DOREEN L. SIMON v. BOARD OF REVIEW, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.


                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-1972-15T4

DOREEN L. SIMON,

        Appellant,

v.

BOARD OF REVIEW, DEPARTMENT OF
LABOR AND WORKFORCE DEVELOPMENT,
and SHALOM TORAH CENTERS,

     Respondents.
__________________________________

              Submitted May 9, 2017 – Decided December 14, 2017

              Before Judges Ostrer and Leone.

              On appeal from the Board of Review, Department
              of Labor and Workforce Development, Docket No.
              056653.

              Doreen L. Simon, appellant pro se.

              Christopher S. Porrino, Attorney General,
              attorney for respondent Board of Review
              (Melissa Dutton Schaffer, Assistant Attorney
              General, of counsel; Elizabeth A. Davies,
              Deputy Attorney General, on the brief).

              Respondent Shalom Torah Centers has not filed
              a brief.

        The opinion of the court was delivered by

OSTRER, J.A.D.
     In this unemployment compensation appeal, the parties dispute

whether the employer satisfies the exemption for certain religious

schools.      N.J.S.A.    43:21-19(i)(1)(D)(i)(II).                New    Jersey's

unemployment law excludes from the definition of "employment" —

and thereby exempts from unemployment compensation coverage — work

for a school that satisfies two requirements: (1) it "is operated

primarily   for     religious   purposes"      and    (2)     it   "is   operated,

supervised, controlled or principally supported by a church or

convention or association of churches."              Ibid.1    Petitioner was a

computer teacher at Shalom Torah Academy until she was terminated

in 2014. She appealed the initial denial of unemployment benefits.

The Board of Review ultimately adopted the Appeal Tribunal's

holding that the school was exempt. On appeal, petitioner contends

the Board erred because the school failed to meet either of the

two prerequisites for the exemption.           As we are not satisfied the

Tribunal or the Board made sufficient findings, we vacate and

remand.

     The    facts    pertaining    to       petitioner's       employment      were

undisputed.   For almost six years, she was a computer teacher and



1
  The Board does not contend that the school satisfies a separate
exemption, for "services performed . . . [i]n the employ of . . .
a church or convention or association of churches."      N.J.S.A.
43:21-19(i)(1)(D)(i)(I). See n. 5 infra.


                                        2                                  A-1972-15T4
lab manager at Shalom Torah Academy, a K-through-8 school in the

Morganville section of Marlboro Township.                 Initially, the school

and its employees contributed to the unemployment compensation

system.    In 2013, the school reversed course and opted out.2               There

was   no   dispute   that   but    for    the       school's   claimed   statutory

exemption, petitioner was eligible for unemployment benefits.

      Turning to the first prong of the exemption, petitioner

asserted at the Tribunal hearing that the school was operated

primarily for secular, as opposed to religious, purposes.                       The

school's    Facebook   page,      which       she   introduced   into    evidence,

stated, "The goal of Shalom Torah Academy is to provide the next

generation of American Jews with an outstanding secular education

complemented by an appreciation for the Jewish heritage and a love

for Torah, mitzvoth, mankind and the Land of Israel."3



2
   According to the Tribunal, the Division of Unemployment
Compensation established the school as an exempt employer.
However, no documentation of that decision is in the record.
Confusingly, the Tribunal stated, "Division records designate the
above named employer with statute N.J.S.A. 43:21-8(c)(2)," which
pertains to an otherwise exempt employer's participation in the
system.   Notably, petitioner was not offered an opportunity to
participate in, or appeal the school's decision to opt out. She
testified that she asked the Department if she could pay into the
system on her own, and was told she could not. The Board concedes
petitioner was not precluded from challenging the school's status
in the current proceeding.
3
  The school's website repeated                this    statement,   substituting
"General Studies" for "secular."

                                          3                                A-1972-15T4
      Although religious education was a significant part of the

curriculum, and petitioner was unaware of any non-Jewish students

at the school, she testified that the coursework was "heavily

slanted   toward    secular     studies."         Based   on   class    schedules

introduced into evidence, she stated the majority of class hours

were in secular subjects.         The school's witness, its bookkeeper,

was unfamiliar with the breakdown of classes; but noted that

prayers were recited during the school day.               Petitioner stated no

religious services were conducted at the school building.

