IN THE MATTER OF BOROUGH OF KEYPORT v. INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 68

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0581-10T1

A-1411-10T1

A-1453-10T1

IN THE MATTER OF

BOROUGH OF KEYPORT,

Respondent-Appellant,

v.

INTERNATIONAL UNION OF

OPERATING ENGINEERS,

LOCAL 68,

Petitioner-Respondent.

____________________________

IN THE MATTER OF

BOROUGH OF BELMAR,

Respondent-Appellant,

v.

COMMUNICATIONS WORKERS

OF AMERICA, AFL-CIO,

Petitioner-Respondent.

____________________________

TOWNSHIP OF MOUNT LAUREL,

Respondent-Appellant,

v.

COMMUNICATIONS WORKERS

OF AMERICA,1

Petitioner,

and

AFSCME, COUNCIL 71, SOUTH

JERSEY PUBLIC EMPLOYEES,

Petitioner-Respondent.

____________________________________________________________

February 26, 2013

 

Argued March 28, 2012 - Decided

Before Judges Fuentes, Graves, and Haas.

On appeal from the State of New Jersey Public

Employment Relations Commission, Docket Nos.

CO-2010-065; CO-2010-135; CO-2010-128; and

CO-2010-134.

Gordon N. Litwin argued the cause for appellant

(A-0581-10)/respondent (A-1453-10) Borough of

Keyport (Ansell Grimm & Aaron, attorneys;

Mr. Litwin, of counsel and on the brief;

Andrew J. Provence, on the brief).

Jonathan F. Cohen argued the cause for appellant

(A-1411-10)/respondent (A-1453-10) Borough of

Belmar (Apruzzese, McDermott, Mastro & Murphy,

P.C., attorneys; James L. Plosia, Jr., of

counsel; Mr. Cohen and Timothy D. Cedrone,

on the brief).

Kelly E. Adler argued the cause for appellant

Township of Mt. Laurel in A-1453-10 (Capehart

& Scatchard, P.A., attorneys; Joseph F. Betley

and Kelly M. Estevam, on the brief).

Raymond G. Heineman argued the cause for respondent

I.U.O.E., Local 68 in A-0581-10 (Kroll Heineman,

LLC, attorneys; Mr. Heineman, on the brief).

Martin R. Pachman, General Counsel, argued the

cause for respondent New Jersey Public

Employment Relations Commission in A-0581-10,

A-1411-10 and A-1453-10 (Mary E. Hennessy-

Shotter, Deputy General Counsel, on the brief).

Steven P. Weissman argued the cause for respondents

CWA, AFL-CIO and AFSCME, Council 71, South Jersey

Public Employees in A-1411-10 and A-1453-10 and

amicus curiae CWA, AFL-CIO in A-0581-10 (Weissman

& Mintz, LLC, attorneys; Mr. Weissman, of counsel

and on the brief; Ira W. Mintz, on the brief).

Matthew Weng argued the cause for amicus curiae

New Jersey State League of Municipalities in

A-0581-10.

PER CURIAM

In these consolidated cases, three civil service municipalities appeal from separate decisions by the Public Employment Relations Commission (PERC). Two municipalities, the Borough of Belmar (Belmar) and the Township of Mount Laurel (Mount Laurel), appeal from PERC decisions dated October 28, 2010. The Borough of Keyport (Keyport) appeals from a PERC decision dated September 23, 2010. The appeals were consolidated because they involve related questions of law and fact. For the reasons that follow, we reverse in part and affirm in part.

 

 

THE BELMAR LITIGATION (A-1411-10)

The Communications Workers of America, AFL-CIO (CWA), the union representing all employees of the Department of Public Works (DPW), and Belmar entered into a collective negotiations agreement (CNA) effective January 1, 2005 through December 31, 2009. Article 18 of the CNA provided that Belmar had the right to control the "hours of work to be performed" by municipal employees. It also stated that Belmar would "discuss any proposed layoff with the union, in order to explore all avenues and methods." In addition, Article 11 of the CNA provided that each of the covered employees would receive a 3.9% wage increase in 2005 and a 4% increase each year from 2006 through 2009.

