by Susan L. Swatski, Esquire (email / link to bio)

New Jersey employers should be aware of the recent Appellate Division decision in Lord v. Board of Review addressing the not uncommon scenario in which an employer gives an employee the Hobson’s Choice of either resigning or being fired. The Appellate Division in Lord clarified that for purposes of collecting unemployment benefits, the foregoing “choice” is moot; a resignation is the same as a firing leaving the former employee eligible for unemployment benefits.

In Lord v. Board of Review, Lord, the petitioner/employee, told his employer that he had car trouble which would keep him from being able to do his job. His supervisor responded by telling Lord that he “had to resign” from his job “effective immediately.” Lord testified that he felt he “had no choice” but to leave his job, and he considered his job to have been terminated. Shortly thereafter, Lord applied for unemployment benefits. The Division of Unemployment Compensation denied his claim citing that Lord left his employment voluntarily. Under N.J.S.A. § 43:21-5(a), an employee who “has left work voluntarily without good cause attributable to such work” is ineligible for unemployment compensation benefits.
The Appellate Division (NJ’s second-highest court) reversed the Division, finding that “[t]he undisputed facts show that the decision that appellant ‘had to resign’ was [the supervisor’s] alone, and therefore, there was nothing ‘voluntary’ about appellant’s separation from his employment.” In so finding, the Appellate Division relied in part on the New Jersey Supreme Court’s reasoning in Campbell Soup v. Board of Review, 13 N.J. 431 (1953) in which the Court found that leaving a job is voluntary only if “the decision whether to go or to stay lay at the time with the worker alone.” The Appellate Division further reasoned that there is no difference between telling an employee s/he is fired or has to resign.
Employers should take from this decision that it is important to be sure that “resignations” are not disguised terminations. This decision highlights the importance of setting and following proper termination procedures in order to avoid costly lawsuits. Employers should consult employment counsel for assistance in establishing proper termination procedures.
Employees should remember that cases such as Lord are highly fact sensitive; thus, they should not rely that if they opt to “resign” in order to avoid the stigma of being fired, that unemployment benefits will be available.