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In the Matter of County of Hunterdon v. Fraternal Order of Police Lodge No. 94

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


June 5, 2012

IN THE MATTER OF COUNTY OF HUNTERDON, APPELLANT,
v.
FRATERNAL ORDER OF POLICE LODGE NO. 94, RESPONDENT.
IN THE MATTER OF COUNTY OF HUNTERDON, APPELLANT,
v.
FRATERNAL ORDER OF POLICE LODGE NO. 29, RESPONDENT.

On appeal from the Public Employment Relations Commission, P.E.R.C. No. 2011-75, No. IA-2009-103 (A-4989-10); and P.E.R.C. No. 2011-80, No. IA-2009-067 (A-5311-10).

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: March 21, 2012

Before Judges Cuff and Lihotz.

This opinion addresses the appeals filed by the County of Hunterdon (the County) from final orders entered by the Public Employment Relations Commission (PERC) affirming the arbitrator's award following conventional arbitration of contract disputes between the County and the Fraternal Order of Police (FOP) Lodge No. 94 (FOP 94) (Sheriff's Officers) and FOP Lodge No. 29 (FOP 29) (Corrections Officers). The principal issue in contention between the parties in this appeal is the incremental salary guide awarded by the arbitrator for each group of officers. We calendared these separate appeals back-to-back and now consolidate them for the purpose of opinion only. We affirm.

Our review of the PERC order issued in each case is governed by the statutory role of PERC and our standard of review. PERC is authorized by statute, N.J.S.A. 34:13A-16f(5)(a), to decide appeals of public interest arbitration awards. Twp. of Teaneck v. Teaneck Firemen's Mut. Benev. Ass'n Local No. 42, 353 N.J. Super. 289, 306 (App. Div. 2002), aff'd o.b., 177 N.J. 560 (2003). "Absent violation of standards of conduct, PERC's appellate role is to determine whether the arbitrator considered the criteria in N.J.S.A. 34:13A-16(g) governing the issuance of an interest arbitration award and rendered a reasonable determination of the issue or issues at impasse that was supported by substantial evidence in the record." Ibid.

This court, in turn, owes deference to an order rendered by PERC because of the expertise of that agency. The Supreme Court in In re Hunterdon County Board of Chosen Freeholders, 116 N.J. 322, 328 (1989), explained that deference as follows:

It must also be emphasized that the judicial role in this kind of case must be both sensitive and circumspect. We deal here with the regulatory determination of an administrative agency that is invested by the Legislature with broad authority and wide discretion in a highly specialized area of public life . . . . These manifestations of legislative intent indicate not only the responsibility and trust accorded to PERC, but also a high degree of confidence in the ability of PERC to use expertise and knowledge of circumstances and dynamics that are typical or unique to the realm of employer-employee relations in the public sector.

An arbitrator in a public interest conventional arbitration is not required to select from one of the last offers of the parties. See Fox v. Morris Cnty. Policemen's Ass'n, P.B.A. 151, 266 N.J. Super. 501, 514 (App. Div. 1993) (holding an arbitrator is not required to consider only factors on which the parties choose to produce evidence because "this may lead to a choice between two unreasonable offers"), certif. denied, 137 N.J. 311 (1994). Rather the arbitrator may fashion an award based on the evidence produced by the parties. See Hillsdale PBA Local 207 v. Borough of Hillsdale, 137 N.J. 71, 82 (1994) (holding an arbitrator's analysis "depends on the disputed issues and the evidence presented"). He is also obliged to analyze and consider nine statutory factors. Ibid.; see also N.J.S.A. 34:13A-16g. In addition, the party seeking to alter a provision in an existing agreement has the burden of proof on any modification, addition or deletion sought by it of an existing provision. Twp. of Teaneck, 25 N.J.P.E.R. 450 (¶30199 1999).

Here, the same arbitrator resolved the contract dispute between the County and FOP 94 (Sheriff's Officers) and FOP 29 (Corrections Officers). In each case, the principal issue was whether an incremental salary schedule should be reinstituted for both groups of employees. Although recognizing that the use of an incremental salary schedule is a mandatorily negotiable term, and the representatives of both groups had properly presented that issue for resolution by the arbitrator, the County argued vociferously against the provision noting that such a schedule had been eliminated through an earlier round of collective negotiations in 2003. Each award was accompanied by a comprehensive decision in which the arbitrator addressed the factors outlined in N.J.S.A. 34:13A-16g. We briefly outline the award for each bargaining unit and the last offers by both parties.

