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In re New Brunswick Municipal Employees Association

Superior Court of New Jersey, Appellate Division

March 2, 2018

CITY OF NEW BRUNSWICK, Respondent-Respondent.

          Submitted October 10, 2017

         On appeal from the New Jersey Public Employment Relations Commission, P.E.R.C. No. 2017-22.

          Oxfeld Cohen, PC, attorneys for appellant (Samuel Wenocur, on the briefs).

          Bauch Zucker Hatfield, LLC, attorneys for respondent City of New Brunswick (Kathryn V. Hatfield, of counsel and on the brief; Elizabeth Farley Murphy, on the brief).

          Robin T. McMahon, General Counsel, attorney for respondent New Jersey Public Employment Relations Commission (Joseph P. Blaney, Deputy General Counsel, on the statement in lieu of brief).

          Before Judges Messano, Accurso and O'Connor.


          ACCURSO, J.A.D.

          The question presented by this appeal is whether PERC, the Public Employment Relations Commission, is correct the contribution rates included in the Pension and Health Care Benefits Act (Chapter 78) L. 2011, c. 78, N.J.S.A. 52:14-17.28c, which top out at thirty-five percent, do not preempt the provision in the parties' contract requiring eligible retirees to contribute fifty percent of the costs of their health care coverage.

         Article XXI of the 2011-2014 collective negotiations agreement (CNA) ending December 31, 2014 between the City of New Brunswick and the New Brunswick Municipal Employees Association, provided the City would assume fifty percent of the costs of health and welfare benefits for eligible retirees, that is, those employees with twenty-five years of service with the City or those who are sixty-two and have either fifteen or twenty years of service with the City, depending on when they were hired.[1] See N.J.S.A. 40A:10-23 (granting municipality discretion to assume all or part of the cost of health benefits to certain eligible retirees); Middletown Twp. PBA Local 124 v. Twp. of Middletown, 193 N.J. 1, 5 (2007) (discussing application of the statute).

          During negotiations for the 2015-2018 contract to start January 1, 2015, the City proposed leaving Article XXI unchanged. The Association, however, took the position that contribution rates for retirees could not exceed those specified in Chapter 78. The City maintained Chapter 78 did not preclude the higher rate the parties had negotiated previously and refused to change the language. The parties eventually entered into a sidebar agreement, including Article XXI as previously negotiated in the 2015-2018 CNA subject to PERC's ruling on a scope-of-negotiations petition to be filed by the Association.

         Before PERC, the Association argued N.J.S.A. 40A:10-21.1 established a ceiling for retiree contributions for health care coverage based on the sliding scale established in N.J.S.A. 52:14-17.28c. The City contended those statutes set a floor, not a ceiling, on what local government employers could require retirees to contribute to their health care costs.

         In a final decision on the scope petition issued October 20, 2016, PERC determined Chapter 7 8 does not preempt Article XXI. PERC began its analysis by acknowledging that although health benefits contributions are mandatorily negotiable, "an otherwise negotiable topic cannot be the subject of a negotiated agreement if it is preempted by legislation." Bethlehem Twp. Bd. of Educ. v. Bethlehem Twp. Educ. Ass'n, 91 N.J. 38, 44 (1982). It found "negotiations over the level of health benefits contributions were first preempted by the enactment of P.L. 2010, C. 2 (Chapter 2)." Specifically, PERC found that

[n]otwithstanding any other amount that may be required additionally by the employer or through a collective negotiations agreement, Chapter 2 required all public employees to contribute 1.5% of base salary toward health benefits and those employees who became members of a public retirement system on or after Chapter 2's effective date to pay 1.5% of their monthly retirement allowance for health benefits in retirement. See N.J.S.A. 18A:16-17; N.J.S.A. 40A:10-21; N.J.S.A. 40A;10-23(b); N.J.S.A. 52:14-17.28b(c)(2).
In 2011, negotiations over the level of health benefits contributions were further preempted by the enactment of Chapter 78. Chapter 7 8 required all public employees to contribute a percentage of the cost of coverage for health benefits based upon employees' earning levels and specified the health benefits contribution required for public employees in retirement. See N.J.S.A. 18A:16-17.1; N.J.S.A. 40A:10-21.1; N.J.S.A. 52:14-17.28c; N.J.S.A. 52:14-17.28d. However, negotiated health benefits contribution levels in excess of Chapter 78 levels remain in effect despite the enactment of Chapter 78[.]

         Relying on N.J.S.A. 40A:10-21.1(d), which provides that "the authority to determine an amount of contribution ... by means of a binding collective negotiations agreement . . . shall remain in effect with regard to contributions, whether as a share of the cost, or percentage of the premium or periodic charge, or otherwise, in addition to the contributions required" under subsections (a) and (b) of the statute, PERC concluded Article XXI was unaffected by Chapter 7 8 under the test for negotiability established by the Supreme Court in In re Local 195, IFPTE, 88 N.J. 393, 404-05 (1982).

         The Association appeals, contending Chapter 78 prohibits the City and the Association from negotiating "contribution rates above those expressed in N.J.S.A. 52:14-17.28c." The Association argues those rates, which establish what a retiree "shall pay, " are "neither a floor nor a ceiling, " but instead "limit[] any discretion" in setting contribution rates for eligible retirees.

         The Association maintains that "[t]o the extent . . . N.J.S.A. 40A:10-21.1(d) may allow an exception to the progressive payment plan under N.J.S.A. 52:14-17.28c, the exception is to apply only in very limited circumstances and only upon demonstration of compliance with N.J.S.A. 40A:10-21.1(c), " which did not occur here. The Association further contends that PERC's interpretation of Chapter 7 8 is at odds with the Legislature's goal of imposing "a progressive rate structure to ensure that lower income employees and eligible retirees [pay] a smaller percentage of their health care costs than higher income earners." We reject those arguments as without support in the statutory scheme and affirm PERC's ruling that Article XXI is not preempted by Chapter 78.

         PERC has primary jurisdiction to determine in the first instance whether a matter in dispute is within the scope of collective negotiations. N.J.S.A. 34:13A-5.4(d); State v. State Supervisory Emps. Ass'n, 78 N.J. 54, 83 (1978). Although a party dissatisfied with PERC's determination of course has recourse to this court, N.J.S.A. 34:13A-5.4(d), the scope of our review is narrow. State Supervisory, 78 N.J. at 83. "In the absence of constitutional concerns or countervailing expressions of legislative intent, [appellate courts] apply a deferential standard of review to determinations made by PERC." City of Jersey City v. Jersey City Police Officers Benevolent Ass'n, 154 N.J. 555, 567 (1998). We, however, owe no particular deference to PERC's interpretation of Chapters 2 and 78. Although both certainly affect employer/employee relations, PERC is not charged with administering either. See In re Camden Cty. Prosecutor, 394 N.J.Super. 15, 23 (App. Div. 2007).

         To determine whether the parties may continue to agree that retirees should contribute fifty percent of the costs of their health and welfare benefits after Chapter 78, we look to the Legislature's intent in establishing the contribution schedule the Association maintains robbed the parties of their discretion in the matter. See DiProspero v. Penn, 183 N.J. 477, 492 (2005). While the best indicator of that intent is the words of the statute, it is important to read those words "in ...

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