On appeal from Final Administrative Determinations of the Public Employment Commission and the Merit System Board.
Approved for Publication December 1, 1995.
Before Judges Shebell, Stern and Newman. The opinion of the court was delivered by Shebell, P.j.a.d.
The opinion of the court was delivered by: Shebell
The opinion of the court was delivered by SHEBELL, P.J.A.D.
On January 23, 1995, Governor Christine Todd Whitman, in her Budget in Brief, outlined a plan to save 6.7 million dollars by reducing the workweek of approximately 1/2 or 1,800 of the Department of Environmental Protection's (DEP or Department) employees by eliminating their 40 hour a week positions and moving them into 35 hour a week positions instead. The savings would be derived from employee pay reductions in accordance with N.J.A.C. 4A:3-4.2(b) and N.J.A.C. 4A:3-4.7. Employees would not lose any benefits or seniority rights, and would receive a higher hourly rate of pay for the hours actually worked, but not offsetting the loss caused by the reduced number of hours. Notwithstanding the reduction in hours, the governor maintained that DEP would still provide the same level of service. If the workweek were not reduced, it was estimated that an additional 158 DEP employees would need to be laid off to stay within the department's budget, thereby adversely affecting DEP's mission.
On January 25, the DEP informed the employees' union, Communication Workers of America (CWA), that the workweek reduction would take effect July 1, 1995. The CWA opposed the reduction and demanded that the State negotiate this issue as part of the collective bargaining for a new contract to replace the 1992-1995 agreement. The State refused to negotiate, maintaining that the issue is not negotiable.
On February 6, 1995 CWA filed an unfair practice charge with the Public Employment Relations Commission (PERC) alleging that DEP's announced workweek reduction had had a "chilling effect" on upcoming negotiations, and requested interim relief that the State rescind the announcement. PERC issued an Order to Show Cause regarding the union's request for interlocutory relief. The State opposed the relief, asserting that the union alleged a failure to negotiate a matter that was not mandatorily negotiable, as it constituted "non-negotiable budget policy." The State contended, in part, that the reduction of the workweek was part of the Governor's program to reengineer State government, and one of many "cost-saving initiatives" to make government "smarter, leaner and more efficient." In the judgment of DEP management, it was "preferable" to utilize the layoff option of replacement of 40 hour positions with 35 hour positions in order to minimize any adverse impact upon DEP operations.
On April 6, 1995 PERC denied the requested injunctive relief without prejudice, reasoning that
In the absence of a demonstrated refusal to address these issues through collective negotiations, it would be inappropriate to review the merits of the parties' expressed legal positions....
On April 21, 1995 CWA again demanded that the reduction of hours be negotiated. Nonetheless, on April 24, 1995, DEP filed a layoff plan with the Department of Personnel (DOP) containing the information required by N.J.A.C. 4A:8-1.4. On May 7, 1995, CWA renewed its application for interim relief before PERC and filed a petition for a scope of negotiations determination.
On May 15, 1995, the Merit System Board (MSB) of the DOP, which regulates compensation and workweeks, see N.J.A.C. 4A:3-4.1 et seq., amended N.J.A.C. 4A:8-1.1 to extend the employer's statutory and managerial power to lay off employees to include demotions in the form of reductions in hours, thereby subjecting such reductions to the full panoply of Civil Service requirements, including DOP review and approval of any layoff plan including a reduction in hours.
On May 18, 1995, DOP approved the DEP layoff/workweek reduction plan, and on May 22, 1995, the DEP responded to the union's renewed application for relief. It's brief noted that DOP approval of the layoff plan was itself a determination by DOP that the personnel action which the union argues is a negotiable change in work hours is, instead, a layoff. The State argued that the determination of DOP was not reviewable by PERC because PERC's authority did not extend to the review of a determination of an independent regulatory body vested with the express jurisdiction to devise layoff rules. The State further noted that the union's emphasis of prior decisions of PERC concerning local public employers was misplaced because unlike local service, State service is subject to extensive regulations.
On June 16, 1995, PERC issued its final agency determination regarding the scope of negotiations. The commission found the negotiations preempted by a vote of 4 to 2. The commission recognized that it is well established through case law that an employer has a duty to negotiate before implementing a reduction in its employees' workday, workweek or workyear. Citing Local 195, I.F.P.T.E. v. State, 88 N.J. 393, 404-05, 443 A.2d 187 (1982), PERC stated that in ordinary circumstances it would have found the employer's decision to cut the workweek to be mandatorily negotiable. In ultimately holding to the contrary, it stated:
However, an additional criteria, and unique factor in this case is that it involves State service, where the Merit System Board (MSB) regulates compensation and workweeks, see N.J.A.C. 4A:3-4.1 et seq., and where the MSB has recently adopted an amended regulation extending the employer's statutory and managerial power to lay off employees to include demotions in the form of reductions in hours. That extension subjects such reductions to the full panoply of Civil Service requirements, including Department of Personnel ("DOP") review and approval of any layoff plan including a reduction in hours. N.J.A.C. 4A:8-1.1 provides:
(a) An appointing authority may institute layoff actions for economy, efficiency or other related reasons.
1. Demotions for economy, efficiency or other related reasons shall be considered layoff actions and shall be subject to the requirements of this chapter.
(b) The Commissioner. . .shall determine seniority and designate lateral, demotional and special reemployment rights for all career service titles prior to the effective date of the layoff and ...