In the Matter of County of Atlantic and Pba Local 243 And , 445 N.J. Super. 1 ( 2016 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2477-13T4
A-0107-14T1
IN THE MATTER OF
COUNTY OF ATLANTIC,
Respondent-Respondent, APPROVED FOR PUBLICATION
and March 9, 2016
APPELLATE DIVISION
PBA LOCAL 243,
Charging Party,
and
FOP LODGE 34 and PBA LOCAL 77,
Charging Parties-Appellants.
_____________________________________
IN THE MATTER OF
TOWNSHIP OF BRIDGEWATER,
Petitioner-Respondent,
and
PBA LOCAL 174,
Respondent-Appellant.
______________________________________
Argued October 28, 2015 – Decided March 9, 2016
Before Judges Alvarez, Haas, and Manahan.
On appeal from the State of New Jersey
Public Employment Relations Commission,
P.E.R.C. Nos. 2014-40 and 2015-11.
Ira W. Mintz and Steven R. Cohen argued the
cause for appellants FOP Lodge 34, and PBA
Local 77 in A-2477-13, and amici curiae
Lodge 34, PBA Local 77, and Communications
Workers of America AFL-CIO in A-0107-14
(Weissman & Mintz, LLC, and Selikoff &
Cohen, P.A., attorneys; Mr. Mintz and Mr.
Cohen, on the briefs).
James M. Mets and David M. Bander argued the
cause for appellant PBA Local 174 in A-0107-
14 and amicus curiae Professional
Firefighters Association of New Jersey in A-
2477-13 (Mets Schiro & McGovern, LLP,
attorneys; Mr. Mets, of counsel and on the
briefs; Mr. Bander and Brian J. Manetta, on
the briefs).
James F. Ferguson, Atlantic County Counsel,
argued the cause for respondent County of
Atlantic in A-2477-13.
Don Horowitz, Acting General Counsel, argued
the cause for respondent New Jersey Public
Employment Relations Commission (Mr.
Horowitz, attorney; Martin R. Pachman,
formerly General Counsel, and Mr. Horowitz,
on the briefs).
Eric M. Bernstein argued the cause for
Township of Bridgewater respondent in A-
0107-14 and amicus curiae in A-2477-13 (Eric
M. Bernstein & Associates, LLC, attorneys;
Mr. Bernstein, of counsel and on the brief;
Philip G. George, on the brief).
John J. Hoffman, Acting Attorney General,
attorney for amicus curiae Governor's Office
of Employee Relations in A-2477-13 (Michelle
Lyn Miller, Assistant Attorney General, of
counsel; Todd A. Wigder, Deputy Attorney
General, on the brief).
Oxfeld Cohen, P.C., attorneys for amicus
curiae International Federation of
Professional and Technical Engineers, Local
2 A-2477-13T4
195 in A-2477-13 (Arnold S. Cohen, of
counsel and on the brief; Samuel Wenocur, on
the brief).
Bucceri & Pincus, attorneys for amicus
curiae New Jersey Education Association in
A-2477-13 (Louis P. Bucceri, of counsel and
on the brief; Albert J. Leonardo, on the
brief).
Cynthia J. Jahn, General Counsel, attorney
for amicus curiae New Jersey School Boards
Association in A-2477-13 (Patrick Duncan, on
the brief).
Law Offices of Craig S. Gumpel LLC,
attorneys for amicus curiae New Jersey State
Firefighters Mutual Benevolent Association
(Craig S. Gumpel, of counsel and on the
brief).
Genova Burns LLC, attorneys for amici curiae
New Jersey State League of Municipalities,
New Jersey Association of Counties, and New
Jersey Council of County Colleges (Joseph M.
Hannon, of counsel and on the brief; Allison
B. Gotfried, on the brief).
Markowitz and Richman, attorneys for amicus
curiae New Jersey State Lodge of the
Fraternal Order of Police (Matthew D.
Areman, on the brief).
Zazzali, Fagella, Nowak, Kleinbaum &
Friedman, attorneys for amicus curiae New
Jersey State PBA in A-2477-13 (Paul L.
Kleinbaum, of counsel and on the brief;
Marissa A. McAleer, on the brief).
The opinion of the court was delivered by
ALVAREZ, P.J.A.D.
3 A-2477-13T4
Oral argument was conducted on these two matters back-to-
back, and they are consolidated for purposes of this opinion.
We reverse both Public Employment Relations Commission (PERC)
final agency decisions because PERC's abandonment of the dynamic
status quo doctrine was action outside the scope of its
legislative mandate, which is the implementation of the New
Jersey Employer-Employee Relations Act (Act), N.J.S.A. 34:13A-1
to -39.
