On certification to the Public Employment Relations Commission.
For affirmance in part and reversal in part -- Chief Justice Hughes, Justices Sullivan, Pashman, Clifford, Schreiber and Handler and Judge Conford. Opposed -- None. The opinion of the court was delivered by Pashman, J.
These cases involve the question of the permissible scope of collective negotiations concerning the terms and conditions of public employment in this State. At issue is the correctness of the decisions of the Public Employment Relations Commission (PERC) in two scope-of-negotiations determinations rendered pursuant to the New Jersey Employer-Employee Relations Act, L. 1968, c. 303, as amended by L. 1974, c. 123, N.J.S.A. 34:13A-1 et seq. (the Act). Because of the public importance of these questions, both appeals were directly certified by this Court and have also been consolidated. The real point of dispute is the question of the extent, if any, to which the 1974 amendment to N.J.S.A. 34:13A:8.1, L. 1974, c. 123, § 6, expanded the scope of collective negotiation. In short, we must determine whether the amendment signaled an intent by the Legislature to permit negotiation and agreement to supplant Civil Service statutes and regulations. N.J.S.A. 11:1-1 et seq.; N.J.A.C. 4:1-1 et seq. We must also determine whether negotiation of any of the proposals made by the employee organizations is precluded by N.J. Const. (1947), Art. VII, § 1, par. 2, as being inimical to the merit and fitness principles which govern the hiring and promotion of public employees pursuant to that constitutional provision.
State v. Local 195, IFPTE and Local 518 SEIU
The collective negotiations agreements between the State of New Jersey and Local 195 of the International Federation of Professional and Technical Engineers (IFPTE) and Local 518 of the Service Employees International Union (SEIU) were scheduled to expire on June 30, 1975. During the term of these agreements, large-scale layoffs of employees represented by the Locals had taken place in the Department of Transportation. The Locals were concerned at the lack of job security for the employees and thus sought to negotiate
their seniority rights with regard to layoffs, recall, bumping and reemployment rights. The State refused to negotiate on these matters, contending that they involved managerial policies and were controlled by the Civil Service statutes.
On October 28, 1975 the parties filed a joint petition for a scope-of-negotiations determination with PERC pursuant to N.J.S.A. 34:13A-5.4(d). See N.J.A.C. 19:13-1.1 et seq. The Locals and the State were in general agreement that seniority rights as they related to layoff, recall, bumping and reemployment, constituted terms and conditions of employment. The State argued, however, that regardless of whether the Locals' proposals concerned terms and conditions of employment, they were not subject to negotiation since they concerned managerial responsibilities delineated in the Civil Service statutes, which enactments were said to implement the constitutional "merit and fitness" system embodied in N.J. Const. (1947), Art. VII, § 1, par. 2:
Appointments and promotions in Civil Service of the State, and of such political subdivisions as may be provided by law, shall be made according to merit and fitness to be ascertained, as far as practicable by examination, which as far as practicable, shall be competitive.
The State argued in the alternative that even if not preempted by statute, negotiability of the proposals was still precluded since they concerned "managerial prerogatives" on matters of basic personnel policy.
The fundamental dispute before PERC centered around the various interpretations to be given to the amendments to the Act contained in L. 1974, c. 123, particularly N.J.S.A. 34:13A-8.1. In the original Act, L. 1968, c. 303, this section effectively limited the scope of collective negotiations by clearly stating that no provision of the Act could "annul or modify any statute or statutes of this State." In Dunellen Bd. of Ed. v. Dunellen Ed. Ass'n, 64 N.J. 17, 31 (1973), we held that the Legislature's use of this strong qualifying language "clearly precluded any expansive approach" to the
negotiability of the terms and conditions of public employment. The 1974 amendment to that section, L. 1974, c. 123, § 6, changed the wording of N.J.S.A. 34:13A-8.1 to its present form, "nor shall any provision hereof annul or modify any pension statute or statutes of this State."
The Locals argued that the 1974 amendment was a legislative response to Dunellen, supra, and was intended to broaden the scope of mandatory negotiation to include all terms and conditions of public employment except those covered by pension statutes. The State contended that the amendment's only effect was to make the pension laws sacrosanct and fully immune from any negotiated modifications. The State did not believe that the amendments had any effect on the Dunellen rule, which precluded negotiation on matters of governmental policy or on those terms and conditions of employment covered by any statutory scheme.
PERC did not wholly accept either of these viewpoints. It held that the 1974 amendment to N.J.S.A. 34:13A-8.1 was not intended "to permit the parties, under any circumstances -- even by mutual agreement -- to annul or modify existing statutes relative to terms and conditions of employment." In re Local 195, IFPTE and Local 518, SEIU and State of New Jersey, PERC No. 77-57, 3 NJPER 118, 121 (1977). However, PERC found that the amendments did work a limited expansion of the scope of collective negotiations:
Thus, the change in N.J.S.A. 34:13A-8.1 means that general statutes giving authority to employers are not to be read as shields to the employer's obligation to negotiate regarding terms and conditions of employment, but specific statutes governing terms and conditions of employment cannot be abrogated by collective negotiations.
