P.E.R.C. No. 2013-2, New Milford Boro

CaptionSTATE OF NEW JERSEY BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION In the Matter of BOROUGH OF NEW MILFORD, Appellant, -and- Docket No. IA-2012-008 PBA LOCAL 83, Respondent. ¶

SynopsisSYNOPSIS ¶

The Public Employment Relations Commission remands an interest arbitration award to a new arbitrator determining that the award on remand did not comply with the Commission’s directives in P.E.R.C. No. 2012-53, 38 NJPER 340 (¶116 2012). ¶

This synopsis is not part of the Commission decision. It has been prepared for the convenience of the reader. It has been neither reviewed nor approved by the Commission. ¶

CaptionSTATE OF NEW JERSEY BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION In the Matter of BOROUGH OF NEW MILFORD, Appellant, -and- Docket No. IA-2012-008 PBA LOCAL 83, Respondent. ¶

AppearancesAppearances: ¶

For the Appellant, DeCotiis, Fitzpatrick & Cole, attorneys (Avis Bishop-Thompson, of counsel) ¶

For the Respondent, Loccke, Correia, Limsky & Bukosky, attorneys (Leon B. Savetsky, of counsel) ¶

DECISION ¶

The Borough of New Milford appeals an interest arbitration award involving a unit of police officers in the ranks of patrol officer, sergeant, and lieutenant who are represented by PBA Local 83.1/ We had vacated the arbitrator’s initial award in this matter and remanded to the arbitrator for reconsideration and issuance of a new award. P.E.R.C. No. 2012-53, NJPER (¶2012). We instructed the arbitrator that the new award had to apply the salary cap imposed by P.L. 2010, c. 1052/ by determining: 1)the total base salary for the last year of the parties’ expired agreement; 2)explain what items were included in the base salary calculation; and 3)determine that the award will not increase base salary by more than 2% per contract year or 6% in the aggregate for a three-year contract award. We also instructed the arbitrator to address the Borough’s internal settlement pattern as required by N.J.S.A. 34:13A-16g(2) as well as any other proposals of the parties for which argument and evidence were introduced. ¶

On May 24, 2012, the arbitrator issued his opinion and award on remand. His initial award ordered a three-year agreement effective January 1, 2012 through December 31, 2014 with a 1% salary increase effective July 1, 2012; 2% effective January 1, 2013; and 2.5% effective January 1, 2014. He also modified the parties’ terminal leave procedure. ¶

The remand award reduced the contract duration from a three to a one-year agreement effective January 1, 2012 through December 31, 2012. It also awards a new health benefits provision permitting payment for waiver of health benefits and premium sharing per State law; retiree health benefits per State law; minor stipulations of the parties regarding language changes and clothing allowance; out-of-title pay when a member is required to work in a higher rank; removal of accumulation of a maximum of six personal days; establish a separate longevity schedule for officers hired after January 1, 2012; modifies terminal leave payments; and provides the following 2012 salary: ¶

Lieutenant $117,950 ¶

Sergeant $110,260 ¶

Patrolman 7 $102,760 ¶

All other proposals were denied. ¶

The Borough argues that the remand award should be vacated because the arbitrator imperfectly executed his duties so that a mutual, final and definite award was not made; the arbitrator did not consider the financial impact of the terminal leave award; and the matter should be submitted to a new arbitrator. The PBA responds that the arbitrator’s award was reasonable. ¶

N.J.S.A. 34:13A-16g requires that an arbitrator shall state in the award 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. The statutory factors are as follows: ¶

(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; provided, however, each party shall have the right to submit additional evidence for the arbitrator's consideration. ¶

(b) In public employment in general; provided, however, each party shall have the right to submit additional evidence for the arbitrator's consideration. ¶

(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); provided, however, that each party shall have the right to submit additional evidence concerning the comparability of jurisdictions for the arbitrator's consideration. ¶

(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:4- 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 municipal purposes element or, in the case of a county, 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). ¶