PERC is charged with safeguarding the rights of public
employees. Galloway Twp. Bd. of Educ. v. Galloway Twp. Ass'n
(NJ Galloway), 78 N.J. 25, 36 (1978). It "bear[s] the dual
responsibilities of adjudicating violations of the unfair
practice provisions and the Act and taking all steps necessary
to enforce that which the Legislature has declared to be the
public policy of this State in public employment labor
relations." Ibid.
In the first appeal, the Atlantic County matters, FOP Lodge
34 and PBA Local 771 filed separate unfair practice charges with
PERC.2 The unions alleged that Atlantic County violated the Act
by, after the expiration of collective negotiation
1
The organizations are the designated collective bargaining
units for officers below the rank of sergeant.
2
A third union, PBA Local 243, is not involved in the appeal.
4 A-2477-13T4
agreements3 (CNAs), failing to pay salary/step increments to unit
members while negotiations were ongoing and the employment
contract disputes were in interest arbitration. PERC dismissed
the charges, disavowing the dynamic status quo doctrine, which
would have required payment of the salary increments. Had PERC
adhered to the longstanding doctrine, it would have held
Atlantic County's decision not to pay salary/step increments an
unfair labor practice. See N.J.S.A. 34:13A-5.4.
In the second appeal, the Bridgewater Township case, PERC
restrained binding arbitration of Local 174's grievance, relying
on its decision in the Atlantic County cases.4 The grievance was
filed to challenge the Township's failure to pay automatic
salary increments to unit members after the expiration of their
CNA. PERC held that, since it had abandoned the dynamic status
quo doctrine, the issue of automatic salary increments after the
expiration of a negotiated agreement was no longer mandatorily
negotiable nor legally arbitrable. Had PERC adhered to the
3
New Jersey typically employs the terms "collective negotiation"
and "collective negotiation agreements," not "collective
bargaining" or "collective bargaining agreements." Twp. of
Franklin v. Franklin Twp. PBA Local 154, 424 N.J. Super. 369,
373 n.1 (App. Div. 2012).
4
Local 174 is a collective bargaining unit for officers below
the rank of sergeant.
5 A-2477-13T4
doctrine, since salary is a mandatory subject of negotiation, it
would have held Local 174's grievance to be arbitrable.
I.
PERC has had exclusive jurisdiction over unfair labor
practice charges since 1974. See L. 1974, c. 123 (1974),
codified at N.J.S.A. 34:13A-5.4; See In re Galloway Twp. Bd. of
Educ. (PERC Galloway), P.E.R.C. No. 76-32, 2 N.J.P.E.R. ¶ 122B,
1976 N.J. PERC LEXIS 23 (1976), rev'd, 149 N.J. Super. 352 (App.
Div. 1977), rev'd, NJ Galloway, supra, 78 N.J. 25. The
following year, PERC adopted the dynamic status quo doctrine.
See In re Piscataway Twp. Bd. of Educ., PERC No. 91, 1
N.J.P.E.R. 49, 50 (1975).
In Piscataway, PERC found that the employer had engaged in
an unfair labor practice by unilaterally dropping employee
hospitalization and medical coverage, a condition of employment,
after the expiration of a CNA while negotiations were ongoing.
PERC stated: "It is the generally accepted view in both the
public and private sectors that an employer is normally
precluded from altering the status quo while engaged in
collective negotiations . . . ." Ibid. PERC defined the term
"status quo" to include scheduled pay increments. Moreover,
such dynamic status quo was within the scope of mandatory fair
labor practices even where no CNA was in effect.
6 A-2477-13T4
Two years later, in 1976, PERC again held that refusal to
pay salary increments in accordance with an expired agreement,
pending the negotiation of a successor agreement, was an unfair
labor practice in violation of N.J.S.A. 34:13A-5.4(a)(1) and
(5). PERC Galloway, supra, 2 N.J.P.E.R. at 8-9. In PERC
Galloway, PERC observed that a level playing field for labor
negotiations between a government employer and the employee
bargaining unit requires that "the status quo is predictable and
constitutes the terms and conditions under which the parties
have been operating[.]" PERC Galloway, supra, 2 N.J.P.E.R. at
7.
Our Supreme Court affirmed the PERC Galloway decision in
part based on the application of N.J.S.A. 18A:29-14. The
statute bound school boards to salary schedules "for a period of
two years from the effective date of such policy[,]" and in that
case the second year fell in the school term in which the Board
was refusing to pay salary increments. Because the Board did
not pay salary increments for the second year, it violated the
"statutory compulsion." Id. at 52. NJ Galloway, supra, 78 N.J.
at 51-52. The Court, by way of dictum, also endorsed PERC's
reliance on the doctrine of dynamic status quo in its decision.
Id. at 50-51.
7 A-2477-13T4
In its discussion, the Court cited NLRB v. Katz, 369 U.S.
