RANDOLPH A. BEHN, Appellant, v. BOARD OF REVIEW and OAK HILL GOLF CLUB, Respondents.
The issue in this unemployment compensation case is whether plaintiff, a country club's executive chef, left work voluntarily without good cause attributable to his work. Plaintiff claimed he resigned because his employer subjected him to a hostile work environment and substantially diminished his authority, although his pay and title were unchanged. The Board of Review affirmed the Appeal Tribunal, which, after an evidentiary hearing, reversed the Deputy Director's initial determination awarding unemployment compensation benefits. We reverse.
The record reflects that Oak Hill Golf Club (Oak Hill or the club) hired plaintiff in July 2011 as executive chef. His responsibilities included purchasing food, formulating menus, and managing kitchen personnel, including hiring and firing staff. He reported to the club's house chairman, Brian London. Shortly after a new house chairman, Kevin Harrington, took office, he implemented the changes that preceded plaintiff's resignation.
Plaintiff had a contentious relationship with a fellow employee, Ryan,1 who was in charge of the “front of the house,” or non-kitchen area, and managed the bar. Ryan had worked for the club for several years. In one instance, as the Appeal Tribunal found, Ryan threatened to kill plaintiff. The incident arose during plaintiff's first month on the job, after a server argued with plaintiff in the kitchen over a missing order. The server became upset and cried. Ryan then entered the kitchen. According to plaintiff, “[H]e had told me if I ever ․ said anything to her again he'd f–––en kill me. And this went on a daily basis with him. Not to that level of being threatened but he was always very hostile towards me.” Plaintiff complained to London, who reportedly responded, “[O]h don't worry about it[,] it's just [Ryan,] you'll get over it.”
Plaintiff also asserted that Ryan talked behind his back, and changed the wording and pricing of menus. Plaintiff testified that Ryan told a club member that plaintiff used marijuana. The member reported the charge to plaintiff, but told plaintiff he believed Ryan “made it up.” However, Harrington conceded that he discussed the charge with plaintiff.
On November 17, 2011, Harrington issued an email announcing changes in the lines of authority and plaintiff's duties. Plaintiff was thenceforth to report to Ryan “regarding daily internal operations of the kitchen area.” Ryan assumed “final approval authority” over “Staffing/Scheduling[,] Ordering Food/Supplies[,] Menu Selections[, and] Payroll.” Plaintiff was also required to punch in and out each day, and report to Ryan when leaving for the business day.
Harrington testified that he implemented the management change because the cost of goods had been rising, and revenue was down, although Harrington declined to blame plaintiff, and conceded that membership and weather affected revenue. Harrington also conceded that his email stated the club had been providing “very good food and service.” Harrington considered the disagreements between Ryan and plaintiff to be normal for a working environment. Harrington explained that because of his own job responsibilities, he decided to vest authority in Ryan “who ha[d] been there longer ․ [and knew] the whole kitchen and dining area.”
Harrington testified that he informed plaintiff of the change the previous evening and, “He was acceptable to it. Although he said he wanted to think about it a little bit more.” Regarding plaintiff's presence on site, Harrington acknowledged that plaintiff reported he was sometimes off premises to negotiate with vendors, but Harrington stated he had no verification of that. He did not otherwise present a reason for requiring plaintiff to punch in and out, and report to Ryan before leaving each day.
Plaintiff considered the change in his duties to be substantial, and inconsistent with his understanding, based on his thirty years of experience, of the nature of an executive chef's position. An executive chef generally had complete control of kitchen staff, he said, and it was highly unusual that a bartender with no apparent kitchen experience would “tell [him] how to order [his] food, how to prepare [his] food, make menu selections and staff [his] ․ kitchen.” Harrington confirmed that previous executive chefs at Oak Hill had the final say as to the ordering of food, supplies, menu selection, and kitchen payroll.
Plaintiff testified that as soon as he arrived at work on November 17, Ryan confronted him aggressively and with a “real attitude.” Ryan told plaintiff that he had hired two new dishwashers for the kitchen, who would replace those currently employed. When plaintiff responded that Ryan could not do that without plaintiff interviewing the new hires, Ryan told him, “I can do whatever the ‘F’ I want.” Plaintiff said that Ryan was “almost screaming ․ at the top of his lungs.”
