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Prestegaard v. Board of Review, Department of Labor

A-6578-01T2 (N.J. Super. App. Div. 2003) (Unpublished)

UNEMPLOYMENT INSURANCE—The wages paid to an employee of a company of which he or she was an officer or was a 5% or greater owner cannot be considered in calculating unemployment benefits following the loss of a job with a later employer.

An individual was employed by a company that he founded and of which he owned more than a five percent equity interest. After he sold the assets of the company, he retained his stock. He then began work at an unrelated company until he was let go about four months later. He filed an unemployment claim and was awarded benefits based solely on his employment with the unrelated company. He appealed, arguing “that the fact that he was both a stockholder and executive in [his earlier employer] should not [have prevented] him from receiving full unemployment benefits.” In New Jersey, “[a]n officer of a corporation and/or person who has more than five percent equitable or debt interest in the corporation, whose claim for benefits is based on wages with that corporation, shall not be considered unemployed in any week during the individual’s term of office or ownership… .” Based on its reading of the statute that says so, the Appellate Division agreed with the administrative decision of the Board of Review that the employee’s work for the company in which he held an ownership interest should have been disregarded for all purposes and that his benefits, both in amount and duration, were to be calculated solely upon his subsequent employment with the unrelated company.

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