governor christie conditionally vetoes s1813

8/6/2019 Governor Christie Conditionally Vetoes S1813

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STATE OF NEW JERSEYEXECUTiVE DEPARTMENT

June 24, 2010

SENATE BILL NO. 1813

To the Senate:Pursuant to Article V, Section I, Paragraph 14 of the New

Jersey Constitution, I am returning Senate Bill No. 1813 with myrecommendations for reconsideration.

A. Summary of BillThis bill would reduce the unemployment insurance (UI) tax

rates which will be imposed on employers during fiscal year 2011by setting them based on the "C" column of the UI tax table.The UI tax rate which is being charged to employers during FY2010 is based on the "B" column of the tax table. Due to thesignificant deficit in the DI trust fund, under current law, thetax rate would increase, starting on July I, 2010, to thehighest tax rate set by the law, which is the rate found in the"Elf column,' plus an additional 10 percent surcharge.

B. Recommended ActionI commend the sponsors of the bill for their efforts in

crafting this legislation, which recognizes that the scheduledpayroll tax increase on employers would do enormous harm to aneconomy already staggering from the recession. However, thisbill simply does not go far enough to solve the fundamentalproblems with UI that will persist without bold reform. As youknow, from 1992 to 2006, approximately $4.6 billion was divertedfrom the UI fund. In addition, since March 2009, the State hasborrowed over $1.75 billion from the federal government. I amadvised that if no immediate action is taken, the debt owed tothe federal government will increase dramatically. This issimply unacceptable, and will prove catastrophic for theemployer community, the labor community, and the overall

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STATE OF NEW JERSEYEXECUTIVE DEPARTMENT

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economy. The State can no longer pursue the status quo, butmust take immediate action.

It is time for the State to achieve comprehensive reform inthe State's unemployment compensation system in order to bringthe fund back to solvency in a fair and balanced way. There is abroad consensus that the current statutory framework for ourtreatment of misconduct cases is not in line with the practicesof a majority of other states. Under the current statutorystructure about 90 percent of the misconduct cases have the samepenalty without regard to the individual's level of misconduct.This treatment is not balanced. I am advised that by redefining"misconduct" by carving out a "severe misconduct" tier, as wellas creating a more proportional unemployment benefit penaltystructure, the individuals seeking unemployment insurance wouldbe treated more equitably, and the Unemployment Insurance TrustFund would realize a significant savings each year. In thisregard, I believe it would be equitable to reform this sectionof the law to ensure that the penalty for the misconduct istreated proportionately to the level of misconduct.

Moreover, I will advise the Department of Labor & WorkforceDevelopment to change any regulations that are not consistentwith the above recommendation, and, also, to propose appropriateregulations to require that an employer provide writtendocumentation to show that the employee's actions constituteeither misconduct, severe misconduct, or gross misconduct.

Additionally, I recommend that an Unemployment InsuranceFund Task Force be established to study and assess the currentunemployment insurance crisis and recommend how the State canrestore the trust fund in a way that balances the interests ofworkers, employers, and the overall economy. The Unemployment



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Insurance Fund Task Force would replace the Employment SecurityCouncil, a group that has not met in over half a decade. Acomprehensive review and assessment of the State's unemploymentcompensation system would include an evaluation of: eligibilitystandards; benefit levels; certain definitions in theunemployment compensation law; the statutory matrix for thepayroll tax triggers; contributions to the unemploymentinsurance fund and the ~xperience rating table; and other areasrelevant to the short-term and long-term solvency of theunemployment insurance fund.

Lastly, in light of the State's fiscal crisis, and theinsolvency of the State's DI fund, I am requesting that theLegislature not consider benefit increases while a task force isin place, and if a bill increasing unemployment benefits ispassed by the Legislature while the task force is in place, Iwill not sign it.

Accordingly, I herewith return Senate Bill No. 1813 andrecommend that it be amended as follows:Page 23, Section 2, Line 47: Insert new section 2 to read asfollows:

"R.S. 43:21-5 is amended to readas follows:An individual shall bedisqualified for benefits:(a) For the weekindividual has

in which theleft workvoluntarily without good causeattributable to such work, and foreach week thereafter until theindividual becomesand works eight [four]employment, which mayemployment for the

reemployedweeks inincludefederalgovernment, and has earned inemployment at least ten [six]times the individual's weeklybenefit rate, as determined ineach case. This subsection shallapply to any individual seeking



