "[t]he grant of authority . . . should be liberally

construed to enable the agency to accomplish the Legislature's

goals." Ibid. (quoting Van Dalen v. Washington Twp., 120 N.J.

234, 245 (1990)). An agency action within that delegation of

power is therefore "accorded a strong presumption of validity

and reasonableness." Ibid. (quoting Van Dalen, supra, 120 N.J.

at 244-45).

That said, an agency may not adopt a regulation that

"extend[s] a statute to give it a greater effect than its

language permits." GE Solid State v. Dir., Div. of Taxation,

132 N.J. 298, 306 (1993) (citing Kingsley v. Hawthorne Fabrics,

Inc., 41 N.J. 521, 528 (1964) and Serv. Armament Co. v. Hyland,

70 N.J. 550, 563 (1976)). An appellate court's review of a

regulation is therefore essentially limited to determining

whether:

(1) the action offends the State or Federal

Constitution; (2) the action violates

express or implied legislative policies; (3)

the record contains substantial evidence to

support the agency's findings; and (4) in

applying the legislative policy to the

facts, the agency erred in reaching a

conclusion that could not reasonably have

20 A-4636-14T3

been made on a showing of the relevant

factors.

[In re N.J.A.C. 12:17-9.6 ex. rel. State

Dep't of Labor, 395 N.J. Super. 394, 407

(App. Div. 2007) (internal citations

omitted).]

Another core principle that guides our review here is the

notion that codified provisions, whether they be enacted within

a statute, an administrative regulation, or an ordinance, must

be interpreted sensibly in a manner that avoids reaching absurd

results. See US Bank, N.A. v. Hough, 210 N.J. 187, 202 (2012).

Although duly-enacted regulations start off with a presumption

of validity, courts are empowered to set them aside where they

are shown to be "unreasonable or irrational[.]" Bergen Pines

Cty. Hosp. v. N.J. Dep't of Human Servs., 96 N.J. 456, 477

(1984). Such flaws may be evident where the wording of a

provision is internally inconsistent, impermissibly vague, or

plainly in conflict with overarching law, which, in the case of

a regulation, could be a Constitution or an enabling statute.

See, e.g., In re N.J.A.C. 7:1B-1.1 Et Seq., 431 N.J. Super. 100,

117 (App. Div. 2013); N.J. Ass'n of Health Care Facilities v.

Finley, 83 N.J. 67, 82 (1980).

The public is entitled to be guided by regulations that are

clear, understandable, and reasonably predictable in uniform

application. That objective is particularly essential in the

21 A-4636-14T3

sphere of unemployment compensation cases, which, as appellants

emphasize, are most commonly pursued by self-represented

laypersons who have been denied benefits by an unemployment

claims Deputy or Tribunal.

Substantively, we also must be cognizant of the fundamental

conceptual difference between conduct that is "intentional" or

"deliberate" in nature from behavior that is "negligent."

"Negligence" has been defined in our law as "the failure to

exercise 'that degree of care for the safety of others, which a

person of ordinary prudence would exercise under similar

circumstances.'" Steinberg v. Sahara Sam's Oasis, LLC, 226 N.J.

344, 363-64 (2016) (quoting Model Jury Charge (Civil), 5.10A,

"Negligence and Ordinary Care – General" (2009)). By contrast,

an "intentional" or "deliberate" act connotes "conduct decidedly

more culpable[.]" Mahoney v. Carus Chem. Co., Inc., 102 N.J.

564, 577 (1986).

As this court repeatedly pointed out in Silver, supra, 430

N.J. Super. at 51, 57, 58, negligence and intentional or

deliberate wrongdoing are qualitatively different states of mind

and degrees of behavior. Within our State's statutory scheme

for unemployment compensation and decades of case law applying

it, the basic notion of "simple misconduct" requires "elements

of wil[l]fulness, deliberateness, intention, and malice." Id.

22 A-4636-14T3

at 58. An employee's mere "negligence" or "inadvertence" does

not suffice to comprise misconduct under the Act. Id. at 57.

That said, the regulations the Department adopted in 2015

fail to make this critical distinction between simple

negligence, on the one hand, and intentional, deliberate, or

malicious conduct, on the other hand, at least not consistently.

Unfortunately, the literal wording of N.J.A.C. 12:17-2.1

defining and utilizing the term "simple misconduct" confusingly

blends concepts of negligence with intentional wrongdoing that

cannot be sensibly understood or harmonized. Several aspects of

the new rule illustrate this problem.

As we have already noted, the definition of "simple

misconduct," as adopted in the new regulation, encompasses the

following:

[A]n act of wanton or willful disregard of

the employer's interest, a deliberate

violation of the employer's rules, a

disregard of standards of behavior that the

employer has the right to expect of his or

her employee, or negligence in such degree

or recurrence as to manifest culpability,

wrongful intent, or evil design, or show an

intentional and substantial disregard of the

employer's interest or of the employee's

duties and obligations to the employer.