736, 743-47, 82 S. Ct. 1107, 8 L. Ed. 2d 230 (1962), for the
proposition that unilateral change in the status quo
"frustrate[s] the 'statutory objective of establishing working
conditions through bargaining.'" Id. at 48 (citing Katz, supra,
369 U.S. at 744, 84 S. Ct. at 1112, 8 L. Ed. 2d at 236). The
Court drew a parallel between that principle and N.J.S.A.
34:13A-5.3. The statute stated then as it does now, that "new
rules or modifications of existing rules governing working
conditions" should only be implemented when they are the product
of negotiations:
Our Legislature has also recognized that the
unilateral imposition of working conditions
is the antithesis of its goal that the terms
and conditions of public employment be
established through bilateral negotiation
and, to the extent possible, agreement
between the public employer and the majority
representative of its employees. It has
incorporated a rule similar to that of Katz
in . . . N.J.S.A. 34:13A-5.3.
[NJ Galloway, supra, 78 N.J. at 48.]
Since compensation is an important condition of employment,
the unilateral denial of that increment
would constitute a modification thereof
without the negotiation mandated by N.J.S.A.
34:13A-5.3 and would thus violate N.J.S.A.
34:13A-5.4(a)(5). Such conduct by a public
employer would also have the effect of
coercing its employees in their exercise of
the organizational rights guaranteed them by
the Act because of its inherent repudiation
8 A-2477-13T4
of and chilling effect on the exercise of
their statutory right to have such issues
negotiated on their behalf by their majority
representative.
[Id. at 49.]
Eighteen years later, in Board of Education Township of
Neptune v. Neptune Township Educational Association, 144 N.J. 16
(1996), the Court acknowledged PERC's longstanding adherence to
the dynamic status quo doctrine, and the adherence to the
doctrine in "most jurisdictions[.]" Id. at 22-23.
The Court observed, however, that "there is less unanimity
in applying that rule to the public sector." Ibid. When
Galloway was written, N.J.S.A. 18A:29-4.1 authorized school
boards to adopt salary schedules for full-time teaching staff
for a maximum of two years. At the time Neptune was written,
the statute had been amended to allow increments in "one, two or
three year" steps. Supra, 144 N.J. at 30. The Court found the
statute effectively preempted labor law. Id. at 29.
In Neptune, the Court clarified that salary increments
could not be paid to teachers after the expiration of the salary
schedule negotiated between the school board and the union
because it was prohibited by statute, id. at 30-31, and because
no recoupment could be obtained from a tenured public employee,
id. at 33-34. The latter point was important because recoupment
could be obtained from other non-tenured public employees, thus
9 A-2477-13T4
limiting the potential impact of payments of increments during
periods in which a CNA was not in effect on a governmental
entity's budget. Should the parties ultimately negotiate a
different schedule of payments that resulted in an overpayment
during the time the CNA was expired but increments paid, the
overpayments could be "recouped."
In the context of the newly decided Abbott v. Burke, 136
N.J. 444 (1994), which mandated the equalization of school
funding across the state, the Neptune Court concluded that
N.J.S.A. 18A:29-4.1 was enacted "to allow schools to properly
manage their budgets in conformance with the New Jersey
Constitution and current economic realities." Supra, 144 N.J.
at 28-29. The Court disavowed a reading of NJ Galloway that
relied on the dynamic status quo doctrine. Id. at 31-32.
Despite the disavowal, the Court also specified that the
salary schedule limit found in N.J.S.A. 18A:29-4.1 did not apply
to non-teaching staff members. Neptune, supra, 144 N.J. at 34.
In other words, despite the weighty school funding concerns
addressed in Abbott, and the potential negative effect of
automatic increases on a school budget, the Neptune Court
allowed non-teaching employees to benefit from the dynamic
status quo doctrine and collect increments in salaries at the
expiration of their CNAs. See ibid.
10 A-2477-13T4
PERC thereafter decided that because of the potential
negotiating difficulties resulting from mixed bargaining units,
in which members would be subject to different rules depending
on whether they were teachers or non-teachers, Neptune's holding
would be extended to non-teaching members included in a
bargaining unit with teachers. In re East Hanover Bd. of Educ.,
PERC No. 99-71, 25 N.J.P.E.R. ¶ 30052 1999 N.J. PERC LEXIS 12
(1999), aff'd, No. A-4226-98 (App. Div. Apr. 10, 2000), certif.
denied, 165 N.J. 489 (2000).
Appellate review of agency decisions is deferential. In re
Hunterdon Cnty. Bd. of Chosen Freeholders, 116 N.J. 322, 328
(1989). Our inquiries are limited to: (1) whether the agency
followed the law; (2) whether the agency's decision is supported
by substantial evidence in the record; and (3) whether in
applying the law to the facts, the agency reached a supportable
conclusion. City of Jersey City v. Jersey City Police Officers
Benev. Ass'n, 154 N.J. 555, 567 (1998); Morris Cnty. Sheriff's
Office v. Morris Cnty. Policeman's Benev. Ass'n, Local 298, 418
N.J. Super. 64, 74-75 (App. Div. 2011).