Due to increased costs and declining revenues, Belmar was experiencing a significant budget crisis in 2009. Belmar officials requested that municipal employees accept wage concessions, and several employees agreed to a wage freeze. However, the CWA refused to relinquish the 4% wage increase that was effective January 1, 2009.

On August 3, 2009, Belmar submitted a temporary layoff plan to the Civil Service Commission (CSC) for approval. The plan provided for ten involuntary furlough days for all employees of the DPW during the period between October 6, 2009 and December 15, 2009. The CSC approved the plan on August 18, 2009.

CWA filed an unfair practice charge against Belmar with PERC on October 20, 2009. The charge alleged that the imposition of the furlough days constituted a repudiation of the parties CNA and that the employees were entitled to be reimbursed for "all losses suffered" as a result of Belmar's actions. Belmar denied the charge, and the parties cross-moved for summary judgment in February and March 2010.

On October 28, 2010, PERC determined that the matters in dispute were "indisputably negotiable" because they involved "fundamental terms of employment at the heart of the collective negotiation process: compensation and hours of work." Accordingly, PERC deferred the unfair practice charge to binding arbitration and retained jurisdiction as to any issues that were not resolved in arbitration.

THE MOUNT LAUREL LITIGATION (A-1453-10)

 

Mount Laurel and the American Federation of State, County and Municipal Employees, Council 71, South Jersey Public Employers (AFSCME), entered into a CNA that was effective from January 1, 2005, through December 31, 2008. The CNA provided salary increases for each year from 2005 through 2008. Article II of the CNA, entitled "Management Rights," stated that Mount Laurel had the right to institute layoffs "in the event of lack of work or funds or under conditions where continuation of work would be inefficient and non-productive." Additionally, Article VII stated that an employee's regular hours of work were not subject to change, "except as required under emergency conditions or agreed upon by both parties."

Mount Laurel was experiencing financial difficulties in 2009 due to increased costs, additional litigation expenses from numerous tax appeals and foreclosures, decreased state aid, and tax levy caps. On June 18, 2009, Mount Laurel representatives met with union representatives to request temporary salary and wage concessions. However, no agreement was reached.

On August 26, 2009, Mount Laurel submitted a temporary layoff plan to the CSC. Under the proposed plan, all Township employees, except police and emergency medical personnel, were to have eight involuntary furlough days between November 20, 2009 and June 18, 2010. The furlough days were expected to save Mount Laurel approximately $152,000. The CSC approved the plan on October 5, 2009.

On October 20, 2009, AFSCME filed an unfair practice charge with PERC against Mount Laurel. AFSCME alleged that the "unilateral reduction in the compensation and work year" of the employees it represented violated the New Jersey Employer-Employee Act (NJEERA), N.J.S.A. 34:13A-1 to -30, because Mount Laurel failed to negotiate the furlough days. The union sought an order directing "Mount Laurel to make employees whole for all losses suffered." Mount Laurel stated in its answer that the furlough plan was properly submitted to and approved by the CSC and that the CSC's regulations were "binding upon both employers and labor organizations."

AFSCME filed a motion for summary judgment with PERC in February 2010,and Mount Laurel responded with a cross-motion for summary judgment. On October 28, 2010, PERC issued a final agency decision. Even though the furlough plan had been approved by the CSC, PERC ruled that Mount Laurel could not "reduce the employees' workweek and pay through the means of the temporary layoff plan," because any reduction of work hours and compensation was subject to "the collective negotiations process." Accordingly, the unfair practice charges were deferred to binding arbitration and PERC retained jurisdiction.

THE KEYPORT LITIGATION (A-0581-10)

Keyport was a party to a CNA effective from January 1, 2008 through December 31, 2010, with the International Union of Operating Engineers, Local 68 (Local 68). Local 68 represents Keyport's clerical employees. Article 27 of the CNA provided employees with an increase in salary for years 2008, 2009 and 2010. Article 33 granted Keyport the management right to assign employees' schedules, and Article 5 provided that in the event of a layoff, Keyport would respect employees' seniority rights. Keyport was also required to "provide all bargaining unit employees with one of the health plans described in [the CNA]." In addition, Article 8 specified that the "work week for all bargaining unit employees shall be from Monday through Friday, and shall consist of five (5) consecutive seven and one-half (7 ) hour work days for a thirty-seven and one-half (37 ) hour work week."

