In a published decision issued March 6, 2017, the New Jersey Appellate Division held that a trial judge erred by reducing an employee-plaintiff’s back pay award in light of his receipt of unemployment compensation benefits. Fornaro v. Flightsafety International, Inc., No. A-1295-14T2. The plaintiff in Fornaro was a flight instructor who was discharged, he claimed, based on disability in violation of the New Jersey Law Against Discrimination (NJ LAD). The jury sided with the plaintiff, ultimately awarding him $83,000 in back pay. The trial judge, however, reduced the back pay award by about $14,000, which represented half of the employment compensation benefits the plaintiff received from the state fund prior to obtaining new employment. Both the plaintiff and the employer appealed, arguing, among other things, that the trial judge’s off-set of the unemployment benefits was improper.
Judge Reisner, writing for the Appellate Division, found no basis on which to deduct unemployment compensation benefits from back pay awarded under the NJ LAD. In reaching this conclusion, the court first held that the collateral source statute, N.J.S.A. 2a:15-19, was enacted to control automobile insurance costs and did not apply to NJ LAD cases. Next the court rejected the employer’s argument that unemployment benefits should be deducted from NJ LAD back pay awards as a matter of discretion, in order to avoid giving the plaintiff a double recovery. The court relied primarily on the remedial purpose of the NJ LAD, focusing on what the plaintiff should receive rather than what the employer should pay. Reducing recovery based on the receipt of unemployment benefits, the court reasoned, would be giving the employer undeserved credit on its own wrongdoing.
The Fornaro decision aligns with well-settled Third Circuit precedent which holds that unemployment benefits may not be deducted from back pay awards under Title VII.