As to the review of PERC decisions, we have said:
PERC is charged with administering the New
Jersey Employer-Employee Relations Act
(Act), N.J.S.A. 34:13A-1 to -29, and its
interpretation of the Act is entitled to
substantial deference. Appellate courts
"'will not upset a State agency's
11 A-2477-13T4
determination in the absence of a showing
that it was arbitrary, capricious or
unreasonable, or that it lacked fair support
in the evidence, or that it violated a
legislative policy expressed or implicit in
the governing statute.'" "Although an
agency's 'interpretation of the statute it
is charged with administering . . . is
entitled to great weight,' . . . [appellate
courts] will not yield to PERC if its
interpretation is 'plainly unreasonable,
contrary to the language of the Act, or
subversive of the Legislature's intent.'"
PERC's interpretation of the law
outside of its charge is entitled to "no
special deference." Moreover, deference is
not afforded when PERC's interpretation
gives a provision of the Act greater reach
than the Legislature intended, and PERC must
follow judicial precedents interpreting the
Act.
[Commc'ns Workers of Am., Local 1034 v.
State Policemen's Benev. Ass'n, Local 203,
412 N.J. Super. 286, 291 (App. Div. 2010)
(alteration in original) (citations
omitted).]
The issue presented in these appeals is one of law:
whether PERC can summarily reverse the dynamic status quo
doctrine in order to advance the legislative goal embodied in
the two percent tax levy cap, N.J.S.A. 40A:4-45.44 to -45.47.
Our review is de novo. Maeker v. Ross, 219 N.J. 565, 574-75
(2014); Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140
N.J. 366, 378 (1995).
12 A-2477-13T4
II.
In the Atlantic County matters, PERC adopted and
incorporated the hearing examiner's findings of fact. However,
because it abandoned the dynamic status quo doctrine, it
rejected the examiner's decision in favor of both bargaining
units.
It was undisputed that the County's practice for many years
had been to pay salary increments while a new agreement was
negotiated, pursuant to the schedule contained in the expired
CNA. It is common for contracts between public employers and
employees to expire long before new ones are negotiated. Local
77's CNA explicitly provided for this eventuality by stating:
"All provisions of this Agreement will continue in effect until
a successor Agreement is negotiated." Article XIX, "Duration
and Termination."
During the course of the hearing, County employees
testified that law enforcement salary increments were between
approximately five and six percent per year. If paid, in order
to meet the two percent tax levy cap, some adjustment would have
to be made to other budget items.
Despite adopting the hearing examiner's findings of fact,
PERC disagreed with his conclusion that the parties' CNAs
compelled salary step increments beyond the expiration of the
13 A-2477-13T4
agreements. PERC found instead that "there is not one word in
any of the agreements by which the parties agreed to continue to
provide incremental increases beyond the termination date of the
agreements." PERC made no mention that both CNAs were
negotiated assuming the dynamic status quo doctrine applied.
PERC began the analysis in its decision by discussing the
2010 tax levy cap. It observed that the County had demonstrated
a decrease in its ratable base, as a result of which it had been
compelled to cut expenditures by reducing public services and
projects, by employee furloughs, and similar measures.
PERC further observed that the County's efforts had enjoyed
great success, and that it carried actual budget surpluses in
2010 and 2011, maintained its good bond rating, and limited its
overall budget growth to under two percent. After this
discussion, PERC proceeded to consider the "continuing propriety
of what is known as the dynamic status quo doctrine."
PERC's analysis also referenced Piscataway, PERC Galloway,
and Neptune, acknowledging adherence to the doctrine since 1975.
The opinion then stated that PERC had the authority to modify,
or even abandon doctrines it created. It identified two earlier
14 A-2477-13T4
cases, one decided in 2011 and other in 2012, in which it
deviated from the dynamic status quo doctrine.5
Without reference to the record, and contrary to the
rationale it had employed since Piscataway in 1974 that the
dynamic status quo doctrine maintained a level playing field for
labor negotiations, PERC continued: "a post expiration
requirement that employers continue to pay and fund a prior
increment system creates myriad instabilities in the
negotiations process." PERC next referred to changing economic
conditions, and asserted that governmental budgetary constraints
trump labor considerations. PERC's opinion closed with this
statement:
[W]e find that the dynamic status quo no
longer fulfills the needs of the parties in
that it serves as a disincentive to the
prompt settlement of labor disputes, and
disserves rather than promotes the prompt
resolution of labor disputes. While public
employers will continue to be bound by the
5
Bloomfield Bd. of Educ., P.E.R.C. No. 2011-055, 37 N.J.P.E.R.
