On appeal from the Final Decision of the Public Employment Relations Commission, PD-2003-1.
Before Judges Fall, Parrillo and Hoens.
The opinion of the court was delivered by: Parrillo, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
At issue is the constitutionality of a recent amendment to the New Jersey Employer-Employee Relations Act (EERA), N.J.S.A. 34:13A-1 to -5.9, entitling majority union representatives to have representation or"agency" fees deducted from the paychecks of non-members provided certain statutory conditions are met. L. 2002, c. 46, § 1, effective August 1, 2002. Before the law was amended, public employers were required to negotiate over proposals to deduct representation fees, but a union could not obtain fees without the employer's agreement. N.J.S.A. 34:13A-5.5 and -5.6. In this case, CWA Local 1034 (CWA), the majority representative of a negotiations unit of Hunterdon County's (County) non-supervisory employees, filed with the Public Employment Relations Commission (PERC) the first petition for agency fees under the amendment, N.J.S.A. 34:13A-5.5(a). This petition was filed on August 22, 2002, during the current term of the contract that had been negotiated before the effective date of the amendatory legislation. After appropriate investigation to determine whether the statutory conditions had been satisfied, PERC ordered the County to immediately institute a payroll deduction of an agency fee from the wages of non-member county employees in the negotiations unit. The County now appeals this order, challenging both the constitutionality of the amendment on First Amendment and other grounds, and the jurisdiction of PERC in this particular instance. We affirm.
Some background is in order. EERA was enacted in 1968, L. 1968, c. 303, to foster the prevention and prompt settlement of labor disputes in the public and private sectors. N.J.S.A. 34:13A-2. As originally enacted, EERA authorized public employee unions and required that they negotiate for all employees in the bargaining unit, regardless of union membership status. N.J.S.A. 34:13A-5.3. Thus, the right of exclusive representation was inextricably linked to the duty of fair representation. By the same token,"the Act afforded the bargaining unit's non-union public employees substantial benefits from the majority representative, without any cost obligation." In re Boonton Bd. of Ed., 99 N.J. 523, 528 (1985), cert. denied sub nom., Kramer v. Public Employment Relations Comm'n, 475 U.S. 1072, 106 S.Ct. 1388, 89 L.Ed. 2d 613 (1986). See also New Jersey Turnpike Employees' Union v. New Jersey Turnpike Auth., 64 N.J. 579 (1974), aff'g per curiam 123 N.J. Super. 461 (App. Div. 1973).
In an effort to curtail the"free ride" enjoyed by non- union members of the bargaining unit who received the benefit of services performed by the majority representative without sharing in the costs incurred, the Legislature amended the EERA in 1979, effective July 1, 1980, L. 1979, c. 477, § 2, to authorize the imposition of representation fees, not exceeding 85% of regular membership dues, fees and assessments, on non- union employees as a bargained-for provision of a negotiated collective bargaining agreement. N.J.S.A. 34:13A-5.5(a). Consistent with constitutional concerns, the statute required that the majority representative refund to non-union employees any part of the representation fee used"either in aid of activities or causes of a partisan political or ideological nature only incidentally related to the terms and conditions of employment or applied toward the cost of any other benefits available only to members of the majority representative." N.J.S.A. 34:13A-5.5(c). Thus, public employers were authorized to withhold the representation fee by payroll deduction, but only if the union had established and maintained a"demand and return" system that provided a pro rata refund of those expenditures that the statute expressly determined should not be shared by non-union member employees. N.J.S.A. 34:13A-5.6. The statute also required that the demand and return system provide for a procedure to review the amounts refunded, with the burden of proof on the majority representative. Id. The statute further provided that non-union members have the right to appeal to a three-member board, consisting of a representative of public employers, a representative of public employee organizations, and a neutral member. Id.
This provision of a fair-share formula for non-union member payroll deductions was enacted so that the cost of union services that benefit both union and non-union members alike would not burden unfairly the members of the union. Boonton, supra, 99 N.J. at 538. As the Boonton Court noted,"[t]he original statute and its 1979 amendments demonstrate a state interest in promoting stability in public-sector employment by authorizing majority-unit representation of all employees for collective negotiations and grievance procedures, with the cost to be shared equitably among members and non-members." Id. at 539.
Significantly, although the 1979 law required public employers to negotiate over proposals to deduct representation fees from non-union members' paychecks, it did not compel an employer to agree to a proposal. In other words, while the Legislature made the agency fee a mandatory subject of negotiations, the public employer could still refuse to agree to a representation fee and thus block a majority representative's receipt of this revenue stream.
To further address the State's interest in promoting an equitable sharing of representation costs, and ultimately in promoting stability in public-sector employment, the Legislature amended section 5.5(a) of the EERA in 2002, L. 2002, c. 46, § 1, entitling majority representative unions to receive representation fees even though no agreement has been reached, provided two statutory conditions are met. N.J.S.A. 34:13A- 5.5(a). Those conditions are that a union demonstrate both that a majority of employees in the bargaining unit are union members and that it maintains a"demand and return" system in conformity with N.J.S.A. 34:13A-5.5(c). Thus, in relevant part, the amendment provides that upon failure of a public employer and a public employees' union to reach an agreement concerning payment of"representation fees in lieu of dues[,]" or agency fees, by non-union employees,
the majority representative may petition the commission to conduct an investigation. If the commission determines during the investigation that a majority of the employees in the negotiations unit are voluntary dues paying members of the majority representative and that the majority representative maintains a demand and return system as required by subsection c. of this section and section 3 of P.L.1979, c. 477 (C.34:13A-5.6), the commission shall order the public employer to institute a payroll deduction of the representation fee in lieu of dues from the wages or salaries of the employees in the negotiations unit who are not members of the majority representative.
Prior to August 1, 2002, the effective date of the amendment, and in accordance with the earlier version of N.J.S.A. 34:13A-5.5(a), the County and CWA negotiated the issue of agency fees on several occasions, but the County consistently refused to agree to its implementation. Therefore, no provision for the imposition and collection of such fees was ever contained in any collective bargaining agreement including the most recent contract negotiated between the County and CWA effective from January 1, 2000 to December 31, 2002. During the negotiations leading to this agreement, CWA specifically proposed an agency fee deduction for non-members and the County refused, but agreed to reopen contract negotiations for the calendar year 2002 on that issue as well as wages. The reopened negotiations concluded in June 2002, without any agreement on the agency fee issue.
Consequently, on August 22, 2002, CWA filed with PERC the instant petition for agency fees, the first such petition filed under the recently enacted amendment. Included in the petition was a certification establishing that CWA is the majority representative of a negotiations unit of the County's non- supervisory employees; that CWA represents a unit of 375 employees; and that ...