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State, Dep't of Corrections v. P.B.A. Local 105


May 15, 2008


On appeal from a Final Administrative Decision of the Public Employment Relations Commission, Docket No. SN-2007-041.

Per curiam.


Submitted February 27, 2008

Before Judges Wefing, Parker and R. B. Coleman.

In this appeal, respondent P.B.A. Local 105 (PBA) appeals from a final decision of the Public Employment Relations Commission (PERC) rendered on April 26, 2007. The PERC decision granted the application by the State of New Jersey Department of Corrections (State) for an order restraining binding arbitration of the PBA's grievance arising out of the July 2006 shutdown of all non-essential State functions as a result of the budget impasse between Governor Jon Corzine and the Legislature.*fn1

The collective bargaining agreement between the PBA and the State provides for binding arbitration of grievances. In July 2006, the shutdown of non-essential State services led to furloughs of State employees who were considered "non-essential." The furlough ended on July 8, 2006, when the Fiscal Year 2007 Appropriations Act (Act) was signed. That Act gave the Treasury Department discretion over whether to compensate furloughed employees. On July 10, 2006, both furloughed and nonfurloughed workers were notified that they would receive full compensation for the shutdown period.

In July 2006, the PBA wrote to the Director of the Governor's Office of Employee Relations requesting compensatory time off for the essential employees who worked during the "special emergency" declared by the Governor. On July 13, 2006, the Director declined the request, stating that [c]ompensation for essential employees called in to work by the State during "emergency conditions" is governed by N.J.A.C. 4A:6-2.5(d), which provides, in its entirety, as follows:

"An essential attendance employee who is required to work in accordance with an Essential Employee Attendance Plan shall be compensated at the regular rate of pay for such work. See N.J.A.C. 4A:3-5 for overtime compensation for work performed by non-exempt employees in excess of the regular work week." [Emphasis added].

The Director further pointed out that the collective bargaining agreement -- under which the PBA claimed compensatory time -- did not provide for overtime pay for work "when the Governor declares an emergency resulting in time off to State workers." The Director explained, "[t]his is why, as a long standing past practice, members of the PBA Local 105 bargaining unit get a compensatory day for working the day after Thanksgiving (when declared a holiday by Executive Order) but do not receive a compensatory day for coming in during a snow emergency."

On August 7, 2006, the PBA demanded arbitration of the grievance. The State then petitioned PERC to restrain binding arbitration and determine the scope of negotiations.

In rendering its decision, PERC specifically noted, "we do not consider the merits of the grievance or any contractual defenses the employer may have." Rather, PERC determined that binding arbitration must be restrained and that, pursuant to N.J.A.C. 4A:6-2.5(d), the scope of negotiations limited essential employees who work during a State emergency to compensation at regular rates. PERC also determined that "the regulation was intended to preempt all negotiations over compensation" under emergency circumstances. PERC noted that "[e]ven if the PBA's contractual interpretation is correct and Article XIX(B)'s provision for alternate time off could be read to apply to this type of emergency . . . its application is preempted because the regulation specifically requires that essential workers be compensated at their regular rate of pay during emergencies." Accordingly, PERC concluded that "arbitration seeking compensatory time off cannot be permitted."

The PBA appealed and argues that (1) PERC's conclusion is not entitled to deference; and (2) PERC erred in enjoining binding arbitration for compensatory time because, under the PBA contract, the grievance is mandatorily negotiable.

Our scope of review in an appeal from an administrative agency decision is narrowly defined. In re Camden County Prosecutor, 394 N.J. Super. 15, 22 (App. Div. 2007). We "will not upset a State agency's determination in the absence of a showing that it was arbitrary, capricious or unreasonable . . . or that it violated a legislative policy expressed or implicit in the governing statute." County of Gloucester v. Pub. Employment Relations Comm'n, 107 N.J. Super. 150, 156 (App. Div. 1969), aff'd, 55 N.J. 333 (1970).

While "due regard [is] given to the agency's expertise on the subject . . . we are not bound by the agency's interpretation of the statute or its determination of a strictly legal issue." In re Application of Meadowlands Commc'ns Sys., Inc., 175 N.J. Super. 53, 65 (App. Div.), certif. denied, 85 N.J. 455 (1980). "Although an agency's 'interpretation of the statute it is charged with administering . . . is entitled to great weight', we will not yield to PERC if its interpretation is 'plainly unreasonable, contrary to the language of the Act, or subversive of the Legislature's intent.'" Camden County Prosecutor, supra, 394 N.J. Super. at 23 (quoting Bent v. Twp. of Stafford Police Dep't, 381 N.J. Super. 30, 40 (App. Div. 2005); In re N.J. Tpk. Auth. v. Am. Fed'n of State, County & Mun. Employees, 150 N.J. 331, 352 (1997)).

In this case, the PBA appeals from PERC's interpretation of N.J.A.C. 4A:6-2.5(d) in its determination of the scope of negotiations. The only matter decided by PERC was whether arbitration of essential employee compensation was preempted by the regulation. Newark Bd. of Educ., 20 N.J.P.E.R. 79 (N.J.P.E.R.C.). The ultimate merits of the case are not on appeal and are, therefore, immaterial to the scope of negotiations petition. Id. Our focus is solely on PERC's interpretation of N.J.A.C. 4A:6-2.5(d).

The PBA argues that the regulations do not preempt the contract because the regulation provides only for "a minimum level of compensation for essential employees and does not expressly preclude essential employees from receiving contractually required compensatory time."