¶ 2 2011 N.J. PERC LEXIS 79 (2011); State Operated School Dist.
of Paterson, P.E.R.C. No. 2012-3, 38 N.J.P.E.R. ¶ 33 2011 N.J.
PERC LEXIS 118 (2011). Both opinions relate to interim relief.
In the first, PERC declined to compel salary increments during
negotiations because the payments could not be recouped. In the
second case, PERC declined to apply the dynamic status quo
doctrine to a dispute in a financially struggling school
district because "after weighing the relative hardship to the
parties and the harm to the public interest, interim relief is
not appropriate and the dynamic status quo should not be applied
in this case." State Operated School Dist. of Paterson, 2011
N.J. PERC LEXIS at 9.
15 A-2477-13T4
strictures of maintenance of the status quo,
that will be defined as a "static" rather
than a dynamic status quo.
Therefore, PERC rejected the hearing examiner's decision because
he applied the dynamic status quo doctrine and "for the reasons
set forth above[,]" and dismissed the unfair practice charges.
This appeal followed.
We begin our analysis with N.J.S.A. 34:13A-16.7 [and
related statutes], enacted in 2010, which cap interest
arbitration salary growth at two percent. The effective life of
N.J.S.A. 34:13A-16.7 was recently extended to 2017. This cap,
limited to interest arbitration, is the Legislature's link
between the Act and the two percent tax levy cap or efforts at
controlling the size of municipal budgets.6 It is significant
because in New Jersey, interest arbitration is compulsory. See
N.J.S.A. 34:13A-16. It hardly needs to be said that had the
Legislature intended to limit salary growth in other areas not
affected by the interest arbitration cap, it clearly could have
done so. And its silence is meaningful:
6
In N.J.S.A. 34:13A-16(g)(6), an element, among many,
arbitrators must take into account in resolving salary
negotiations is the effect of an award on the employers' budget.
Similarly, in N.J.S.A. 34:13A-16.8(e)(1), the Interest
Arbitration Task Force is directed to, as part of its charge,
"study the effect and impact of the arbitration award cap on
local property taxes."
16 A-2477-13T4
[T]he fact that the Legislature has not
acted in response to an agency's
interpretation or practice is "granted great
weight as evidence of its conformity with
the legislative intent." Malone v. Fender,
80 N.J. 129, 137, 402 A.2d 240 (1979)
(citing Lavitz v. Civil Serv. Comm'n, 94
N.J. Super. 260, 266, 227 A.2d 722 (App.
Div. 1967)); see also Cedar Cove, Inc. v.
Stanzione, 122 N.J. 202, 212, 584 A.2d 784
(1991) ("The meaning ascribed to legislation
by the administrative agency responsible for
its implementation, including the agency's
contemporaneous construction, long usage,
and practical interpretation, is persuasive
evidence of the Legislature's understanding
of its enactment." (citing Malone, supra, 80
N.J. at 137, 402 A.2d 240)).
[Klumb v. Bd. of Educ. of Manalapan-
Englishtown Reg'l High Sch. Dist., Monmouth
Cnty., 199 N.J. 14, 24-25 (2009).]
The Legislature could have enacted additional limits by
further amendments. It did not. See, e.g., Bd. of Educ. of
Borough of Alpha, Warren Cnty. v. Alpha Educ. Ass'n, 190 N.J.
34, 47-48 (2006) (noting that Legislature overruled Supreme
Court's ruling in Camden Bd. of Educ. v. Alexander, 181 N.J.
187, 203-07 (2004), in part, by amending N.J.S.A. 34:13A-5.3,
effective Jan. 12, 2006, to set forth a presumption in favor of
arbitration).
PERC's decision, undertaken in an area in which the
Legislature did not act, was driven by the tax levy cap,
concerns regarding government budgets, and not the Act. The two
percent tax levy cap is beyond PERC's agency mandate. Concerns
17 A-2477-13T4
regarding budgets are not a primary consideration when the
agency safeguards the rights of public employees. "PERC's
interpretation of the law outside of its charge is entitled to
'no special deference.'" Local 1034, supra, 412 N.J. Super. at
291.
PERC is charged with administering the Act and its
interpretation of the Act is entitled to substantial deference.
Its interpretation and implementation of laws, and primary
consideration of goals outside its charge, however, is not.
Local 1034, supra, 412 N.J. Super. at 291. In these cases, PERC
filled in a gap it did not have the authority to fill.
Contrary to PERC's conclusion, there is no absolute
inconsistency between the tax levy cap statute and the dynamic
status quo doctrine because the employer is free to adjust and
balance its budget, if necessary, from other expenditures.