Plaintiff contacted Harrington to discuss the change in his responsibilities, but Harrington, who apparently was at his own workplace, told him he did not have time to do so. Harrington testified that plaintiff later informed Harrington that he was resigning, because he could not work under the new lines of authority and conditions of employment.
Plaintiff filed for unemployment benefits on November 20, 2011. His claim, which Oak Hill did not initially oppose, was approved after an initial hearing on December 5. However, the club filed an appeal. Plaintiff and Harrington were the sole witnesses at the Appeal Tribunal's telephonic hearing on May 9, 2012.
In advance of the hearing, plaintiff's counsel sought the testimony of London; the member to whom Ryan conveyed the marijuana charge; the club's assistant office manager and various kitchen employees, who presumably would testify about plaintiff's performance and the relationship between Ryan and plaintiff. Plaintiff also sought various club records, including financial records of the kitchen, his personnel file, and Ryan's personnel file. The appeals examiner initially ruled that such additional testimony and documents would be ordered if he determined they were necessary. At the conclusion of the hearing, plaintiff's counsel raised the matter again. The appeals examiner did not expressly rule on the request, nor did he do so in his written decision reversing the award of benefits.
The Appeal Tribunal credited plaintiff's testimony that Ryan threatened him, but minimized it because plaintiff failed to resign immediately thereafter. It did not address plaintiff's claim regarding Ryan's behavior and language on November 17. The Appeal Tribunal also dismissed plaintiff's allegation that Ryan spread false rumors about his usage of marijuana, because they “were not taken seriously or believed by the employer.” The appeals examiner did not make specific findings regarding plaintiff's claim that Ryan interfered with his duties prior to November 17.
The Appeal Tribunal found it irrelevant whether plaintiff was competently running the kitchen, and whether the kitchen was actually losing money. “The employer has the right to, in an effort to save money, implement cost controls in order to negate any losses or, in this case, increase profit margins.”
The Appeal Tribunal concluded that plaintiff failed to give a good faith effort to attempt to work in the new environment, and resigned without good cause attributable to work:
The Tribunal believes that the ignominy of having “a bartender run a kitchen” was the primary reason for the claimant's resignation. In light of the fact that the claimant gave no good faith effort to operate under the changes enacted by management, the conflict between the claimant and his coworker was not serious enough in the eyes of the Tribunal to warrant resignation, and the claimant's job title and pay remained the same, on the whole the claimant's contention that he had good cause attributable to the work is rejected. Therefore, as the claimant left work voluntarily without good cause attributable to the work, he is disqualified for benefits from 11/13/11 in accordance with N.J.S.A. 43:21–5(a).
The Board of Review affirmed on the basis of the Appeal Tribunal's decision.
Plaintiff appeals and presents the following points for our consideration:
THE BOARD OF REVIEW ERRED IN ITS INTERPRETATION OF [THE] STATE STATUTE.
THE BOARD OF REVIEW RELIED ON THE APPEAL TRIBUNAL'S INEFFECTIVE INVESTIGATION WHICH RESULTED IN THE INCORRECT INTERPRETATION OF THE STATE LAW AND WRONGFUL DENIAL OF BENEFITS.
THE BOARD OF REVIEW ERRED IN VIEWING THIS MATTER IN THE SIMPLEST FORM WHEN FURTHER EVIDENCE WOULD CONFIRM THE HOSTILE WORK ENVIRONMENT FORCING APPELLANT TO RESIGN.
We begin by restating well-settled principles governing our standard of review. Our role in reviewing administrative agency decisions involving unemployment benefits is generally limited. Brady v. Bd. of Review, 152 N.J. 197, 210 (1997). We defer to fact-findings if reasonably based on the proofs. Ibid. Nonetheless, we must intervene when the agency's action is arbitrary, capricious, or unreasonable, or “ ‘clearly inconsistent with its statutory mission or with other State policy.’ ” Ibid. (quoting George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994)). Although we give “some deference to [the agency's] ‘interpretation of statutes and regulations within its implementing and enforcing responsibility,’ we are ‘in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue.’ ” Utley v. Bd. of Review, 194 N.J. 534, 551–52 (2008) (quoting In re Appeal by Progressive Cas. Ins. Co., 307 N.J.Super. 93, 102 (App.Div.1997), and Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93 (1973)) (rejecting Board of Review's application of the “good cause attributable to work” standard to facts presented).