The State argues that PERC was correct in its determination, and the legislative history of N.J.A.C. 4A:6-2.5(d) confirms that the legislature's intent to fully preempt bargaining on essential employee compensation.

Ordinarily, there is a three-prong test for a scope of negotiations analysis.

[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. [In re Local 195, IFPTE v. State, 88 N.J. 393, 404-05 (1982)].

Since this case involves corrections officers, which the courts have deemed analogous to police officers, the scope of negotiations analysis includes one additional prong not applied to other unionized employees. Camden County Prosecutor, supra, 394 N.J. Super. at 20; In re Paterson Police PBA Local No. 1 v. Paterson, 87 N.J. 78, 92 (1981).

In a case involving police and firefighters, if an item is not mandatorily negotiable, one last determination must be made. If it places substantial limitations on government's policy-making powers, the item must always remain within managerial prerogatives and cannot be bargained away.

However, if these governmental powers remain essentially unfettered by agreement on that item, then it is permissively negotiable. [Paterson Police PBA Local, supra, 87 N.J. at 92-93 (emphasis added).]

Generally, compensation claims are mandatorily negotiable and, when subject to an arbitration clause, proceed to binding arbitration. Newark Bd. of Educ., supra, 20 N.J.P.E.R. 79. In that case, PERC denied the Board's petition for a restraint of binding arbitration of a grievance by the Association of Supervisors and Administrators after the Board required Association members who did not come to work during a blizzard to use paid leave time for their absence. The members who went to work during the blizzard were not deemed "essential" and, therefore, not subject to N.J.A.C. 4A:6-5.2(d).

[A]n otherwise negotiable topic cannot be the subject of a negotiated agreement if it is preempted by legislation. However, the mere existence of legislation relating to a given term or condition of employment does not automatically preclude negotiations. Negotiation is preempted only if the regulation fixes a term and condition of employment "expressly, specifically and comprehensively." The legislative provision must "speak in the imperative and leave nothing to the discretion of the public employer." If the legislation, which encompasses agency regulations, contemplates discretionary limits or sets a minimum or maximum term or condition, then negotiation will be confined within these limits. [Bethlehem Twp. Bd. of Educ. v. Bethlehem Twp. Educ. Assn., 91 N.J. 38, 44 (1982) (quoting Council of New Jersey State Coll. Locals v. State Bd. of Higher Educ., 91 N.J. 18, 30 (1982) and Local 195, IFPTE, supra, 88 N.J. at 403-04) (emphasis added) (citations omitted).]

To determine whether a "subject has not been fully or partially preempted by statute or regulation," we look to the legislative history under which the statute or regulation was adopted. Local 195, IFPTE, supra, 88 N.J. at 404-05. In D.S. v. Bd. of Educ., 188 N.J. Super. 592, 598 (App. Div.), certif. denied, 94 N.J. 529 (1983), we stated that [t]o determine whether statutory authorization for a particular administrative action exists, the reviewing court may look beyond the specific language of the delegating statute to the objective of the statute. We may examine the entire statute in light of its surroundings and objectives to ascertain whether authority is implicitly granted.

Here, the State maintains that the legislative history prior to the enactment of N.J.A.C. 4A:6-2.5(d) is definitive proof of the intent to preempt collective bargaining on this issue. At a public hearing on July 23, 1997, the public was permitted to comment on the proposed rule, N.J.A.C. 4A:6-2.5(d), and the Department of Personnel (DOP) responded to the comments. A comment directly on point can be found in the New Jersey Register:

Regarding the provision concerning pay of essential attendance employees in N.J.A.C. 4A6-2.5(d), Mr. Pursell stated that it would be unfair for employees not designated as essential attendance employees to go home or stay home with pay while those who are designated essential attendance employees must remain at work and receive only regular pay rather than overtime pay.

[29 N.J.R. 4279, 4280 (July 23, 1997).] The DOP responded as follows:

N.J.A.C. 4A:6-2.5(d) recognizes the longstanding expectation and practice that, when an employee is serving in a position designated as essential, the employee will come to work or stay at work, as the case may be, in adverse conditions. The Board does not believe the proposed new rule treats such employees unfairly in view of the widely accepted practice under the old N.J.A.C. 4A:6-2.5. Furthermore, the proposed N.J.A.C. 4A:6-2.5(d) would continue the current practice of paying essential employees overtime only if they have accumulated hours beyond the regular workweek, as provided in N.J.A.C. 4A:3-5.

The commenter may make a proposal to amend the overtime rules if he wishes. [Ibid. (emphasis added).]

The DOP thereby left no doubt that any compensation originating from a declaration of emergency is determined by statute and, therefore, preempted from negotiations. The PBA attempts to distinguish "overtime," which it acknowledges is preempted by N.J.A.C. 4A:6-2.5(d), from "compensatory time off," which it contends is a fringe benefit separate from overtime and, therefore, still negotiable. We disagree.

Under N.J.A.C. 4A:3-5.2 definitions, which apply to all state employees, "overtime compensation" is defined as "cash overtime compensation or compensatory time off as permitted." The same rule defines "compensatory time off" as "the granting of time off in lieu of cash payment where permitted for excess or unusual work time." N.J.A.C. 4A:3-5.2. Thus, there is no distinction.

We have carefully considered all of the PBA's arguments in light of applicable law and we are convinced that PERC's decision was not arbitrary, capricious or unreasonable and that it correctly interpreted and applied the law. Camden County Prosecutor, supra, 394 N.J. Super. at 23.


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