Keyport officials met with union representatives on April 2, 2009, to discuss cost-saving measures that the Borough was considering to balance its budget. No agreement was reached.

On May 20, 2009, Keyport submitted a temporary layoff plan to the CSC, which was approved on May 22, 2009. The layoff plan reduced personnel expenses by converting three full-time clerical positions (two in the construction department and one in the office of the Registrar) into part-time positions. The three affected clerical employees were subsequently advised that their health insurance coverage would be eliminated because they were no longer full-time employees.

On August 25, 2009, Local 68 filed an Unfair Practice Charge with PERC alleging that Keyport violated the parties' CNA by failing to negotiate before it reduced the hours of the three employees. In addition, Local 68 sought to temporarily restrain Keyport from reducing the three employees' hours and canceling their health benefits.

On September 16, 2009, PERC issued an interlocutory determination that Keyport was permitted to reduce the employees' work hours, but it could not eliminate their health benefits. The interlocutory decision noted that the health benefits issue was appropriate for arbitration because the CNA did not distinguish between full-time and part-time employees.

After Keyport filed an answer to the union's unfair practice charge, the parties cross-moved for summary judgment. In a decision dated September 23, 2010, PERC found that Keyport violated the NJEERA when it reduced the work hours of the three employees without first engaging in negotiations with Local 68. Accordingly, PERC granted Local 68's motion for summary judgment and ordered Keyport "to immediately commence negotiations with Local 68 over the workweek reductions." In addition, PERC ruled that the health benefits issue could be submitted to arbitration.

Thus, PERC determined in each of these cases that the issues in dispute were negotiable. In A-1411-10 and A-1453-10, PERC ruled that the involuntary furlough days implemented by Belmar and Mount Laurel amounted to a reduction of the employees' salary, and should have been negotiated. In A-0581-10, PERC determined that the reduction in hours of three Keyport employees from full-time to part-time and the elimination of their health benefits should have been negotiated. On appeal, all three municipalities argue that they acted within their authority for reasons of economy and efficiency, and their managerial decisions were non-negotiable.

The NJEERA requires public employers to negotiate with majority representatives regarding terms and conditions of employment, N.J.S.A.34:13A-5.3, and it prohibits public employers from refusing to negotiate in good faith. N.J.S.A.34:13A-5.4(a). It further provides that PERC has "the power and duty, upon the request of any public employer or majority representative, to make a determination as to whether a matter in dispute is within the scope of collective negotiations." N.J.S.A.34:13A-5.4(d). PERC's decisions regarding the scope of collective negotiations are entitled to "substantial deference." N.J. Tpk. Auth. v. Am Fed'n of State, Cnty. & Mun. Emps., Council 73, 150 N.J.331, 352 (1997). It is well established that a reviewing court "should not disturb an administrative agency's determinations or findings unless there is a clear showing that (1) the agency did not follow the law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the decision was not supported by substantial evidence." In re Virtua-West Jersey Hosp. Voorhees, 194 N.J.413, 422 (2008).

The Civil Service Act (Act), N.J.S.A.11A:1-1 to 12-6, authorizes the CSC to "plan, evaluate, administer and implement personnel programs and policies in State government and political subdivisions" within civil service jurisdictions. N.J.S.A.11A:2-11(e). Pursuant to the Act, public employers may implement layoff actions for reasons of "economy, efficiency or other related reason." N.J.S.A.11A:8-1. Demotions for reasons of economy and efficiency are also considered layoff actions. N.J.A.C.4A:8-1.1.