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unemployment benefits on the basisof employment in the productionand harvesting of agriculturalcrops, including any individualwho was employed in the productionand harvesting of agriculturalcrops on a contract basis and whohas refused an offer of continuingwork with that employer followingthe completion of the minimumperiod of work required to fulfillthe contract.(b) For the week in which theindividual has been suspended ordischarged for misconductconnected with the work, and forthe [five] seven weeks whichimmediately follow that week, asdetermined in each case. [In theevent the discharge should berescinded by the employervoluntarily or as a result ofmediation or arbitration, thissubsection (b) shall not apply,provided, however, an individualwho is restored to employment withback pay shall return any benefitsreceived under this chapter forany week or unemployment for whichthe individual is subsequentlycompensated by the employer.]For the week in which theindividual has been suspended ordischarged for severe misconductconnected with the work, and foreach week thereafter until theindividual becomes reemployed andworks four weeks in employment,which may include employment forthe federal government, and hasearned in employment at least sixtimes the individual's weeklybenefit rate, as determined lneach case. Examples of severemisconduct include, but are notnecessarily limited to, thefollowing: repeated violations ofan employer's rule or policy,repeated lateness or absencesafter a written warning by anemployer, falsification ofrecords, physical assault orthreats that do not constitutegross misconduct as defined inthis section, misuse of benefits,misuse of sick time, abuse ofleave, theft of company property,



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STATE OF NEW JERSEYEXECVTlVE DEPARTMENT

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excessive use of intoxicants ordrugs on work premises; theft ofmalicioustime, or where the behavior isand deliberate but isnot considered gross misconduct asdefined in this section.In the event the discharge shouldbe rescinded by the employervoluntarily or as a result ofmediation or arbitration, thissubsection (b) shall not apply,provided, however, an individualwho is restored to employment withback pay shall return any benefitsreceived under this chapter forany week of unemployment for whichthe individual is subsequentlycompensated by the employer.If the discharge was for grossmisconduct connected with the workbecause of the commission of anact punishable as a crime of thefirst, second, third or fourthdegree under the "New Jersey Codeof Criminal Justice," N.J.S.2C:1-1et seq., the individual shall bedisqualified in accordance withthe disqualification prescribed insubsection (a) of this section andno benefit rights shall accrue toany individual based upon wagesfrom the employer for servicesrendered prior to the day uponwhich the individual wasdischarged.The director shall insure that anyappeal of a determination holdingthe individual disqualified forgross misconduct in connectionwith the work shall beexpeditiously processed by theappeal tribunal."cf: P.L. 2007, c.162.3. (New Section) a. There iscreated a task force to be knownas the "New Jersey UnemploymentInsurance Task Force, II which shallbe an independent body in, but notof, the Department of Labor andWorkforce Development. The taskforce shall consist of 12 members,including:



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(1) Six non-voting members asfollows: the Chairpersons of theSenate Labor Committee and theAssembly Labor Committee, exofficio, a Senator nominated bythe Minority Leader of the Senate,a member of the General Assemblynominated by the Minority Leaderof the General Assembly, theCommissioner of Labor andWorkforce Development I ex officio,an individual appointed by theGovernor who has expertise anemploymentt unemployment andunemployment insurance programs;and(2) Six voting members appointedby the Governor. Three members tobe appointed by the Governor fromthe following organizations: theNew Jersey State Chamber ofCommerce, the New Jersey Businessand Industry Association, the NewJersey branch of the NationalFederation of IndependentBusiness, the New Jersey FoodCouncilt the New Jersey RestaurantAssociation, or the New JerseyCommerce & Industry Association.Three members to be appointed bythe Governor from the followingorganizations: the New JerseyState AFL-CIO, the New JerseyState Building Trades Council, theAmerican Federation of StatetCounty and Municipal Employees tthe Mechanical & Allied CraftsCouncil of New Jersey, the NewJersey State Council of theService Employees InternationalUnion, or the New Jersey RegionalCouncil of Carpenters.b. The task force shall have co-chairs who are elected by thevoting members: one co-chairshall be from the New Jersey StateChamber of Commerce, the NewJersey Business and IndustryAssociation, the New Jersey branchof the National Federation ofIndependent Business, the NewJersey Food Council, the NewJersey Restaurant Associationl orthe New Jersey Commerce & IndustryAssociation; and one co-chairshall be from the New Jersey StateAFL-CIO, the New Jersey State