Our decision is also guided by fundamental principles of law governing unemployment compensation. Our State's unemployment compensation law, N.J.S.A. 43:21–1 to –24.30(Act), is primarily designed to lessen the impact of unemployment that befalls workers without their fault. Brady, supra, 152 N.J. at 212. “The public policy behind the Act is to afford protection against the hazards of economic insecurity due to involuntary unemployment.” Yardville Supply Co. v. Bd. of Review, 114 N.J. 371, 374 (1989) (emphasis omitted). See also N.J.S.A. 43:21–2 (declaring public interest in addressing the burden of “[i]nvoluntary unemployment”). On the other hand, “it is also important to preserve the fund against claims by those not intended to share in its benefits. The basic policy of the law is advanced as well when benefits are denied in improper cases as when they are allowed in proper cases.” Yardville Supply Co., supra, 114 N.J. at 374.
Consistent with these policy goals, the law provides that “[a]n individual shall be disqualified for benefits” if “the individual has left work voluntarily without good cause attributable to such work.” N.J.S.A. 43:21–5(a). See also N.J.A.C. 12:17–9.1. The disqualification lasts “[f]or the week in which the individual ․ left work,” and “each week thereafter” until the individual is reemployed and has worked eight weeks and earned ten times the individual's weekly benefit rate. N.J.S.A. 43:21–5(a).2 A person who voluntarily quits work for personal reasons, rather than causes attributable to work, is ineligible for benefits. Self v. Bd. of Review, 91 N.J. 453, 456–57 (1982).
Application of the “good cause” standard requires a “fact-sensitive analysis.” Utley, supra, 194 N.J. at 550. New Jersey courts have construed the phrase to mean cause sufficient to justify an employee's voluntarily leaving the ranks of the employed and joining the ranks of the unemployed. Brady, supra, 152 N.J. at 214 (internal quotation marks and citations omitted). A court must consider what a person with ordinary common sense and prudence would do. Ibid. The reasons for leaving must be real and substantial, and not imaginary, trifling and whimsical. Ibid. (internal quotation marks and citation omitted). Mere dissatisfaction with working conditions which are not shown to be abnormal or do not affect health, does not constitute good cause for leaving work voluntarily. Medwick v. Bd. of Review, 69 N.J.Super. 338, 345 (App.Div.1961) (warm and uncomfortable working conditions not good cause attributable to work).
Threats of physical violence directed to an employee from which he may reasonably conclude that his personal safety is endangered ․ constitute good cause for that employee to voluntarily leave his employment. Domenico v. Bd. of Review, 192 N.J.Super. 284, 288 (App.Div.1983) (reversing Board of Review and approving benefits where psychiatric hospital employee was twice assaulted in a closed ward). See also Condo v. Bd. of Review, 158 N.J.Super. 172, 175–76 (App.Div.1978) (reversing Board of Review and approving benefits for employee subjected to threats of physical violence).
Also, [i]ntentional harassment of an employee ․ is an abnormal working condition and constitutes good cause for leaving work voluntarily. Associated Util. Servs., Inc. v. Bd. of Review, 131 N.J.Super. 584, 587, 589 (App.Div.1974) (affirming award of benefits where supervisor continuously harassed and mistreated the claimant, and frequently called her at home to scold her). We have approved benefits where a claimant was subject to sexual harassment and racially prejudicial comments. Doering v. Bd. of Review, 203 N.J.Super. 241, 246 (App.Div.1985). On the other hand, on-the-job reprimands even if public and arguably improper and humiliating did not justify a voluntary quit. Gerber v. Bd. of Review, 313 N.J.Super. 37, 40 (App.Div.1998).