[N.J.S.A. 34:13A-16g] ¶

The standard for reviewing interest arbitration awards is well established. We will not vacate an award unless the appellant demonstrates that: (1) the arbitrator failed to give “due weight” to the subsection 16g factors judged relevant to the resolution of the specific dispute; (2) the arbitrator violated the standards in N.J.S.A. 2A:24-8 and -9; or (3) the award is not supported by substantial credible evidence in the record as a whole. Teaneck Tp. v. Teaneck FMBA, Local No. 42, 353 N.J. Super. 298, 299 (App. Div. 2002), aff’d o.b. 177 N.J. 560 (2003), citing Cherry Hill Tp., P.E.R.C. No. 97-119, 23 NJPER 287 (¶28131 1997). Because the Legislature entrusted arbitrators with weighing the evidence, we will not disturb an arbitrator’s exercise of discretion unless an appellant demonstrates that the arbitrator did not adhere to these standards. Teaneck, 353 N.J. Super. at 308-309; Cherry Hill. ¶

Arriving at an economic award is not a precise mathematical process. Given that the statute sets forth general criteria rather than a formula, except as set forth below by P.L. 2010 c. 105, the treatment of the parties’ proposals involves judgment and discretion and an arbitrator will rarely be able to demonstrate that an award is the only “correct” one. See Borough of Lodi, P.E.R.C. No. 99-28, 24 NJPER 466 (¶29214 1998). Some of the evidence may be conflicting and an arbitrator’s award is not necessarily flawed because some pieces of evidence, standing alone, might point to a different result. Lodi. Therefore, within the parameters of our review standard, we will defer to the arbitrator’s judgment, discretion and labor relations expertise. City of Newark, P.E.R.C. No. 99-97, 26 NJPER 242 (¶30103 1999). However, an arbitrator must provide a reasoned explanation for an award and state what statutory factors he or she considered most important, explain why they were given significant weight, and explain how other evidence or factors were weighed and considered in arriving at the final award. N.J.S.A. 34:13A-16g; N.J.A.C. 19:16-5.9; Lodi. ¶

In cases where the 2% salary cap imposed by P.L. 2010, c. 1053/ applies, we must also determine whether the arbitrator established that the award will not increase base salary by more than 2% per contract year or 6% in the aggregate for a three-year contract award. ¶

The Borough’s main argument is in opposition to the arbitrator’s awarding of a one-year contract. It asserts that the arbitrator failed to adequately consider either the Borough’s or the PBA’s proposal regarding contract duration.4/ The arbitrator’s original award provided for a three-year agreement. On remand, he modified the award to a one-year contract. In modifying the contract duration, the Borough alleges the arbitrator violated N.J.S.A. 2A:24-8(d) as the parties never modified their final offers on duration; presented their financial evidence based on three and four-year terms; and that financial evidence was not analyzed by the arbitrator under the statutory criteria to support his duration award. It further asserts that the award of a one-year contract term is a blatant attempt to avoid the 2% salary cap as the reforms to the law apply to only one negotiations period. ¶

The PBA responds that the award of a one-year agreement was within the arbitrator’s conventional arbitration authority and that the arbitrator set forth fully and comprehensively his reasons for denying the PBA’s and Borough’s duration proposals. ¶

In awarding a one-year contract, the arbitrator stated: ¶

The rate of change in New Jersey’s public sector militates against the three-year term (proposed by the Borough), and the four-year term (proposed by PBA Local 83). Legal and regulatory evolution, economic fluctuations, the housing market, and myriad other forces make this a risky time for being locked into long-term agreements. The future is less predictable than ever. . . . A shorter contract would allow the parties greater flexibility to adapt. It would also afford a new opportunity to [negotiate] in good faith over the numerous issues that apparently were not fully addressed during their abbreviated 2011 negotiations. ¶

The limited time at the [negotiations] table and the number of issues submitted to arbitration, lead me to conclude that this arbitration was premature. The parties need more time to talk. While I cannot undo the past, I can afford them an opportunity to meet and confer as soon as reasonable possible. ¶