The parties herein therefore are required to negotiate seniority as it relates to layoffs, recall, bumping and reemployment but in doing so must not exceed maximums or fall below minimums provided by statute or in any other manner agree to contravene specific statutory requirements as provided for in Title 11 or any other Title.
PERC also held that the constitutionally-required merit and fitness system, N.J. Const. (1947), Art. VII, § 1, para. 2, supra, applies only to appointments and promotions. Thus, in its view, negotiations on layoffs and reemployment would not contravene the constitutional mandate. PERC further concluded that even if that constitutional provision was applicable, increased seniority rights would not be inconsistent with merit and fitness principles.
Finally, PERC held that N.J.S.A. 34:13A-5.3, which preserves the rights of public employees under the Civil Service laws and regulations, related solely to the employees' procdural rights of appeal to the Civil Service Commission. That section was not construed to be a bar to negotiations.
PERC's order required the State to negotiate in good faith concerning seniority as it relates to layoffs, recall, bumping and reemployment rights. Both the State and the Locals appealed this determination to the Appellate Division. Thereafter, the State filed a motion for direct certification and for consolidation with the then pending consolidated appeals in Englewood Teachers Ass'n v. Englewood Ed. Ass'n, 75 N.J. 525 (1978), and Ridgefield Park Ed. Ass'n v. Ridgefield Park Bd. of Ed., 78 N.J. 144 (1978). The motion for direct certification was granted and that for consolidation denied. 76 N.J. 231 (1978).
State v. State Supervisory Employees Association
The other appeal before this Court concerns many matters whose negotiability is in dispute. During collective negotiations between the State Supervisory Employees Association [the Association] and the State of New Jersey, the Association submitted the following negotiating proposals:
1. An employee be eligible for examinations to which he would otherwise be eligible had he not been demoted or involuntarily transferred during two years following the demotion or involuntary transfer.
2. The Department of Civil Service recognizes total State service as the single criteria for layoff.
3. Each employee to be affected by a layoff shall be given individually a forty-five day notice in advance of such action which notice shall specify the effective date of the layoff action.
4. The State negotiate in good faith on the elements of the Civil Service promotional and open competitive examination process:
a. Employees shall be appointed in the order in which they are listed on a promotional listing, veterans' preference excepted.
b. No listing of employees shall be considered incomplete by virtue of there being fewer than three employees on the list.
c. Provisional appointments shall be made from permanent employees in the next lower title in the class series or, if there is no eligible employee there, from the next lower title in the class series.
d. Promotional examinations must be administered within ninety (90) days of the provisional appointment of an employee.
e. The scope of eligibility for a promotional examination shall be extended by stages to the entire State, if necessary, before the Department of Civil Service shall determine that an open competitive examination is appropriate.
5. Employees in variant titles shall be considered to be in the title appropriate to the variation for purposes of layoff actions.
6. The Department of Civil Service shall publish the total score and all the elements of the total score for all promotional examinations.
7. The State shall eliminate any employee rating other than "satisfactory" or "unsatisfactory."
The State refused to negotiate these proposals. It contended that such matters concern fundamental managerial policies entrusted by the Legislature to the Civil Service Commission.
The parties filed a joint petition with PERC for a scope-of-negotiations determination. PERC noted that the State's position was essentially the same as that it had advanced in Local 195, IFPTE and Local 518, SEIU, supra, and that the Association's position was closely aligned with that of the Locals in the other case. PERC reaffirmed its decision in the earlier case and held that "[t]he instant parties will be required to negotiate regarding terms and conditions of employment within the framework of the lawful authority of the public employer." State Supervisory Employees Association and State of New Jersey, PERC No. 77-67, 3 NJPER 138, 141 (1977). However, PERC made it clear that while
negotiations may include subjects within the statutory authority of the public employer, the parties may not agree to contravene or modify the terms of those statutes. Id.
PERC held that all of the Association's proposals, except 4(d) and 7, involved terms and conditions of employment and were thus mandatory subjects of negotiation. Since PERC found that 4(d) and 7 did not involve terms and conditions of employment, those items were not held to be mandatorily negotiable. However, PERC added that the parties "may" negotiate these proposals if they wish, but that the Association could not insist on negotiating those two items to the point of impasse.*fn1
The State was ordered to negotiate those proposals which PERC had held to be mandatorily negotiable. The State appealed this determination to the Appellate Division and subsequently filed a motion for direct certification of the appeal and consolidation with the appeal in State v. Local 195, IFPTE and Local 518, SEIU. At the same time, the State moved before this Court to have the above appeals consolidated with the appeals in Englewood Teachers Ass'n v. Englewood Ed. Ass'n, supra, and Ridgefield Park Ed. Ass'n v. Ridgefield Park Bd. of Ed., supra.
This Court granted the State's motion for direct certification, but denied its motion for consolidation. 76 N.J. 231 (1978).