FOP 94 (Sheriff's Officers).

The arbitrator entered an award containing five provisions. For the FOP 94 agreement, in addition to the issues stipulated by the FOP and the County, the arbitrator awarded a three-year agreement, an incremental salary schedule with eleven steps reflecting a 14.96% salary increase over the life of the agreement, and a salary payment schedule of twenty-five payments in place of twenty-six payments on an annual basis. The latter provision had been advanced by the County. The arbitrator also rejected the proposed salary increase advanced by FOP 94, modifications to the provisions governing overtime for officer's "called out" to duty outside of regular work hours, holiday pay, leaves of absence, medical benefits, employee expenses, safety, uniforms and equipment, attendance bonus, on-call, longevity, tuition reimbursement, and employment and reimbursement agreements. The arbitrator also rejected a new provision governing modified duty. Additionally, the arbitrator denied the County's proposed salary increase schedule.

FOP 29 (Corrections Officers).

The arbitrator entered an award containing six provisions. In addition to the provisions stipulated by the parties, the arbitrator awarded a three-year agreement, an incremental salary schedule consisting of eleven steps reflecting a 13.40% increase over the life of the agreement, a salary payment schedule of twenty-five weeks in place of twenty-six weeks on an annual basis, and a $100 increase in the uniform maintenance allowance. The arbitrator also rejected the ten step salary schedule proffered by FOP 29, as well as the salary increase proposed by the corrections officers, and a $200 increase in the clothing allowance. Additionally, the arbitrator rejected the salary increase proposed by the County.

In his decision on each agreement, the arbitrator explained that the award of a salary schedule with annual increments was consistent with the practice in every other county and throughout all law enforcement units. He noted that the ranks of Sheriff's Officers and Corrections Officers in the County have been depleted by low salaries and the absence of annual increments. Furthermore, the incremental salary schedule has worked well in every county in which it was instituted to address recruitment and retention of experienced and qualified personnel to serve as Sheriff's Officers and Corrections Officers.

The arbitrator also explained that he structured the salary schedule to freeze salaries for 2009 at 2008 levels and froze the first nine steps at the 2009 level for 2010 and 2011, but increased step 10 in 2011 and step 11 in 2010 and 2011. This structure permitted the cost of the salary portion of the agreement to fall "within the total cost of the County's own salary proposal." Notwithstanding the significant improvement in salaries achieved by the incremental salary schedule, the arbitrator emphasized that the maximum salary in 2011 for each group of officers is still well below the maximum salary in all other counties.

The County appealed each award to PERC. In its May 5, 2011 decision, PERC addressed the award governing the FOP 94 contract. The agency determined that the arbitrator provided a reasoned explanation for the award that reflected consideration of the statutory criteria and further explained how other evidence or factors were weighed and considered. PERC expressly found that "the arbitrator acted within his conventional arbitration authority to award an incremental salary guide" even when that guide covers increases beyond the duration of the award. PERC noted that "P.L. 2010, c.105*fn1 will apply to any impasse that the parties may reach in negotiating a successor agreement." The agency also found that the analysis in support of the incremental salary guide was well-supported by the record. In doing so, PERC cited the 85% turnover rate for Sheriff's Officers between 1996 and October 2008 and the retention of only four of the thirty-two officers hired between 2000 and 2005.

PERC also found that the arbitrator addressed the public interest and welfare when he awarded the incremental salary guide. The agency noted that the arbitrator awarded "substantially lower increments and increases than those proposed by the FOP," and that the arbitrator properly assigned the burden of proof to the FOP to impose an incremental salary guide in the agreement. PERC also held that the record supported the comparability analysis produced by the arbitrator and his assignment of greater weight to the extra-county agreements governing Sheriff's Officers and Corrections Officers than the intra-county agreements governing non-law enforcement personnel. Finally, PERC found that the record demonstrated that the incremental salary schedule will not cause the County to exceed the cap restrictions, see N.J.S.A. 40A:4-45.45, or that the County lacks the funds to pay the increase or that it is unreasonable in light of current economic conditions. In doing so, the agency also noted "that the base salaries are the second lowest in the State and therefore a 14.96% increase yields a total cost of $115,300 for a three-year agreement."