Conventional arbitration permits neutrals to set durations other than those proposed by labor and management. In this instance, I have chosen a 12-month term even though each party – for its own reasons – sought a longer contract. They had the freedom to stipulate to a mutually acceptable term, but did not do so. Finally, they were asked at the February 2nd and May 3rd hearings if they had any stipulations. ¶

[Award at 48-49] ¶

The arbitrator continued to explain that a 12-month term was in line with New Jersey’s public policy that it is in the bests interest of the people t have prompt settlement of labor disputes. ¶

We vacate the award and remand it to a new arbitrator. In our prior remand, we advised the arbitrator to provide the calculations he made to reach his total base salary; 2)explain why other economic figures presented by the Borough, if any, were not included in base salary; and 3)provide a cost analysis of each year of the award that includes at a minimum step increments and longevity. The arbitrator has not complied with our directive on remand. ¶

An interest arbitrator retains the conventional authority to make determinations outside the parties’ final offers. See Hudson Cty. Pros., P.E.R.C. No. 98-88, 24 NJPER 78 (¶29043 1997) (conventional arbitration allows the arbitrator considerable discretion to fashion an award, although the arbitrator may not reach out and decide issues not presented by the parties).5/ However, those determinations must be based on substantial credible evidence in the record as a whole. Teaneck. Here, the arbitrator did not make the calculations for year two and three. Had the calculations been made and supported changing the duration, then the arbitrator had the conventional authority to make the change with the accompanying explanation as to how the record supports it. The sole reliance on outside evidence and policy considerations is not credible evidence to support the award. We recognize that the record in each case is unique and may lead an arbitrator to fashion an award outside the parties’ proposals. However, the record on remand in this case is not supportive of the arbitrator’s change. ¶

Having vacated on the duration issue, we do not need to reach the Borough’s terminal leave argument as it will be reviewed by the new arbitrator. ¶

OrderORDER ¶

The remand award is vacated and the case is remanded to the Director of Arbitration for the appointment of a new arbitrator who shall issue a new award within 45-days of appointment. The new arbitrator retains the discretion to hold new hearings or utilize the current record. ¶

BY ORDER OF THE COMMISSION ¶

Chair Hatfield, Commissioners Boudreau, Bonanni, Eskilson and Voos voted in favor of this decision. None opposed. Commissioner Jones recused himself. Commissioner Wall was not present. ¶

ISSUED: July 2, 2012 ¶

Trenton, New Jersey ¶

Note1/ We deny the Borough’s request for oral argument. The issues have been fully briefed. ¶

2/ N.J.S.A. 34:13a-16.7. ¶

3/ P.L. 2010, c. 105 provides: ¶

a. As used in this section: ¶

~Base salary~ means the salary provided pursuant to a salary guide or table and any amount provided pursuant to a salary increment, including any amount provided for longevity or length of service. It also shall include any other item agreed to by the parties, or any other item that was included in the base salary as understood by the parties in the prior contract. Base salary shall not include non-salary economic issues, pension and health and medical insurance costs. ¶

~Non-salary economic issues~ means any economic issue that is not included in the definition of base salary. ¶

b. An arbitrator shall not render any award pursuant to section 3 of P.L. 1977, c. 85 (C.34:13A-16) which, on an annual basis, increases base salary items by more than 2.0 percent of the aggregate amount expended by the public employer on base salary items for the members of the affected employee organization in the twelve months immediately preceding the expiration of the collective negotiation agreement subject to arbitration; provided, however, the parties may agree, or the arbitrator may decide, to distribute the aggregate monetary value of the award over the term of the collective negotiation agreement in unequal annual percentages. An award of an arbitrator shall not include base salary items and non-salary economic issues which were not included in the prior collective negotiations agreement. ¶

4/ The Borough proposed a three-year contract and the PBA proposed a four-year contract. ¶

5/ We reject the Borough’s argument that the Appellate Division’s decision in Township of Montclair v. Montclair PBA, Local 53, is applicable to this case as that case involved a grievance arbitration award. In grievance arbitration, the arbitrator does not have conventional authority. ¶