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Building Trades Council, the NewJersey state Council of theService Employees InternationalUnion, the American Federation ofState, County and MunicipalEmployees, the Mechanical & AlliedCrafts Council of New Jersey, orthe New Jersey R~gional Council ofCarpenters. Members shall beappointed as soon as practicable.Members shall be appointed forthree-year terms and may be re-appointed for any number of terms.Any member of the task force whois not a legislator may be removedfrom office by the Governor, forcause, upon notice and opportunityto be heard. Vacancies shall befilled in the same manner as theoriginal appointment for thebalance of the unexpired term. Amember shall continue to serveupon the expiration of his termuntil a successor is appointed andqualified, unless the member 1Sremoved by the Governor.c. Action may be taken by thetask force by an affirmative voteof a majority of its votingmembers. A majority of the votingmembers and a majority of the non-voting members of the task forceshall constitute a quorum for thetransaction of any business, forthe performance of any duty, orfor the exercise of any power ofthe task force.d. Members of the task forceshall serve without compensation,but may be reimbursed for theactual and necessary expensesincurred in the performance oftheir duties as members of thetask force within the limits offunds appropriated or otherwisemade available for that purpose.4. (New Section) a. The taskforce shall study and assess thecurrent unemployment insurancecrisis and recommend how the statecan stabilize the unemploymentinsurance fund. Specifically, thework of the task force shallinclude, but not necessarily belimited to, an evaluation of thefollowing: eligibility standards;benefit levels; certain



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definitions, such as "suitablework"; the statutory matrix forpayroll tax triggers;contributions and the experiencerating table; collections ofoverpayments of unemploymentimethods used in order to getindividuals off unemploymentinsurance benefits; the statutoryand regulatory framework for thetreatment of misconduct; and otherareas relevant to the short-termand long-term solvency of theunemployment insurance fund.b. In furtherance of itsevaluation, the task force mayhold public meetings or hearingswithin the State on any matter ormatters related to the provisionsof this act, and call to itsassistance and avail itself of theservices of the Rutgers School ofManagement and Labor Relations,the John J. HeIdrich Center forWorkforce Development, and theemployees of any State department,board, task force or agency whichthe task force determinespossesses relevant data,analytical and professionalexpertise or other resources whichmay assist the task force indischarging its duties under thisact. Each department, board,commission or agency of this Stateis hereby directed, to the extentnot inconsistent with law, tocooperate fully with the taskforce and to furnish suchinformation and assistance as isnecessary to accomplish thepurposes of this act. The taskforce shall submit a writtenreport of its findings regardingthe subjects of its review andevaluation of the unemploymentinsurance program, including anyrecommendations of the task forceregarding possible legislation orchanges in administrativeprocedures based on its review andevaluation, to the Governor and tothe Legislature by October 1,2010, and for three yearsthereafter, unless an extension isdeemed necessary and appropriateby the Governor, who shallimmediately review each task force



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STATE OF NEW JERSEYEXECVTIVE DEPARTMENT

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report upon its receipt. The taskforce created under the provisionsof this act shall expire upon theissuance of the task force finalreport issued by October I, 2013.5. N.J.S.A. 34:1A-16 is herebyrepealed. There shall be \iithinthe Department of Labor anEmployment Security Council, .hichshall consist of nine members, notmore than five of '..hom shall be ofthe same political affiliation.Three of the nine members of thecouncil shall be persons '.iho byreason of vocation, employment oraffiliation, may fairly beregarded as representative ofemployers, three shall be persons'.v"ho by reason of vocation,employment or affiliation, mayfairly be regarded asrepresentative of employees, andthree shall represent the generalpublic. Each member of thecouncil shall be appointed by theGovernor, \!lith the advice andconsent of the Senate, for a termof four years and shall serveuntil his successor has beenappointed and has qualified.Bach GO"o"ernorshall des ignate oneof the members of the councilrepresenting the general public aschairman of such council. l',nymember of the councilso designated shall serve as suchchairman at the pleasure of theGOYv"ernoresignating him and untilhis successor has been designated.The chairman of the council shallbe its presiding officer.Any vacancies in the membership ofsaid council occurring other thanby c}fpiration of term shall befilled by the Governor, with theadvice and consent of the Senate,for the unexpired term only. }\,nymember of the council may beremoved from office by theGovernor, for cause, upon noticeand opportunity to be heard.The members of the council shallserve \iithout compensation butshall be reimbursed for necessaryexpenses incurred in theperformance of their duties.



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Page 23, Section 2, Line 47: Renumber Section 2 as Section 6Respectfully,/s/ Chris Christie

[seal]Governor

Attest:/s/ Jeffrey S. ChiesaChief Counsel to the Governor

governor christie conditionally vetoes s1813

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