In its May 26, 2011 decision, PERC addressed the FOP 29 (Corrections Officers) award. The County argued that the arbitrator exceeded his authority in awarding an incremental salary guide, and the evidence did not support an incremental salary guide. PERC held that the record fully supported the award, that the arbitrator did not exceed his authority, and that it was not in a position to substitute its judgment for that of the arbitrator.

In affirming the award, PERC found that the arbitrator considered and weighed each of the statutory factors. The agency noted that the Correction Officers' staffing suffered a 60-70% turnover rate in the past ten years. Notably "between 2000 and 2010, approximately 100 officers were hired for a 30-officer unit and 28 of the current officers were hired after January 1, 2000." The agency also found that the evidence submitted by FOP 29 supported the finding that the current salary schedule and the schedule proposed by the County paid smaller raises to senior officers than junior officers. The County's approach to pay valued inexperience over experience and contributed to the high turnover rate.

In addition, PERC found the arbitrator did not shift the burden of proof on the incremental salary guide issue to the County. It found the evidence supported the arbitrator's imposition of a incremental salary schedule because all other public safety officers throughout the State are paid in accordance with an incremental salary schedule. As to the amount of the raises accorded to the corrections officers, PERC found that "the base salaries are the lowest in the State and therefore a 3.73% to 11.45% increase depending on the step of the guide yields a total cost of $236,336 for a three-year agreement -- a figure the County does not dispute is $100,000 less than its offer." (emphasis supplied). PERC also stated, and the County did not disagree, that the award will not impose an unexpected financial hardship on the County.

PERC summarized its decision as follows:

[A]n interest arbitration award with a cumulative cost that is less than the County's final offer in total cost and percentage raise is not unreasonable and should not create unexpected pressure to the County.

The agency also acknowledged that the terms of P.L. 2010, c. 105, the new interest arbitration law, will apply to any impasse that may arise in the course of negotiations of a successor agreement.

In each appeal, the County argues that the arbitrator exceeded his authority in awarding an incremental salary schedule, that the arbitrator violated N.J.S.A. 34:13A-16 by awarding salary increases for 2012 and each year thereafter without making factual findings as to the need for and ability to pay such increases, that the record does not contain sufficient credible evidence to support the salary guide award, and that the economic award is unreasonable. FOP 29 and FOP 94 respond the arbitrator did not exceed his authority, the incremental salary guide is consistent with N.J.S.A. 34:13A-16, the record supports all portions of the economic award and the award is reasonable.

At the outset of this opinion, we recognized not only the scope of review of PERC of an appeal from an award by an arbitrator in a public interest arbitration proceeding, but also the scope of review of this court of the action by PERC. We are required to determine whether the arbitrator exceeded his authority as established by law, considered the factors identified by statute, N.J.S.A. 34:13A-16g, and rendered an award that is supported by the evidence in the record. Hunterdon Cnty., supra, 116 N.J. at 328; Teaneck FMBA, supra, 353 N.J. Super. at 306. N.J.S.A. 34:13A-16 sets forth the process and the factors the arbitrator must analyze and consider. If we find that he did not exceed his authority, that he considered and analyzed each statutory criterion, and made findings supported by the credible evidence in the record, we must affirm. See Hunterdon Cnty., supra, 116 N.J. at 328.

The factors that the arbitrator must consider and analyze are set forth in N.J.S.A. 34:13A-16g, which provides:

The arbitrator shall decide the dispute based on a reasonable determination of the issues, giving due weight to those factors listed below that are judged relevant for the resolution of the specific dispute. In the award, the arbitrator or panel of arbitrators shall indicate which of the factors are deemed relevant, satisfactorily explain why the others are not relevant, and provide an analysis of the evidence on each relevant factor; provided, however, that in every interest arbitration proceeding, the parties shall introduce evidence regarding the factor set forth in paragraph (6) of this subsection and the arbitrator shall analyze and consider the factors set forth in paragraph (6) of this subsection in any award:

(1) The interests and welfare of the public. Among the items the arbitrator or panel of arbitrators shall assess when considering this factor are the limitations imposed upon the employer by P.L. 1976, c. 68 (C.40A:4-45.1 et seq.).

(2) Comparison of the wages, salaries, hours, and conditions of employment of the employees involved in the arbitration proceedings with the wages, hours, and conditions of employment of other employees performing the same or similar services and with other employees generally:

(a) In private employment in general; . . . .

