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town-crier_facebookOn August 2, 2017, the New Jersey Supreme Court issued its opinion on, In the Matter of County of Atlantic; In the Matter of Township of Bridgewater (077447) (A-98/99/100-15), a case in which the League participated in as amicus.  This case deals with collective negotiation agreements (“CNA”) and more specifically the continuation of certain contractual terms within the CNA after the expiration of the agreement under the dynamic status quo doctrine.

To better understand the issue and its impact a short explanation of the dynamic status quo doctrine and its implications on CNA’s may be needed.  The dynamic status quo doctrine comes into play when a public employer’s CNA with an employee group has expired.  The doctrine holds that the employer cannot unilaterally alter the terms and conditions of employment of the old CNA even after its expiration, while negotiations are ongoing for a new CNA.  In other words, things would operate under the status quo, hence the name.  This doctrine was created through Public Employment Relation Commission (“PERC”) rulings and meant that if any party, during negotiations for a new CNA, attempted to alter any terms and conditions of employment under an expired CNA then that party would be committing an unfair labor practice.

The practical reasoning for the doctrine is that it would keep negotiations fair by not putting added pressures on either party to come to an agreement.  When the doctrine was first developed it made sense and worked well for all parties at the negotiation table.  However, substantial legislative and labor practice changes since the development of the doctrine put its practicality into question and may actually be causing an imbalance in negotiations.

This recent case involved incremental pay increase during a period of negotiation between an expired CNA and a new one.  The local governments involved did not want to continue to make the incremental increases in pay to their law enforcement personnel during this time.  But the unions for those personnel argued that based on the dynamic status quo doctrine, the local governments were required to follow the incremental pay increases as scheduled in the expired CNA.

The case began with PERC’s decision which found that the dynamic status quo doctrine was impractical and burdensome in light of economic conditions and legislative changes since the recession.  Among those legislative changes considered by PERC were the 2% Property Tax Levy Cap and the 2% Interest Arbitration Cap.  Deviating from the status quo doctrine, PERC ruled that the local governments did not need to honor the step increment pay increases as outlined in the expiring CNA during negotiations for a new CNA.

The unions then appealed PERC’s decision to the courts and the Appellate Division determined that PERC could not abandon the dynamic status quo doctrine, which it had adopted years ago as an act of policymaking.  Additionally, the Appellate Division found that neither the property tax cap nor the interest arbitration cap preempted the status quo doctrine, nor did it govern negotiated contracts.  The Appellate Division thus overruled the PERC decisions and found that, because of the status quo doctrine, the local governments must continue to honor the incremental pay increases as found in the expired CNA.

After the Appellate Division’s ruling, the local governments involved appealed the decision to the NJ Supreme Court.  The Court agreed with the Appellate Division judgment that the local governments should have made the incremental pay increases as outlined in the expired CNA during the negotiation period, but did not make their judgment based on the dynamic status quo doctrine.  Instead, the Court relied on contract theory to determine that the local governments should have made the incremental pay increase and thus avoided addressing the issue of PERC’s application of the dynamic status quo doctrine.

The Court’s reliance on contract theory to reach the outcome leaves the use of the dynamic status quo doctrine still in question.  As the Court clarified, salary step increments are a mandatorily negotiable term and condition of employment and suggested that “parties would be wise to include explicit language indicating whether a salary guide will continue beyond the contract’s expiration date.”  So, while it may be too late for those municipalities with current CNAs which contain such language this issue should be remembered when negotiating future contracts.

By failing to address the issue surrounding the dynamic status quo doctrine, the question remains whether or not incremental pay increases must continue during the negotiation period for contracts which do not explicitly state that the terms and conditions of the expired CNA will continue.  This perhaps is an issue which will be taken up in future cases and could potentially be the death knell for the dynamic status quo doctrine.

Contact:  Frank Marshall, Esq., League Staff Attorney, fmarshall@njslom.org or 609-695-3481 x 137.

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