Additionally, employers have the capacity, with non-tenured
employees, to recoup increments.
In fact, the interest arbitration statute's legislative
history, L. 2010, c. 105, explicitly states that the Legislature
did not intend to place a cap on negotiated agreements. See
Assembly Law & Public Safety Comm. Statement to Assembly Comm.
Substitute for A. 3393 (Dec. 9, 2010) ("[A]greements arrived at
through independent negotiation between the parties, and
18 A-2477-13T4
agreements reached with the assistance of a mediator or
factfinder are not subject to the contractual cap.").
Essentially, PERC found that the cost-saving impetus behind
the tax levy cap and the dynamic status quo doctrine conflicted,
and on the balance gave greater weight to the tax cap statute.
By doing so, it undermined its legislative mandate as embodied
in the Act.
"When two statutes may stand together, each governing its
own sphere of operation, there is no inconsistency from which an
intent to repeal may be inferred." Jackson Twp. Bd. of Educ. v.
Jackson Educ. Ass'n ex rel. Scelba, 334 N.J. Super. 162, 171
(App. Div.), certif. denied, 165 N.J. 678 (2000). See also
Brown v. City of Jersey City, 289 N.J. Super. 374, 379 (App.
Div. 1996) ("It is well settled that implied repealers are
disfavored by the law and will be avoided if the two enactments
can be read harmoniously and sensibly."). "Evidence of
statutory incompatibility reflecting a legislative intention to
supplant a prior law must be clear and compelling." Grzankowski
v. Heymann, 128 N.J. Super. 563, 568 (App. Div. 1974).
Nor do we agree with PERC that it was free to discard the
doctrine as an act of mere policymaking. PERC has broad
authority to
make policy and establish rules and
regulations concerning employer-employee
19 A-2477-13T4
relations in public employment relating to
dispute settlement, grievance procedures and
administration including enforcement of
statutory provisions concerning
representative elections and related matters
and to implement fully all the provisions of
this act.
[N.J.S.A. 34:13A-5.2.]
See also N.J.A.C. 19:10-1.1 to 19:19-5.2 (PERC regulations);
Galloway, supra, 78 N.J. at 33 (PERC "is given certain statutory
powers to fulfill its delegated duty as a regulatory body in the
field of public employment labor relations. These include
legislation (i.e., rule making), investigation, prosecution and
adjudication.").
And PERC may amend its regulations "to adapt to changing
circumstances and conditions," Glukowsky v. Equity One, Inc.,
180 N.J. 49, 67 (2004), cert. denied, 543 U.S. 1049, 125 S. Ct.
864, 160 L. Ed. 2d 770 (2005), subject to compliance with the
Administrative Procedure Act, N.J.S.A. 52:14B-1 to -15, and due
process requirements. In re Provision of Basic Generation Serv.
for Period Beginning June 1, 2008, 205 N.J. 339, 347 (2011); In
re N.J.A.C. 7:1B-1.1 et seq., 431 N.J. Super. 100, 115-16 (App.
Div.), certif. denied, 216 N.J. 8 (2013).
But the dynamic status quo doctrine is neither a regulation
nor a policy statement. It is an interpretation of N.J.S.A.
34:13A-5.3, which PERC developed when assessing unfair labor
20 A-2477-13T4
practice charges, in fulfilling its adjudicative function
pursuant to N.J.S.A. 34:13A-5.4(c). See Neptune, supra, 144
N.J. at 23 (PERC "has interpreted the Act to require a dynamic
status quo, including the payment of increments.") (emphasis
added); Galloway, supra, 78 N.J. at 48-49 (Legislature has
"recognized that the unilateral imposition of working conditions
is the antithesis of its goal that the terms and conditions of
public employment be established through bilateral negotiation
and, to the extent possible, agreement between the public
employer and the majority representative of its employees"; and
"If a scheduled annual step increment . . . is an 'existing
rul[e] governing working conditions,' the unilateral denial of
that increment would constitute a modification thereof without
the negotiations mandated by N.J.S.A. 34:13A-5.3 and thus would
violate N.J.S.A. 34:13A-5.4(a)(5)") (emphasis added).
Furthermore, the parties relied on the doctrine in
negotiating their CNAs. By altering its course, PERC undermined
the parties' legitimate expectations based on their negotiations
and, as to at least Local 77, the actual employment contract.
See, e.g., Camden Bd. of Educ., supra, 181 N.J. at 195 ("As a
general matter, legislative and other regulatory enactments are
'a silent factor in every contract[, and p]arties in New Jersey
are likewise presumed to have contracted with reference to the
21 A-2477-13T4
existing law.'" (alteration in original) (quoting Silverstein v.
Keane, 19 N.J. 1, 13 (1955)), superseded by statute on other
grounds as explained in Bd. of Educ. of Alpha, supra, 190 N.J.
at 48).