[N.J.A.C. 12:17-2.1 (emphasis added).]

Unpacking this prose, even the most careful reader could be

readily confused on how the term "negligence" can be sensibly

23 A-4636-14T3

equated with "intentional" conduct. Or with "a wanton or

willful disregard" of an employer's interest. Or "evil design."

Or "an intentional and substantial disregard" of an employer's

interest or of the employee's duties. Such terms conveying a

person's conscious and purposeful aim to engage in wrongful

conduct are not linguistically or doctrinally consistent with

the merely careless forms of conduct that the law routinely

defines as negligent.

We are mindful that the regulation includes this qualifying

phrase after the word "negligence": "in such degree or

recurrence as to manifest[,]" and then enumerates various forms

of intentionally-based wrongdoing. It is not clear from this

wording what is meant to "manifest" such a more extreme revision

of negligence, by an unspecified level of "degree or

recurrence."

We suspect that what the drafters may have had in mind, but

do not say so precisely in the words of the regulation, was to

embrace negligence that is so severe in extent that it is

tantamount in culpability to what our case law in other contexts

sometimes refers to as "gross negligence." In fact, the

Department's brief expressly likens the negligence language

within the new regulation to gross negligence.

24 A-4636-14T3

Black's Law Dictionary defines "gross negligence" as "[a]

conscious, voluntary act or omission in reckless disregard of a

legal duty and of the consequences to another party[.]" Black's

Law Dictionary, 1197 (10th ed. 2014). The term "gross

negligence" has also at times been treated as synonymous with

"reckless negligence, wanton negligence, willful negligence,

willful and wanton negligence, [and] willful and wanton

misconduct[.]" Ibid.

Although rigid classifications of the "degrees of

negligence have been abandoned" in our case law, the term "gross

negligence" is nonetheless still used when referring to "the

upper reaches of negligent conduct." Stelluti v. Casapenn

Enters., LLC, 408 N.J. Super. 435, 457 n.6 (App. Div. 2009)

(quoting Parks v. Pep Boys, 282 N.J. Super. 1, 17 n.6 (App. Div.

1995)), aff’d, 203 N.J. 286 (2010). As the Supreme Court

recently noted, under the applicable New Jersey Civil Model Jury

Charges, the concept of gross negligence "does not require

willful or wanton misconduct or recklessness." Steinberg,

supra, 226 N.J. at 364 (citing Model Jury Charge (Civil), 5.12,

"Gross Negligence" (2009)).

Perhaps these problems of clarity and interpretation could

be solved if the regulation were revised to eliminate this

confusing and internally contradictory language, and instead set

25 A-4636-14T3

forth a clearer definition of "misconduct" that incorporated the

concept of "gross negligence." Alternatively, the regulation

also might provide that either "gross negligence" or

"intentional misconduct" can suffice. Of course, such revised

wording is not before us, and we will not render an advisory

opinion here on the subject. See De Vesa v. Dorsey, 134 N.J.

420, 428 (1993) (noting that our courts refrain from rendering

advisory opinions or exercising jurisdiction "in the abstract");

see also G.H. v. Twp. of Galloway, 199 N.J. 135, 136 (2009)

(instructing that courts should not "answer abstract questions

or give advisory opinions"); Crescent Park Tenants Ass'n v.

Realty Equities Corp. of N.Y., 58 N.J. 98, 108 (1971) (same).

In particular, a challenger might argue that gross

negligence falls short of the levels of culpability delineated

in our prior case law construing the Act, although no prior case

has squarely addressed the question. What we can and must say

is that Silver, which remains binding precedent and which we

reaffirm here, clearly requires that the Act be construed and

applied so as to not deprive claimants of unemployment benefits

based on actions or inactions that amount to nothing more than

simple negligence. The statute is designed to, and must be,

"liberally construed in favor of the allowance of benefits."

Meaney v. Bd. of Review & Atlas Floral Decorators, 151 N.J.

26 A-4636-14T3

Super. 295, 298 (App. Div. 1977) (internal citations omitted).

Although ineligible claimants who have engaged in deliberate

misconduct must be turned away, see Yardville Supply Co. v. Bd.

of Review, Dep't of Labor, 114 N.J. 371, 375 (1989), deserving

claimants who have only been merely negligent should not be

deprived of compensation.

Despite the contrary assertion of appellants, we do not

ascribe any improper policy motives to the Department in

adopting the present regulation as part of some concerted

"scheme" to deprive worthy unemployment claimants of their just

benefits. In fact, we appreciate that the self-contradictory

and confusing terminology that mixes "negligence" concepts with

"intentional wrong" concepts originates with the 1943 Am. Jur.

treatise passage itself, which was quoted in Beaunit Mills.