      Regarding the school's management, petitioner maintained that

the school was controlled by an independent board of directors.

She   cited   a   2009   news   article    that    reported    the     school   had

financial troubles, had not paid teachers, and replaced its board

of directors of parents and educators "with people who have

financial     backgrounds."      She   also   introduced       a   2010   article

reporting the school filed for bankruptcy protection.

      Her most recent annual employment contract was with "Shalom

Torah Academy of Western Monmouth County."            "Shalom Torah Academy"

was the drawer on her paychecks.            She acknowledged there was a

second Shalom Torah Academy in East Windsor.              Nearby that location

is a synagogue, Congregation Toras Emes, but she maintained it was

a distinct organization.



                                       4                                  A-1972-15T4
     Without support of any formational or corporate documents,

or the bankruptcy filings, the school's bookkeeper testified,

sometimes inconsistently, about the school's organization.                She

asserted that the school was operated as a division of a separately

incorporated   entity   known   as       Shalom   Torah   Centers.       That

corporation established as divisions the East Windsor school,

Congregation Toras Emes in East Windsor, and Shalom Heritage

Center, which she said was focused on adult education.               Yet she

also testified that Shalom Torah Centers was "incorporated as a

synagogue" and the "schools are run under the synagogue."                 She

denied that Shalom Torah Academy has its own board of directors,

insisting it was "part of Shalom Torah Centers," and was not

separately incorporated.   She stated that it "was probably just a

mistake" to identify Shalom Torah Academy as the drawer of the

paychecks.

     In rebuttal, petitioner pointed out that the congregation's

website did not mention it was a division of Shalom Torah Centers.

Notably, Shalom Torah Academy's website stated that it "is part

of Shalom Heritage" which was led by a rabbi whose email address

was "shalomheritagecenter.org."

     The Tribunal found that Shalom Torah Centers was petitioner's

employer; it was a "religious school for students of the Jewish

religion," although secular and non-secular subjects were taught;

                                     5                               A-1972-15T4
and it was exempt from the unemployment compensation system.           The

Tribunal concluded that the proportion of secular classes the

students took was both "immaterial" and "d[id] not, on its own,

establish whether a school is operated 'primarily for religious

purposes.'"     The Tribunal found: "[C]learly the school is for

Jewish students only and Judaism is incorporated in the students'

experience at the school on a daily basis."         The Tribunal did not

address the second requirement for exemption: that the school was

"operated, supervised, controlled or principally supported by a

church or convention or association of churches . . . ."        N.J.S.A.

43:21-19(i)(D)(i)(II).

      Apparently relying on the Division's prior treatment of the

school, the Tribunal concluded: "Nevertheless, the eminent fact

on which the Tribunal relies to arrive at its conclusion that the

claimant was in exempt employment and not in covered employment

is that the above named employer had the option, as opposed to the

obligation, to cover its employees for unemployment insurance."

The Tribunal added, "The fact that the employer was not obligated

by FUTA [Federal Unemployment Tax Act] to contribute to the

unemployment insurance fund establishes that the claimant worked

for   an   exempt   employer."   The   Board   of   Review   adopted   the

Tribunal's decision without elaboration.



                                   6                              A-1972-15T4
     We defer to the Board's decision unless it is arbitrary,

capricious, or unreasonable, or is unsupported by substantial

credible evidence.    Brady v. Bd. of Review, 
152 N.J. 197, 210

(1997).   However, we are not bound by the Board's statutory

interpretation.    See, e.g. McClain v. Bd. of Review, 
451 N.J.

Super. 461, 467 (App. Div. 2017).    Nor are we obliged to defer to

an agency's conclusory decision that lacks essential fact-finding.

Blackwell v. Dept. of Corrs., 
348 N.J. Super. 117, 122-23 (App.

Div. 2002).

