By Mark F. Kluger and William H. Healey
We recently got the following email from one of our loyal readers:
Dear Mark and Bill: I just heard that a new law in New Jersey is going to make us tell the truth to the Department of Labor about why we fire employees. What’s up with that? We’ve never done that. We just always say something like, “not a good fit” or “doesn’t dress well” if we don’t care about what happens, or we just ignore the Request for Separation Information if the employee did something really bad but we don’t’ want to get into a beef about Unemployment and have a hearing. Does this new law really make us have to respond to the DOL and tell the truth?
Bob from Accounting
Hey Bob, it’s been so long. Where the heck have you been? Anyway, yes, you are right there is a new law that becomes effective July 31, 2023 and changes the whole way in which New Jersey employers need to deal with claims for Unemployment Insurance benefits. In fact, employers will be obligated to submit termination information even if the employee does not apply for benefits. Yeah, you read that right….even if the employee doesn’t apply for benefits. So here’s how it works.
You know even before the new law, anytime an employee leaves, whether voluntarily or with your boot up their involuntarily, you must give them a Form BC-10 describing how they can apply for Unemployment Insurance (UI) benefits. In addition to continuing that process, the new law requires employers to submit electronically, to the Department of Labor, the BC-10, immediately and simultaneously with the separation. Any minute now, DOL is also supposed to provide employers with a new form to be used for explaining the reason for separation and that form must also be submitted to DOL immediately and simultaneously. As is typical, although employers must rush to submit these forms, the state hasn’t quite gotten around to publishing the new separation information form. They’ve only had since the law passed in November 2022, but who’s counting.
Here’s a new twist: the law also requires the DOL to give your former employees copies of the separation information that you write, and an opportunity to respond, before the initial determination. The law changes the deadlines for DOL too. After receipt of the BC-10 and the new form with separation information, DOL has 7 days to request additional separation information. The legislation now gives DOL 3 weeks, up from 2, to make initial determinations. What happened to immediately and simultaneously? Oh yeah that only applies to us.
Get this: your former employees will now have 21 days to appeal Unemployment benefit determinations while employers will have only 7 days to appeal. That seems fair, doesn’t it Bob?
Here’s what makes this law even more of a problem. You know how some employers just ignore the request for separation information because they know that if they tell the truth the former employee may fight back and/or get a lawyer (and you know how they over complicate everything). And that might lead to a hearing and maybe a lawsuit because the deadbeat former employee is being squeezed financially and hasn’t gotten around to looking for a new job. We of course would never advise our clients to ignore any such inquiry from a state agency, but now it can cost you big if you sit back and do nothing.
Failure to provide separation information will result in a fine of $500 or 25% of the amount the former employee should have received in benefits for each offense. And guess what? Every day that you fail to disclose the separation information is a separate offense. Yup, that means $500 a day folks. The law specifically says, 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.
The way we see it Bob, this means no more ignoring the request for separation information. It also means that it will be risky using those wishy washy answers like “not a good fit” or “wore white after Labor Day” when you in fact caught him getting stoned at work (or wait, is that now legal too?). The reason is that you know if he’s denied Unemployment benefits, he’s going to sue claiming something.
So Bob, it looks like starting August 1, you are going to have to provide NJDOL with the whole truth and nothing but the truth immediately and simultaneously upon the separation of any employee for any reason—even if the separated employee doesn’t apply for benefits.
Good to hear from you again!