The 1974 Amendments to the Act
The passage of the New Jersey Employer-Employee Relations Act, L. 1968, c. 303, represented a milestone in public employment labor relations in this State. The Legislature
created a Public Employment Relations Commission to "[m]ake policy and establish rules and regulations concerning employer-employee relations in public employment relating to dispute settlement, grievance procedures and administration, including enforcement of statutory provisions concerning representative elections and related matters." N.J.S.A. 34:13A-5.2. Public employees were extended rights of collective representation more nearly approximating those enjoyed by private sector employees than had been the case when their sole source of organizational rights was N.J. Const. (1947), Art. I, para. 19.
The scope of collective negotiation, however, was limited by the fact that the Act, by its express terms, authorized such negotiation only with respect to the terms and conditions of public employment. N.J.S.A. 34:13A-5.3. The Act did not provide a definition of terms and conditions of employment. Moreover, the original version of N.J.S.A. 34:13A-8.1 further restricted the reach of collective negotiation:
Nothing in this act shall be construed to annul or modify, or to preclude the renewal or continuation of any agreement during its current term heretofore entered into between any public employer and any employee organization, nor shall any provision hereof annul or modify any statute or statutes of this state. (emphasis added)
This Court first confronted the issue of the permissible scope of collective negotiation in Dunellen Bd. of Ed. v. Dunellen Ed. Ass'n, supra, where we held that
The Dunellen definition of the scope of mandatory negotiability was further refined in Bd. of Ed. of Englewood v.
Englewood Teachers, 64 N.J. 1, 7 (1973), where we held that
Thus, negotiable terms and conditions of employment are those matters which intimately and directly affect the work and welfare of public employees and on which negotiated agreement would not significantly interfere with the exercise of inherent management prerogatives pertaining to the determination of governmental policy. See Burlington Cty. Col. Fac. Ass'n v. Bd. of Trustees, 64 N.J. 10, 14 (1973); Lullo v. Intern. Ass'n of Fire Fighters, 55 N.J. 409, 440 (1970). In Englewood, supra, we indicated that working hours, compensation, physical arrangements and facilities and customary fringe benefits were the essential components of terms and conditions of employment. 64 N.J. at 6-7.
In Dunellen, we contemplated the existence of two categories of negotiating matters -- those mandatorily negotiable as terms and conditions of employment and those which were left to managerial discretion and were thus non-negotiable. 64 N.J. at 25. A further limitation on the negotiability of matters which qualified as terms and conditions of employment under Dunellen was the wording of the last clause in N.J.S.A. 34:13A-8.1. Even proposals concerning terms and conditions of employment were not negotiable under the Act if agreement thereon would contravene any other statute.
Employee groups were greatly dissatisfied with these limitations on negotiability. That dissatisfaction manifested itself in pressure upon the Legislature to expand the area of collective negotiation created by the Act. In 1974 the Legislature amended the Act. The two provisions with which
we are primarily concerned are N.J.S.A. 34:13A-5.3 and N.J.S.A. 34:13A-8.1. The former section had the following sentence added to it:
Notwithstanding any procedures for the resolution of disputes, controversies or grievances established by any other statute, grievance procedures established by agreement between the public employer and the representative organization shall be utilized for any dispute covered by the terms of such agreement.
This particular language was from the initial amendment proposal of April 16, 1974, S. 1087, and was passed unchanged. However, the proposed amendment to N.J.S.A. 34:13A-8.1 underwent several changes. The first version of S. 1087 proposed deletion of the words "nor shall any provision hereof annul or modify any statute or statutes of the State" and would have replaced it with:
Nothing in this act shall be construed to annul the duty, responsibility or authority vested by statute in any public employer or public body except that the impact on terms and conditions of employment of a public employer's or a public body's decisions in the exercise of that duty, responsibility or authority shall be within the scope of collective negotiations.
[S. 1087, p. 9, lines 8-13]
The Sponsor's Statement to S. 1087 indicated that the purpose of this section, § 6, was to "clarify the scope of negotiations" in response to Dunellen's request for such a legislative statement.*fn2
The Sponsors' Statement regarding § 4 of S. 1087, which amended N.J.S.A. 34:13A-5.3, is theoretically valuable to this Court in interpreting the 1974 amendment to that section. As we held in Deaney v. Linen Thread Co., 19 N.J. 578, 584-585 (1955), where the Court adopted Justice Jacobs' view as stated in his concurrence in Board of National Missions v. Neeld, 9 N.J. 349, 361 (1952):
The introducer's statement clearly constitutes relevant evidence on any proper issue as to the legislative purpose, meaning or intent; it sets forth the interpretation of the draftsman or sponsor of the legislation, is circulated amongst his fellow members of the Senate or Assembly, as the case may be, and becomes a matter of record available for inspection by all, then and thereafter. It may be very complete and embody a fully documented narrative of purpose entitled to substantial consideration. See e.g., Assembly No. 15 introduced on March 21, 1952, and bearing a statement which is in form comparable to a detailed committee report. On the other hand it may be inadequate and perhaps misleading and entitled to little consideration.
Since the Legislature passed unchanged the sponsors' version of § 4, we may assume that it ...