          It is axiomatic in this State by this time
          that an administrative agency acting quasi-
          judicially must set forth basic findings of
          fact, supported by the evidence and supporting
          the    ultimate    conclusions    and    final
          determination, for the salutary purpose of
          informing the interested parties and any
          reviewing tribunal of the basis on which the
          final decision was reached so that it may be
          readily determined whether the result is
          sufficiently and soundly grounded or derives
          from arbitrary, capricious or extra-legal
          considerations.

          [In re Howard Sav. Inst., 
32 N.J. 29, 52
          (1960).]

"When an administrative agency's decision is not accompanied by

the requisite findings of fact and conclusions of law, the usual

remedy is to remand the matter to the agency to correct this

deficiency."   Dimaria v. Bd. of Trs. of Pub. Employees' Ret. Sys.,


225 N.J. Super. 341, 347 (App. Div. 1988).


                                 7                          A-1972-15T4
       We are constrained to remand here. We focus on the Tribunal's

decision, because the Board adopted it as its own.           Although an

employee generally bears the burden to establish a right to

benefits, Brady, 
152 N.J. at 218, the party seeking an exemption

from the law's coverage — here, the school — should bear the burden

to show that it qualifies.         See Philadelphia Newspapers, Inc. v.

Bd. of Review, 
397 N.J. Super. 309, 319 (App. Div. 2007) (stating

employer had burden to establish that services did not qualify as

employment), certif. denied, 
195 N.J. 429 (2008); see also Marx

v. Friendly Ice Cream Corp., 
380 N.J. Super. 302, 310 (App. Div.

2005) (employer bears burden to prove right to exemption under

minimum wage law).

       As for the first requirement — the Tribunal did not expressly

find   that   the   school   was   "operated   primarily   for   religious

purposes," notwithstanding its observation that the school was

"for Jewish students only,"4 and Judaism was incorporated in the

curriculum.    Those findings are evidential, but not conclusive as

to whether religious purposes were the school's primary aim.            The

proportion of secular course offerings was also evidential, as was

the school's own statements of its goals.


4
  We interpret that statement to be a factual finding that only
Jewish students actually attended the school.     If the Tribunal
meant that the school excluded non-Jewish students, such a finding
would lack evidential support in the record.

                                      8                            A-1972-15T4
     Other   jurisdictions   have   reached    varying   results    as    to

whether a school met the "primary purpose" test. Compare Baltimore

Lutheran High School Ass'n v. Emp't Sec. Adm., 
490 A.2d 701, 705-

06 (Md. 1985) (reviewing factors to be considered in assessing

whether a school was operated primarily for religious purposes,

and affirming agency decision that the Baltimore Lutheran High

School was not), and Mid Vermont Christian School v. Dept. of

Emp't & Training, 
885 A.2d 1210, 1213-14 (Vt. 2005) (noting

agency's finding that "although the school's Bible's instruction,

inculcation of Christian values and glorification of God were

integral parts of the educational mission, the primary purpose is

to provide a thorough education, combining traditional and modern

subjects to prepare the majority of graduates for college"), with

Community Lutheran School v. Iowa Dept. of Job Serv., 
326 N.W.2d 286, 290-91 (Iowa 1982) (holding that Lutheran school was operated

primarily for religious purposes).         See also Samaritan Inst. v.

Prince-Walker, 
883 P.2d 3, 7 (Colo. 1994) (stating, regarding a

non-educational   organization,     that    "[t]he   activities    of     an

organization, and not the motivation behind those activities"

determine    whether   it   is   operated    primarily   for   religious

purposes).   It was incumbent upon the agency to make a finding as

to the first statutory requirement.