An employee is entitled to benefits after quitting in the face of a substantial downgrade in responsibilities and pay. Compare Johns–Manville Prods. Corp. v. Bd. of Review, 122 N.J.Super. 366, 368–70 (App.Div.1973) (affirming award of benefits to machinist who quit after transfer to less skilled position at twenty-five percent pay reduction and limited prospect for improvement), with Goebelbecker v. State, 53 N.J.Super. 53, 55, 57–59 (App.Div.1958) (affirming denial of benefits to employee who quit after transfer to a lesser position with a sixteen percent drop in pay from $2.77 to $2.32 per hour). We note that in Goebelbecker, the demotion was necessitated by a major reduction in force by the employer due to loss of business. Goebelbecker, supra, 53 N.J.Super. at 56.3
In other contexts, we have recognized that, even if an employee's pay and title are unchanged, he or she may be subject to an adverse employment consequence. See Nardello v. Twp. of Voorhees, 377 N.J.Super. 428, 435–36 (App.Div.2005) (holding that a police lieutenant who retained his rank and pay established a prima facie case under the Conscientious Employee Protection Act, N.J.S.A. 34:19–1 to –8, because he was denied training, forced to resign as leader of the SWAT team, removed from the detective bureau, and assigned to demeaning and non-supervisory jobs).4
A person who is unemployed and receiving benefits is required to accept suitable work; however, the wages and responsibilities of the offered position are factors in determining suitability. N.J.S.A. 43:21–5(c). A position is not suitable if it pays less than eighty percent of the prior wage. N.J.A.C. 12:17–11.2(a)(2). In Goebelbecker, supra, 53 N.J.Super. at 59, we noted that many of the same considerations that go into a finding of leaving work ‘without good cause’ within section 5(a) would be relevant in determining ‘suitability’ of other work offered under section 5(c). However, we rejected the worker's argument that he was authorized to quit over a transfer, under N.J.S.A. 43:21–5(a), because, if unemployed for other reasons, he would have been authorized to reject reemployment in that position as unsuitable under N.J.S.A. 43:21–5(c). Goebelbecker, supra, 53 N.J.Super. at 59.
Employees are required to act reasonably to protect their own employment. “A claimant has the ‘responsibility to do whatever is necessary and reasonable in order to remain employed.’ ” Brady, supra, 152 N.J. at 214 (quoting Heulitt v. Bd. of Review, 300 N.J.Super. 407, 414 (App.Div.1997)). However, in Doering, we rejected the notion that an employee was required to pursue a formal grievance or file a discrimination complaint as a precondition to unemployment benefits. Doering, supra, 203 N.J.Super. at 248. See also Sanchez v. Bd. of Review, 206 N.J.Super. 617, 621 (App.Div.1986) (stating that an employee subject to an unlawful deduction from pay is not required to seek adjustment under the Wage and Hour Law, N.J.S.A. 34:11–56(a) to –67, as a precondition to raising it as a basis for quitting).
An employee bears the burden to show that he or she is entitled to unemployment benefits. Brady, supra, 152 N.J. at 218. If an employee has voluntarily left work, he or she also has the burden to show that he or she left not for personal reasons, but for “good cause attributable to work.” Ibid.
As courts have noted in other contexts, the cumulative effect of an employer's actions may make an employee's resignation justified. Cf. Chertkova v. Conn. Gen. Life Ins. Co., 92 F.3d 81, 90 (2d Cir.1996) (observing that the “effect of a number of adverse conditions in the workplace is cumulative,” and may lead an employee to feel “compelled to step down”); Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1084 (3d Cir.1996) (acknowledging that an employer's pattern of conduct may give rise to a constructive discharge claim); Levendos v. Stern Entm't, Inc., 860 F.2d 1227, 1231 (3d Cir.1988) (holding that a jury could find constructive discharge of maître d' based on various factual allegations including exclusion from management meetings, denial of authority, and false accusations, as well as rumor, and shunning by her employer). Consequently, the agency must consider the totality of circumstances in determining whether a voluntary quit was for “good cause attributable to work.”
Applying these principles, we are convinced the Board of Review erred in affirming the Appeal Tribunal's decision. Plaintiff had good cause, attributable to work, for resigning.
Plaintiff was subjected to the threat of physical harm. He also was harassed with defamatory allegations of drug use, and other hostile remarks and behavior. The Appeal Tribunal essentially found this behavior was irrelevant — because plaintiff allegedly did not immediately resign after he was threatened and no one purportedly believed the drug use allegation. That finding minimizes the significance of the behavior, and overlooks our precedent on the impact of both threats of physical harm and harassment in the workplace.