Finally, PERC wrongly assumed that government employers
cannot negotiate to avoid paying salary increments after the
lapse of CNAs. The employer also has the option, when engaged
in new negotiations, to recoup salary increments in a new
contract.
An additional consideration is that we are obliged to
follow the discussion in NJ Galloway of the dynamic status quo
doctrine. It is well-established that "an expression of opinion
on a point involved in a case, argued by counsel and
deliberately mentioned by the court, although not essential to
the disposition of a case . . . becomes authoritative[] when it
is expressly declared by the court as a guide for future
conduct." State v. Rose, 206 N.J. 141, 183 (2011). In other
words, even if the Court's analysis in NJ Galloway was no more
than dictum unnecessary to the ultimate ruling applying N.J.S.A.
18A:29-4.1, we must follow it.
"[A]s an intermediate appellate court, we consider
ourselves bound by carefully considered dictum from the Supreme
Court." State v. Breitweiser, 373 N.J. Super. 271, 282-83 (App.
22 A-2477-13T4
Div. 2004), certif. denied, 182 N.J. 628 (2005). Even in
Neptune, the Court in effect sanctioned the doctrine because it
would be applied to non-teaching staff members in the bargaining
unit.
Here, the hearing examiner concluded in both cases that
nonpayment of the increments would constitute an unfair labor
practice under N.J.S.A. 34:13A-5.4(a)(1) and (5). We agree. We
therefore reverse.
III.
Once informed of PERC's decision in the matter of County of
Atlantic, the Township's administrator notified Local 174 that,
based on that opinion, "no step increases are to be granted to
any Township employee unless a contract agreement is in place."
As a result, Local 174 filed a grievance alleging the Township
violated the parties' CNA, past practice, and the covenant of
good faith and fair dealing. Local 174 submitted a request to
PERC for grievance arbitration and the Township filed a scope of
negotiations petition, seeking restraint of the grievance
arbitration.
Local 174's CNA expired December 31, 2012. It included the
following term: "This agreement shall remain in full force and
effect during collective negotiations between the parties beyond
the date of expiration set forth herein until the parties have
23 A-2477-13T4
mutually agreed on a new agreement." The hearing examiner found
this provision to mean the employer agreed to salary increments
even after the expiration of a CNA.
The grievance arbitration resulted in an award in favor of
Local 174. That award was confirmed by the Law Division,
pursuant to statute, on July 9, 2014. See N.J.S.A. 2A:24-7.
Over a month after the grievance arbitration award was
confirmed, on August 14, 2014, PERC decided the Township's scope
of negotiations petition, belatedly granting the Township's
request for restraint of binding arbitration. PERC held the
issue was "whether the subject matter in dispute is within the
scope of collective negotiations." It noted that the scope of
negotiations for police and fire officials "is broader than for
other public employees because N.J.S.A. 34:13A-16 provides for a
permissive as well as a mandatory category of negotiations."
After discussion of its Atlantic County decision, and the
contentions of each of the parties, PERC stated:
[W]e find that the issue of automatic
movement on a salary guide after a contract
has expired is not a term and condition of
employment and therefore not mandatorily
negotiable and legally arbitrable. We
acknowledge that the issues of compensation
and advancement on a salary guide are
generally mandatorily negotiable and legally
arbitrable issues. . . . In this case, our
inquiry extends beyond those issues. The
precise issue herein concerns automatic
advancement on a salary guide after the
24 A-2477-13T4
expiration of a contract, and whether such
advancement continues to be a term and
condition of employment. We find that the
answer to this question is no.
Referring to its decision in Atlantic County, PERC added the
following: "Given that the issue herein fails to qualify as a
term and condition of employment it is not mandatorily
negotiable and legally arbitrable and we grant the Township's
request for a restraint of arbitration."
The record does not offer any explanation for the
chronology of events, i.e., that the arbitration award was made
and confirmed before PERC issued its scope of negotiations
ruling. Theoretically, the decision is therefore moot. Caput
Mortuum, L.L.C. v. S&S Crown Servs., Ltd., 366 N.J. Super. 323,
330 (App. Div. 2004) ("A case is moot if the disputed issue has
been resolved, at least with respect to the parties who
instituted the litigation.").
We nonetheless address the issue because the scope of
negotiations petition may be viewed independently from the
grievance. PERC, by virtue of the Township's inquiry, was
required to rule on whether the subject matter of dispute was
within the scope of collective negotiations. See Ridgfield Park
Educ. Ass'n v. Ridgfield Park Bd. of Educ., 78 N.J. 144, 154
(1978). PERC has "primary jurisdiction to make a determination
on the merits of the question whether the subject matter of a
25 A-2477-13T4
particular dispute is within the scope of collective
negotiations." Ibid. This appeal raises an issue of some
public importance, having the potential to recur. See State v.
