Firm Partner PAUL L. KLEINBAUM, ESQ. and Associate MARISSA A. McALEER, ESQ. represented amicus curiae, New Jersey State PBA, in In re County of Atlantic and PBA Local 243. The Appellate Division overturned a decision by PERC which reversed over 35 years of agency case law. The court held that a public employer cannot refuse to pay salary step increments after a contract has expired and before a new contract has been negotiated if it has done so in the past.

This case arose out of Atlantic County and involving PBA Locals 177 and 243, and also involved a companion case involving PBA Local 174 and Bridgewater Township. The appeal attracted a great deal of attention from both labor and management. Specifically, the State PBA, represented by the Zazzali Firm, participated in the case as an amicus and argued for reversal of PERC’s decision. We were joined by a number of other public sector unions, including NJEA, FMBA, IFPTE, PFANJ and FOP. On the other side, the New Jersey League of Municipalities, the New Jersey School Boards Association, the New Jersey Association of Counties, and the New Jersey Council of County Colleges and the Governor’s Office of Labor Relations also participated, but argued to uphold PERC’s decision.

Since 1976, PERC has consistently applied what is called the dynamic status quo doctrine and required employers to maintain terms and conditions of employment, including payment of salary increments, after the expiration of a contract and before a new contract had been negotiated. In a concept borrowed from the private sector, PERC held in many previous cases that an employer is generally precluded from changing terms and conditions of employment, including salary increments, while engaged in negotiations for a new contract. A public employer that refused to pay salary increments during negotiations for a successor contract thus committed an unfair labor practice in violation of the New Jersey Employer-Employee Relations Act (“Act”). Until 2011, PERC consistently relied upon this principle and has repeatedly found employers to be in violation of the Act when they refused to pay salary increments after the expiration of a contract and granted injunctive relief ordering employers to do so.

This case arose in 2011 when Atlantic County refused to pay salary increments after the contracts had expired. The County had an undisputed practice over the years of paying salary increments after the expiration of a contract. The PBA, as well as an FOP Lodge in Atlantic County, applied to PERC for injunctive relief to compel the County to pay the increments pending negotiations for successor agreements. The Commission Chair, who had recently been appointed by the Governor, refused to apply PERC’s longstanding policy and denied the request for injunctive relief. The case proceeded to a hearing before a PERC hearing examiner who found that the County violated the Act by refusing to pay the salary increments and ordered the County to do so. PERC then reversed the hearing examiner’s decision and concluded that a change in the labor relations climate justified PERC’s failure and refusal to comply with an over 35-year history of ordering employers to pay salary increments after expiration of a contract pending negotiations. In the companion case involving Bridgewater Township, the PBA filed a grievance over the Township’s failure to pay the increments. Following its decision in Atlantic County, PERC concluded that the payment of automatic salary increments after the expiration of a contract was no longer a negotiable term and condition of employment which could be grieved or arbitrated.

The Appellate Division, in a unanimous opinion by the three-judge panel, concluded that PERC exceeded its authority in refusing to adhere to the decades old policy requiring employers to maintain the status quo in both the Atlantic County and Bridgewater Township cases. In very strong and unequivocal language, the Court found that PERC undermined its legislative mandate and was not free to discard the doctrine it had applied for so many years. The Court also noted that the hearing examiner who concluded that Atlantic County committed unfair labor practices in unilaterally refusing to pay automatic salary increments was correct, and that the Commission was wrong. It therefore reversed PERC’s decision in both the Atlantic County and Bridgewater appeals. Not only must employers continue to pay salary increments after the expiration of a contract to maintain the status quo, but any grievances over an employer’s refusal to do may be submitted to a grievance arbitrator.

This decision affects not only PBAs but also all public employee unions. A public employer must maintain the status quo and continue to pay salary increments after a contract expires while negotiations continue if there has been a consistent practice of doing so in the past. This decision will not apply to employers which have not paid salary increments in the past after contract expiration while negotiations are ongoing.

A copy of the decision can be found HERE.

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