The uncontroverted behavior of the house coordinator created an uncomfortable and unacceptable work environment. Plaintiff did not resign after the threat was made because London essentially told him to coexist with Ryan. Plaintiff tried to do so. However, once Ryan was installed as plaintiff's boss, the past harassment was a significant factor in justifying plaintiff's resignation.
We recognize that plaintiff did not suffer an immediate loss in pay. However, given his relationship with his newly installed supervisor, and the patent animosity between the two men — most recently demonstrated by Ryan's coarse pronouncement after the new policy was adopted that he could do what he wanted — it would have been reasonable for plaintiff to presume that his work would not be fairly and dispassionately evaluated.
Regardless of whether plaintiff retained his title, he no longer was employed as an executive chef. Plaintiff testified that he performed well in his position. Oak Hill presented no evidence to the contrary, nor did it assert that the change in lines of authority was justified by misconduct or poor performance by plaintiff. Nonetheless, the club stripped plaintiff of the responsibilities historically assigned to the executive chef's post at the club. Those responsibilities were also typical of an executive chef's position in the industry, according to plaintiff's thirty years of experience.
Under the circumstances, plaintiff was not obliged to give the position a good faith effort. The club decided to place plaintiff in a position inferior to the person who threatened him with physical harm, defamed him, and harassed him. We note that even before the new lines of authority were announced by Harrington's email on November 17, 2011, Ryan apparently exercised or exceeded his new authority by hiring new kitchen staff, which Harrington disclosed to plaintiff when he arrived at work. According to the email, plaintiff retained authority to hire and fire, subject to Ryan's “final approval authority.” However, Ryan's unilateral hiring reflected something different. Apparently, Ryan intended to exercise that authority without any input or initial decision by plaintiff.
In sum, plaintiff's resignation resulted from more than “[m]ere dissatisfaction” with his job, Medwick, supra, 69 N.J.Super. at 345, or “imaginary, [or] trifling” concerns. Brady, supra, 152 N.J. at 214 (internal quotation marks and citations omitted). Rather, he acted in accord with what a person of ordinary common sense and prudence would do. Ibid. (internal quotation marks and citation omitted). Plaintiff resigned with good cause attributable to his work.
1. FN1. In view of the allegations about the employee, and the fact that he did not testify on his own behalf, we refer to him by a pseudonym.
2. FN2. The consequences of quitting work “without good cause attributable to ․ work” are more severe than those following a suspension or discharge for misconduct or severe misconduct on the job. See N.J.S.A. 43:21–5(b). We also note that the administrative regulation has not been updated to reflect the lengthier period of disqualification adopted by the Legislature in 2010. See N.J.A.C. 12:17–9.1; L. 2010, c. 37, § 2.
3. FN3. In other cases, unemployment benefits have been denied where the demotion and pay reduction prompting resignation were justified by job performance. See, e.g., Dachel v. Ortho Met, Inc., 528 N.W.2d 268, 270 (Minn.Ct.App.1995). One state has distinguished between demotions or pay cuts implemented in good faith and for cause, and those resulting from “an unfair evaluation procedure in an apparent effort to force [the employee] to take a lower paying job which would not have fully utilized her hard earned experience and knowledge.” Salt Lake City Corp. v. Dep't of Emp't Sec., 657 P.2d 1312, 1319 (Utah 1982).
4. FN4. Other states differ regarding whether there may be good cause to quit after a demotion in responsibility unaccompanied by a pay cut. Compare Marty v. Digital Equip. Corp., 345 N.W.2d 773, 775 (Minn.1984) (finding claimant eligible for benefits after transfer to a less-skilled position with the same starting salary, although lesser prospects for salary advancement), and Holbrook v. Minn. Museum of Art, 405 N.W.2d 537, 539–40 (Minn.Ct.App.1987) (finding good cause to quit where assistant curator was transferred to clerical position, although her pay was not reduced), rev. denied, (Minn. July 15, 1987), with In re Claim of Youngblood, 781 N.Y.S.2d 816, 817 (App.Div.2004) (“Dissatisfaction with a change in job assignment, and resulting loss of prestige or privileges, does not constitute good cause for leaving one's employment particularly where the essential terms and conditions of employment remain unchanged.”) (citations omitted).