                                    9                              A-1972-15T4
     The Tribunal also did not address the second prong of the

test — whether the school was "operated, supervised, controlled

or principally supported by a church or convention or association

of churches."    The Board agrees that a synagogue is treated

similarly to a church under the statute.     Although the Board on

appeal apparently relies on the bookkeeper's statement that the

school "was run under the synagogue," neither the Tribunal nor the

Board in its decision below, reached that conclusion.5

     Furthermore, the bookkeeper's statement was at odds with her

other statement that the synagogue was a division of Shalom Torah

Centers, as was the school.   If so, the school was an affiliate

of a synagogue, not a subsidiary.   The bookkeeper's testimony also




5
  Indeed, if it were established that the school lacked a legal
existence separate from a "church" – here, the synagogue – then
it would be exempt under N.J.S.A. 43:21-19(i)(D)(i)(I), which
excludes "services performed . . . in the employ of . . . a church
or convention or association of churches . . . ."       The United
States Supreme Court held, in St. Martin Evangelical Lutheran
Church v. South Dakota, 
451 U.S. 772, 784 (1981), that 26 U.S.C.
§ 3309(b)(1)(A) — which contains language identical to 
N.J.S.A.
43:21-19(i)(D)(i)(I) — "was meant to apply to schools . . . that
have no separate legal existence from a church, or . . . from a
'convention or association of churches.'"     See also id. at 782
n.12 ("To establish exemption from FUTA, a separately incorporated
church school . . . must satisfy the requirements of §
3309(b)(1)(B): (1) that the organization 'is operated primarily
for religious purposes,' and (2) that it is 'operated, supervised,
controlled, or principally supported by a church or convention or
association of churches.'") (emphasis added).

                               10                           A-1972-15T4
conflicted with petitioner's testimony that an independent board

of directors governed the school.

     We    recognize   that      hearsay    is   admissible   in    unemployment

hearings.    N.J.A.C. 1:12-15.1(a)(b).           But, the residuum rule still

applies.    DeBartolomeis v. Bd. of Review, 
341 N.J. Super. 80, 85

(App. Div. 2001).      "Notwithstanding the admissibility of hearsay

evidence,    the    decision      as   rendered     must   be      supported    by

sufficiently substantial and legally competent evidence to provide

assurance of reliability and to avoid the fact or appearance of

arbitrariness."      N.J.A.C. 1:12-15.1(b).          Notably, the bookkeeper

did not provide a foundation — for example, she did not say she

ever read Shalom Torah Center's corporate documents — for her

hearsay     statements      regarding        the     documents'       substance.

Particularly       given   the     inconsistency      in   the      bookkeeper's

testimony, the Board may deem it appropriate to reopen the record

to require the school to present admissible documents to establish

the relationship between the Marlboro school, the East Windsor

synagogue, and any corporate entity or entities.                   See 
N.J.S.A.

43:21-6(e) (stating the Board may "direct the taking of additional

evidence").6


6
  In a case involving an independent Jewish day school, the
Massachusetts Supreme Judicial Court held that the notion of
support in the phrase "principally supported" was not limited to


                                       11                                A-1972-15T4
     Finally, the Board does not seek affirmance based on the

Tribunal's reasoning that since the school had the option to join

the unemployment compensation system, it must be deemed exempt.

Nor does the Board rely on the Tribunal's rationale "that the

employer   was   not   obligated   by    FUTA   to    contribute   to   the

unemployment insurance fund . . . ."            Therefore, we need not

address these points.     However, we note that New Jersey law does

not mirror FUTA, compare 26 U.S.C. § 3309(b) with 
N.J.S.A. 43:21-

19(i)(1)(D), and New Jersey is free to adopt a narrower exemption

than permitted by FUTA.    See Special Care of N.J., Inc. v. Bd. of

Review, 
327 N.J. Super. 197, 208 (App. Div. 2000) (stating that

the "existence of an exemption under FUTA does not mandate the

same exemption under state law." (citing Standard Dredging Corp.

v. Murphy, 
319 U.S. 306, 310 (1943))).

     The order of the Board is vacated, and the matter is remanded

for additional findings of fact.        We do not retain jurisdiction.




financial support and included other forms           of support from area
synagogues and Jewish organizations. Bleich          v. Maimonides School,

849 N.E.2d 185, 191-92 (Mass. 2006).     As          the parties have not
addressed the case, we leave it to the Board         in the first instance
to address that issue.

                                   12                              A-1972-15T4