(b) In public employment in general; . . . .

(c) In public employment in the same or similar comparable jurisdictions, as determined in accordance with section 5 of P.L. 1995, c. 425 (C.34:13A-16.2); . . . .

(3) The overall compensation presently received by the employees, inclusive of direct wages, salary, vacations, holidays, excused leaves, insurance and pensions, medical and hospitalization benefits, and all other economic benefits received.

(4) Stipulations of the parties.

(5) The lawful authority of the employer. Among the items the arbitrator or panel of arbitrators shall assess when considering this factor are the limitations imposed upon the employer by P.L. 1976, c. 68 (C.40A:45.1 et seq.).

(6) The financial impact on the governing unit, its residents, the limitations imposed upon the local unit's property tax levy pursuant to section 10 of P.L. 2007, c. 62 (C.40A:4-45.45), and taxpayers. When considering this factor in a dispute in which the public employer is a county or a municipality, the arbitrator or panel of arbitrators shall take into account, to the extent that evidence is introduced, how the award will affect the municipal or county purposes element, as the case may be, of the local property tax; a comparison of the percentage of . . . the county purposes element, required to fund the employees' contract in the preceding local budget year with that required under the award for the current local budget year; the impact of the award for each income sector of the property taxpayers of the local unit; the impact of the award on the ability of the governing body to (a) maintain existing local programs and services, (b) expand existing local programs and services for which public moneys have been designated by the governing body in a proposed local budget, or (c) initiate any new programs and services for which public moneys have been designated by the governing body in a proposed local budget.

(7) The cost of living.

(8) The continuity and stability of employment including seniority rights and such other factors not confined to the foregoing which are ordinarily or traditionally considered in the determination of wages, hours, and conditions of employment through collective negotiations and collective bargaining between the parties in the public service and in private employment.

(9) Statutory restrictions imposed on the employer. Among the items the arbitrator or panel of arbitrators shall assess when considering this factor are the limitations imposed upon the employer by section 10 of P.L. 2007, c. 62 (C.40A:4-45.45).

Our review of each award demonstrates that the arbitrator considered each factor, provided an analysis of each relevant factor, and explained which factors he weighed more heavily than others. He conducted an exhaustive comparison of wages and salaries of the Sheriff's Officers and the Corrections Officers with the wages and salaries of other employees performing the same or similar services. See N.J.S.A. 34:13A-16g(2). He considered the interests and welfare of the public to have well-trained and experienced officers performing the critical duties assigned to Sheriff's Officers and Corrections Officers. See N.J.S.A. 34:13A-16g(1). He considered the impact of the exceedingly high turnover on both units due to the low salaries paid to Sheriff's Officers and Corrections Officers and a salary strategy that discouraged retention of senior officers. See N.J.S.A. 34:13A-16g(8). The arbitrator also identified other counties which had experienced similar turn-over problems and noted that an incremental salary schedule reversed that trend in each county in which it was installed. See N.J.S.A. 34:13A-16g(2).

The arbitrator did not exceed his authority in awarding an incremental salary guide. The County acknowledges that whether an incremental salary guide should be adopted is a mandatorily negotiable issue and that FOP 29 and FOP 94 presented the guide as an issue for negotiation. Sussex Cnty., 9 N.J.P.E.R. 77 (¶14042 1982); see also Belleville Educ. Ass'n v. Belleville Bd. of Educ., 209 N.J. Super. 93, 98 (App. Div. 1986) (holding placement on a salary schedule is mandatorily negotiable and subject to arbitration). The decision by parties to prior agreements to eliminate an incremental salary guide does not preclude one or both parties to an agreement to seek reinstatement of such a feature in a subsequent agreement. Finally, the incremental salary schedule does not prevent the County from seeking to modify the number of steps or the increments associated with each step in the course of future negotiations for future agreements.

We are also satisfied that the record fully supports each finding, neither award is economically unreasonable, the County is able to afford each award without exceeding existing caps on spending and taxes, and each award will not impose an excessive financial burden on taxpayers.

We, therefore, affirm the May 5, 2011 decision of PERC of the County's appeal of the Interest Arbitration Award to FOP 94 (Sheriff's Officers) and the May 26, 2011 decision of PERC of the County's appeal of the Interest Arbitration Award to FOP 29 (Corrections Officers).

Affirmed.


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