Layoff plans must comply with the requirements of the Act and must be approved by the CSC. N.J.S.A.11A:8-1(a). Prior to approval, public employers are required to provide the CSC with the following information: (1) the reasons for the layoff; (2) the date of the layoff; (3) copies of the layoff notice; (4) the names, status, and titles of the affected employees; (5) the vacant positions in the layoff units; (6) an explanation of alternative and pre-layoff actions that were either taken or considered; (7) a summary of consultations with affected negotiations representatives; and (8) the names and addresses of the affected negotiations representatives. N.J.A.C.4A:8-1.4. Employees affected by a layoff action have a right to appeal to the CSC. N.J.A.C.4A:8-2.6.

N.J.A.C.4A:8-1.1A, an emergency regulation, which permitted public employers to implement temporary layoffs for economy and efficiency. 41 N.J.R.1535-37 (April 6, 2009). A temporary layoff was defined "as the closure of an entire layoff unit for one or more work days over a defined period or a staggered layoff of each employee in a layoff unit for one or more work days over a defined period." N.J.A.C.4A:8-1.1A(a). It was anticipated that the emergency regulation would minimize the disruption of permanent layoffs, and provide public employers with an equitable means of "reducing the costs of government in the face of sharply declining revenues." 41 N.J.R.1536 (April 6, 2009).

The emergency regulation was immediately challenged. In an unpublished decision, we upheld the CSC's decision to promulgate the emergency rule. Accordingly, we affirmed the emergency regulation except for "staggered layoffs," which are not involved in these appeals.

The emergency regulation was repealed on December 21, 2009. 41 N.J.R.4701 (December 21, 2009). However, all three of the layoff plans at issue here were approved by the CSC and implemented by the municipalities while the emergency regulation was in effect. Thus, the central issue on appeal is whether the public employers' actions, which were effectuated in compliance with the Civil Service Act, were nevertheless subject to negotiation under the NJEERA.

"Questions concerning whether subjects are mandatorily negotiable should be made on a case-by-case basis." Troy v. Rutgers, 168 N.J.354, 383 (2001) (citing Jersey City v. Jersey City Police Benevolent Assoc., 154 N.J.555, 574 (1998)). The Court has provided the following three-pronged test for determining whether an issue is negotiable:

[A] subject is negotiable between public employers and employees when (1) the item intimately and directly affects the work and welfare of public employees; (2) the subject has not been fully or partially preempted by statute or regulation; and (3) a negotiated agreement would not significantly interfere with the determination of governmental policy. To decide whether a negotiated agreement would significantly interfere with the determination of governmental policy, it is necessary to balance the interests of the public employees and the public employer. When the dominant concern is the government's managerial prerogative to determine policy, a subject may not be included in collective negotiations even though it may intimately affect employees' working conditions.

 

[In re Local 195, IFPTE, 88 N.J. 393, 404-05 (1982).]

 

It is clear that the unions satisfied the first prong of the negotiability test because the decisions to reduce work hours and compensation intimately and directly affected the employees' welfare. Nevertheless, it is equally clear the unions did not satisfy the second and third prongs of the test because the municipalities' actions complied with the Civil Service Act and its regulations, and the decisions to furlough and demote employees were non-negotiable policy determinations. See Kearny PBA Local No. 21 v. Town of Kearny, 81 N.J. 208, 215 (1979) ("[P]rerogatives of management, particularly those involving governmental policy making, cannot be bargained away to be determined by an arbitrator."); see also Morris Cnty. Sheriff's Office v. Morris Cnty. Policemen's Benev. Ass'n, Local 298, 418 N.J. Super. 64, 75-76 (App. Div. 2011) ("When the dominant concern is the government's managerial prerogative to determine policy, a subject may not be included in collective negotiations even though it may intimately affect employees' working conditions.").

Notwithstanding our respect for PERC's knowledge and expertise, we conclude that the decisions by Belmar and Mount Laurel to impose unpaid furlough days and the decision by Keyport to reduce the work hours of three clerical employees were not negotiable. We agree, however, that the health benefits issue in the Keyport case (which involves an interpretation of the parties' CNA) should proceed to arbitration.

In view of the foregoing, the decisions in the Belmar and Mount Laurel cases are reversed, and the decision in the Keyport case is reversed in part and affirmed in part.

1 We have been advised that this matter has been settled.