State Troopers Fraternal Ass'n, 134 N.J. 393, 397 (1993); Morris
Cnty. Sheriff's Office, supra, 418 N.J. Super. at 73-74.
We employ the same standard of review as we did in Atlantic
County. Our review is deferential only if PERC's interpretation
of the law relates to its charge to implement the Act. Local
1034, supra, 412 N.J. Super. at 291. We do not reverse unless
the State agency decision is shown to be arbitrary, capricious,
or unreasonable, lacking fair support in the evidence, or
violative of a legislative policy expressed or implicit in the
governing statute. Ibid. We ask: (1) whether the agency
followed the law; (2) whether the agency's decision is supported
by substantial evidence in the record; and (3) whether in
applying the law to the facts, the agency reached a supportable
conclusion. City of Jersey City, supra, 154 N.J. at 567; Morris
Cnty. Sheriff's Office, supra, 418 N.J. Super. at 74-75.
These standards apply to scope of negotiations rulings
which are reviewed for arbitrariness or capriciousness. See,
e.g., City of Jersey City, supra, 154 N.J. at 567-68; In re
Hunterdon Cnty., supra, 116 N.J. at 328-30; Twp. of Franklin,
supra, 424 N.J. Super. at 377-78.
26 A-2477-13T4
Public employees have a constitutional right to engage in
collective negotiations. N.J. Const., art. I, ¶ 19; Council of
N.J. State Coll. Locals v. State Bd. of Higher Educ., 91 N.J.
18, 25-26 (1982). Their majority representative is authorized
to negotiate "terms and conditions of employment" on their
behalf. N.J.S.A. 34:13A-5.3. However, "the scope of
negotiations in the public sector is more limited than in the
private sector" due to the government's "special
responsibilities to the public" to "make and implement public
policy." In re IFPTE Local 195 v. State, 88 N.J. 393, 401-02
(1982) (citations omitted). Salary is a mandatorily negotiable
term and condition of employment. In re Hunterdon Cnty., supra,
116 N.J. at 331-32; In re IFPTE Local 195, supra, 88 N.J. at
403; Twp. of Franklin, supra, 424 N.J. Super. at 379.
In a 2012 decision, while referring to the two percent tax
levy cap, PERC held "because issues of compensation are
mandatorily negotiable and the joint employers have not shown
that paying the increments would be preempted by any specific
statute or regulation, we deny the request for a restraint of
binding arbitration." In re Cnty. of Morris, PERC No. 2013-19,
39 N.J.P.E.R. 181 (¶ 56 2012). Citing to its Atlantic County
decisions and contrary to its decision in In re County of
Morris, PERC determined in this case that salary increments are
27 A-2477-13T4
not a negotiable term or condition of employment during a period
when no CNA is in effect.
We reiterate that the fiscal health of municipalities and
tax rates are not within PERC's charge. PERC cannot abandon the
adjudicative doctrine it long ago adopted, rooted in parallel
federal law. To the extent the dynamic status quo doctrine must
be changed, it is the Legislature's prerogative to do so.
Absent such a step, it remains an item open to negotiation
between employer and bargaining unit.
The Township argues on appeal that PERC's decision accords
with the legislative adoption of the two percent cap on police
and fire interest arbitration awards. See N.J.S.A. 34:13A-16.7
(extended to 2017 by L. 2014, c. 11). But, as we have said,
that legislation was not extended to other labor disputes. In
this case, the parties were attempting to negotiate a successor
agreement but had not turned to interest arbitration, the only
arena in which the Legislature acted.
Thus, there is no basis to conclude that N.J.S.A.
34:13A-16.7 preempts negotiation over salary increments payable
during a CNA, or in the interim period between expiration of a
CNA and negotiation or arbitration of a successor agreement.
See, e.g., Council of N.J. State Coll. Locals, supra, 91 N.J. at
30 (a regulation "must fix a term and condition of employment,
28 A-2477-13T4
and it must so provide expressly, specifically and
comprehensively in order to foreclose otherwise required
employer-employee negotiations on the subject matter"); In re
IFPTE Local 195, supra, 88 N.J. at 403-04 (alteration in
original) (quoting State v. State Supervisory Emps. Ass'n, 78
N.J. 54, 80 (1978)) ("Negotiation is preempted only if the
'statutory or regulatory provisions . . . speak in the
imperative and leave nothing to the discretion of the public
employer.'").
Accordingly, we reverse PERC's decision on the scope of
negotiations petition. Salary is a mandatory subject of
negotiation, and the Township's decision not to pay automatic
salary increments in accordance with the earlier CNAs and past
practice was indeed arbitrable. NJ Galloway, supra, 78 N.J. at
36.
Reversed.
29 A-2477-13T4