On certification to the Superior Court, Appellate Division, whose opinion is reported at 185 N.J. Super. 269 (1982).
For affirmance -- Chief Justice Wilentz, and Justices Clifford, Schreiber, Handler, Pollock, O'Hern and Garibaldi. For reversal -- None. The opinion of the Court was delivered by O'Hern, J. Handler, J., concurring in the result. Handler, J., concurring.
This appeal requires us to determine whether a teacher's claim of reverse discrimination in hiring may be submitted to binding arbitration under the terms of a collective negotiations agreement. We hold that the public employer's decision on hiring implicates an exercise of a governmental function that is not subject to binding arbitration, although it is subject to review by the Division on Civil Rights. We affirm the judgment below.
The Teaneck Teachers Association filed a grievance on behalf of John A. Zubiaurre, a teacher, alleging racial discrimination in the Teaneck Board of Education's failure to appoint Zubiaurre to the position of Assistant Basketball Coach.*fn1 He is white and alleges that he was not appointed for that reason. The grievance was not resolved in the lower steps of the parties' collective negotiations grievance procedure. The Association sought arbitration. At a hearing before the arbitrator, the Board raised the issue of arbitrability. The arbitrator found the issue arbitrable, relying upon Article XXVI, Section A, paragraph 2 of the parties' agreement, which recites that in discharging its functions, the Board shall be "(subject, however, to the provisions of the applicable statutes and rules and regulations of the State Board of Education in such cases made and provided) and all
applicable laws and decisions of any New Jersey State or applicable Federal Agency regarding these matters."
The Board challenged the arbitrability of the issue in a scope of negotiations proceeding before the Public Employment Relations Commission (PERC). PERC ruled that the disputed issue was based upon allegations of racial discrimination that were within the scope of collective negotiations and could be submitted to arbitration. On the Board's appeal, the Appellate Division ruled that the issue of racial discrimination was preempted by the Law Against Discrimination, N.J.S.A. 10:5-1 to -38, and therefore was not subject to collective negotiations. 185 N.J. Super. 269, 276-77 (1982). Furthermore, "negotiations on hiring an assistant basketball coach would significantly interfere with [the employer's] inherent managerial prerogatives." Id. at 277. It concluded that any nonnegotiable subject is nonarbitrable, but the employee could pursue his grievance before another tribunal. It reversed the ruling of PERC but remanded the cause to permit transfer if requested to the Division on Civil Rights, the Superior Court, Law Division, or the Commissioner of Education, Division of Controversies and Disputes. Id. at 278-79. We granted the Association's petition for certification. 91 N.J. 569 (1982).
In Thornton v. Potamkin Chevrolet, 94 N.J. 1 (1983), we reviewed the relationship between the laws against discrimination and arbitration of labor disputes in the private sector. Arbitration of labor disputes in public sector employment presents additional considerations. "We have heretofore recognized that what may be submitted to binding arbitration in the public sector is circumscribed. Unlike the private sector, prerogatives of management, particularly those involving governmental policy making, cannot be bargained away to be determined by an arbitrator." Kearny PBA Local # 21 v. Kearny, 81 N.J. 208, 215 (1979).
The scope of arbitrability is generally coextensive with the scope of negotiability. Ridgefield Park Educ. Ass'n v. Ridgefield Park Bd. of Educ., 78 N.J. 144, 160 (1978). Thus the tests for each are nearly the same. Therefore we begin our analysis with negotiability.
New Jersey has only two categories of subjects of public employment negotiation: "mandatorily negotiable terms and conditions of employment" and "non-negotiable matters of governmental policy." In re IFPTE Local 195 v. State, 88 N.J. 393, 402 (1982). In determining those issues that cannot be bargained away, we apply the test of negotiability.
[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. [ Id. at 404].
The parties concede that the issue intimately and directly affects the work and welfare of public employees. The issues are whether the State's Law Against Discrimination preempts negotiation on the subject and whether arbitration of the discrimination issue would 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. Woodstown-Pilesgrove Bd. of Educ. v. Woodstown-Pilesgrove Educ. Ass'n, 81 N.J. 582, 591 (1980); see also Bethlehem Tp. Bd. of Educ. v. Bethlehem Tp. Educ. Ass'n, 91 N.J. 38 (1982); Council of N.J. State College Locals v. State Bd. of Higher Educ., 91 N.J. 18 (1982).
That the State's Law Against Discrimination sets statutory terms and conditions of employment does ...