On appeal from the Public Employment Relations Commission.
Fritz, Gaulkin and Long. The opinion of the court was delivered by Long, J.A.D.
On this appeal, the City of Elizabeth (city) challenges a decision of the Public Employment Relations Commission (commission) which held that although the establishment of a sick leave verification policy is a non-negotiable managerial prerogative, the question of the cost of such verification is severable and subject to mandatory negotiation.
The case arose as follows: After the expiration of their 1982-83 agreement, the city and the Elizabeth Fire Officers Association (association) began negotiating for a successor contract.*fn1 In September 1983, the association filed a petition to initiate compulsory interest arbitration proceedings regarding the terms of the agreement. In October 1983, the city filed a petition for a scope of negotiations determination. More particularly, the city sought a declaration that the following underscored language from a previous contract with the association was outside the ambit of negotiations: "[t]he present sick leave plan pertaining to non-occupational injuries and illness shall continue in effect for the duration of this Agreement. No sick reports, however, shall be required for the first two (2) days." The association argued that sick leave verification is primarily an economic issue because it involves the cost of a physician's certificate and is therefore a term or condition of employment subject to negotiation. The city rejoined that management's need to verify sick leave use through physician's certificates outweighs any possible economic impact on employees and constitutes the kind of a governmental prerogative exempt from mandatory negotiation.*fn2
The commission agreed that the city was not obligated to negotiate the institution of a sick leave verification policy but held that the question of who pays for the doctor's visits is a severable, mandatorily negotiable issue. No challenge to the right of the city to institute the verification policy is advanced on this appeal. Only the negotiability of the economic question of who pays for verification is at issue here.
It is well established that a scope of negotiations determination such as this is a classic issue for the commission's primary jurisdiction (N.J.S.A. 34:13A-5.4(d)) and expertise, and that the commission's determination will be upheld unless it is contrary to law or arbitrary, unreasonable and capricious. State v. State Supervisory Employees Ass'n, 78 N.J. 54, 83-84 (1978); Plumbers & Steamfitters v. Woodbridge Bd. of Ed., 159 N.J. Super. 83, 86 (App.Div.1978). Applying these standards, we are satisfied that the city's claim is without merit and that the commission's decision should be affirmed.
In In re IFPTE Local 195 v. State, 88 N.J. 393 (1982), the Supreme Court established a three pronged test for determining a scope of negotiations issue:
[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. [88 N.J. at 404]
See also Bd. of Ed. of Woodstown-Pilesgrove v. Woodstown-Pilesgrove Ed. Ass'n, 81 N.J. 582 (1980); Ridgefield Park Ed. Ass'n v. Ridgefield Park Bd. of Ed., 78 N.J. 144 (1978); State v. State Supervisory Employees Ass'n, supra. In this case the city has properly conceded the first two elements established in Local 195, namely, that the issue intimately affects
the work and welfare of the employees and that negotiation is not preempted by statute or regulation. It is the third test with which the city undergirds its position here, advancing the argument that negotiation of the economics of a sick leave verification program would "significantly interfere with governmental policy."
We do not agree. It is clear that the finding of a connection between a managerial prerogative and an issue sought to be negotiated does not automatically bar negotiability. Indeed nearly every determination by management in the public sector will, in some measure, implicate the governmental policy making function. It is for this reason that in Local 195 the Supreme Court required the showing of a "significant" interference with managerial prerogative in order ...