But, importantly, as our opinion in Silver recognized, the

court in Beaunit Mills prefaced its citation to the Am. Jur.

treatise with an important gloss. "The test [of compensability

used under our statute] is more stringent than the Am. Jur.

passage quoted in Beaunit Mills. It incorporates the other

features of the Beaunit Mills analysis, as further elucidated

and reiterated in subsequent case law." Silver, supra, 430 N.J.

Super. at 53. The test "buil[ds] upon a foundation laid down by

the Supreme Court in Bogue, the rationale of which hinged upon

27 A-4636-14T3

the incongruity of allowing benefits to 'a group of employees

[who] deliberately violate a . . . basic provision of a

collective bargaining agreement.'" Ibid. (emphasis in original)

(quoting Bogue, supra, 21 N.J. at 436). In quoting the Am. Jur.

passage without the important gloss, the Department's regulation

fails to include this key concept.

The present edition of the Am. Jur. treatise, issued in

2005, continues to read substantially the same as the 1943

version, repeating the same ambiguous phrase "negligence of such

degree or recurrence as to manifest wrongful intent or evil

design," and so on. 76 Am. Jur., Unemployment Comp., § 68 at

807 (2005). We are also aware that the unemployment laws of

several other states continue to make use of the Am. Jur.

phraseology, or comparable language. 3 Yet, as far as our

research has revealed, none of those states have the kind of

three-tiered gross misconduct/severe misconduct/simple

misconduct structure that our New Jersey statute has utilized

since the 2010 legislative amendment. Now that we have in our

state such a three-tiered statutory gradation, it does not

appear logical to "snap in" the Am. Jur. definition into the

3 See, e.g., Rossini v. Dir., Ark. Empl. Sec. Dep't, 101 S.W.3d

266 (Ark. Ct. App. 2003); Young v. Miss. Empl. Sec. Comm'n, 754

So. 2d 464 (Miss. 1999); Stalcup v. Job Serv. N.D., 592 N.W.2d

549 (N.D. 1999); Kelly v. Unemployment Comp. Bd. of Review, 747

A.2d 436 (Pa. Commw. Ct. 2000); Dailey v. Bd. of Review, W. Va.

Bureau of Empl. Programs, 589 S.E.2d 797 (W. Va. 2003).

28 A-4636-14T3

regulation indiscriminately. 4 Instead, doing so appears to have

caused confusion, and allegedly uneven and unfair application.

As an independent basis for concern, the present regulatory

definitions seem to treat as "simple misconduct" certain kinds

of employee behavior that fall within the statutory definition

of higher-level "severe misconduct," and vice-versa. For

instance, it is difficult to comprehend how an employee who has

acted with "evil design" or with "wrongful intent" is only

guilty of simple misconduct and not severe misconduct.

The regulatory definition of severe misconduct attempts to

address this overlap by requiring proof that the employee's

conduct not only be "simple misconduct" but also "both

deliberate and malicious." The term "deliberate" is not defined

in the regulations. However, the term "malicious" is defined as

follows:

"Malicious" means when an act is done with

the intent to cause injury or harm to

another or others or when an act is

substantially certain to cause injury or

harm to another or others.

[N.J.A.C. 12:17-2.1.]

4 We recognize that a regulation containing both the Am. Jur.

passage and the Beaunit Mills prefatory gloss would be unwieldy.

Hence, we offer our suggestion that the Department create from

scratch a new regulation that clearly and concisely expresses

the appropriate concepts.

29 A-4636-14T3

This definition does not resolve the overlap and definitional

problem. In fact, the solution appears to be circular. In

order to comprise the higher-grade of "severe misconduct," the

employee's behavior must be "deliberate" and "intended," or

"substantially certain" to cause injury or harm to others. That

sounds very much like simple misconduct committed with "wrongful

intent" or "evil design." If the harm (or expectancy of harm)

ingredient is what makes the difference between "simple" and

"severe" misconduct, the regulation surely could express that

line of demarcation more clearly and explicitly.

In sum, with all due deference to (and, indeed,

appreciation for) the Department's efforts to enact a clarifying

regulation defining "simple misconduct," the result of that

process has led to a linguistic morass, one that cannot be

readily or sensibly understood and applied. Although we have

pondered whether to perform "judicial surgery" on the wording of

the regulation ourselves to solve these problems, we consider it

more appropriate for the Department to go back to the proverbial

drawing board and develop a clearer and more cogent alternative

itself, considering the input of appellants and any other

commentators.

The portion of N.J.A.C. 12:17-2.1 defining "simple

misconduct" is accordingly set aside as arbitrary and

30 A-4636-14T3

capricious, without prejudice to the Department adopting a

substitute provision within no later than 180 days. In the

meantime, to avoid disruption in the statewide administration of

the unemployment benefits program, we stay our decision, sua

sponte, for that same 180-day period to enable the Department to

take appropriate corrective action or, alternatively, pursue

further review in the Supreme Court. The remainder of the new

regulations that do not concern the definition remain unaltered.

Reversed. We do not retain jurisdiction.

31 A-4636-14T3