P.E.R.C. No. 2025-23, Union Tp B/E

Notice to employeesNOTICE TO EMPLOYEES PURSUANT TO AN ORDER OF THE PUBLIC EMPLOYMENT RELATIONS COMMISSION AND IN ORDER TO EFFECTUATE THE POLICIES OF THE NEW JERSEY EMPLOYER-EMPLOYEE RELATIONS ACT, AS AMENDED, We hereby notify our employees that: ¶

CaptionSTATE OF NEW JERSEY BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION In the Matter of UNION TOWNSHIP BOARD OF EDUCATION, PETITIONER OR RESPONDENT, -and- Docket No. CO-2023-157 UNION TOWNSHIP EDUCATION ASSOCIATION, CHARGING PARTY. ¶

SynopsisSYNOPSIS ¶

The Public Employment Relations Commission grants the Association’s motion for summary judgment in its unfair practice charge and refers the matter for a hearing to determine the extent and remedy for damages. The unfair practice charge alleges that the Board violated section 5.4(a)(5) of the Act, when it unilaterally implemented changes in the amounts of Association members’ paychecks, from one paycheck with all tax deductions each payroll period, to two paychecks each payroll period, with the second paychecks not having any deductions for federal income taxes. The Commission finds that the Board’s unilateral change to the payroll scheme, resulting in federal income taxes not being withheld from stipend compensation, was mandatorily negotiable, and thus, the Board’s decision to eliminate this income tax deduction benefit without negotiations and without notice to the affected Association members constituted an unfair labor practice. ¶

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 UNION TOWNSHIP BOARD OF EDUCATION, Respondent, -and- Docket No. CO-2023-157 UNION TOWNSHIP EDUCATION ASSOCIATION, Charging Party. ¶

AppearancesAppearances: ¶

For the Respondent Taylor Law Group, LLC, attorneys,(Christopher J. Buggy, of counsel) ¶

For the Charging Party, Zazzali PC, attorneys (Richard A. Friedman, of counsel; Albert J. Leonardo, on the brief) ¶

DECISION ¶

On July 30, 2024, the Union Township Education Association (Association) filed a motion for summary judgment on its unfair practice charge (UPC) filed on March 14, 2023 against the Union Township Board of Education (Board). The charge alleges that the Board violated section 5.4(a)(5)1/ of the New Jersey Employer- Employee Relations Act, N.J.S.A. 34:13A-5.4 et seq. (Act), when it unilaterally implemented changes in the amounts of Association members’ paychecks, from one paycheck with all tax deductions each payroll period, to two paychecks each payroll period, with the second paychecks not having any deductions for federal income taxes. On September 6, 2024, the Board filed an opposition brief and cross-motion for summary judgment, together with the certification of its counsel with exhibits. On September 30, the Association filed an opposition brief to the Board’s cross-motion for summary judgment with a certification from its President. On October 8, the Chair referred the motion to the full Commission. N.J.A.C. 19:14-4.8. The following facts appear. ¶

JOINT STIPULATION OF FACTS2/ ¶

1. The UTEA and the Board are parties to a collective bargaining agreement covering the period beginning September 1, 2021, and ending August 31, 2025 [ “CNA” ]. ¶

2. The CNA makes no reference to income tax withholdings. ¶

3. For all times relevant to this [UPC] (September 2022 to the present), members of the [Association] received their paychecks on a bi-monthly basis, on the 15th and last working day of each month. ¶

4. Bargaining unit members of the [Association] ( “Members” ) receive a set salary based upon their job title and core responsibilities in accordance with the [CNA] ( “contractual salary” ). ¶

5. Certain Members also take on additional responsibilities such as extra teaching periods or supervision of extracurricular or other activities. ¶

6. Members who have additional responsibilities receive extra compensation as set forth in the [CNA] ( “stipend” ). ¶

7. Prior to September 15, 2022, the Board utilized Systems 3000, payroll processing software, to process compensation paid to Members in accordance with the [CNA]. ¶

8. Prior to September 15, 2022, on each payday, Members received a single paycheck (via direct deposit) for all teaching periods, including stipend compensation for additional teaching periods. ¶

9. Prior to September 15, 2022, Federal income taxes were withheld from Members’ full compensation, including stipend in accordance with the information on their Form W-4. Subsequent to September 15, 2022, federal income taxes were generally not withheld from members’ stipend compensation. ¶

10. Members have the right at any time to change their Form W-4. Between September 1 and 15, 2022, the Board did not explicitly inform Members of this right. ¶

11. Immediately prior to the September 2022 pay periods, the parties are not aware of any members who requested or made any changes to their Form W-4s in connection with the use of SchoolFi. ¶

12. On or about September 15, 2022, the Board began to utilize SchoolFi, payroll processing software, to process compensation paid to Members in accordance with the CNA. The determination to use this company and software was made solely by the Board. ¶

13. Members were not specifically informed by the Board, prior to the first payday using SchoolFi, that deductions for Federal income taxes would generally no longer be taken from stipend payments. Thus, Members could not know, prior to the first payday using SchoolFi, that they may have reason to review and adjust their withholdings/Form W-4s. Nor were they informed prior to the first payday that after the withholdings stopped they could make changes to their W- 4 to adjust any withholdings. ¶

14. With SchoolFi, all Members receive two paychecks for each pay period, one paycheck for salary payable to Members in accordance with the [CNA] ( “salary paycheck” ) and one paycheck for any extra compensation payable to Members in accordance with the [CNA] for taking on additional responsibilities ( “stipend paycheck” ). ¶

15. Under SchoolFi Federal taxes were generally not withheld from Members’ stipend paychecks and affected Members had to pay a larger portion of their Federal taxes at the time of completing their tax returns for the 2022 calendar year than they anticipated or had in past years. However, the total amount of taxes owed by any Member for 2022 was not affected, nor was the date on which their income taxes were required to be paid. ¶

16. Under SchoolFi, Federal taxes were generally not withheld from Members’ stipend paychecks and affected Members had to pay a larger portion of their Federal taxes at the time of completing their tax returns for the 2023 calendar year than they anticipated or had prior to the 2022 calendar year. However, the total amount of taxes owed by any Member for 2023 was not affected, nor was the date on which their income taxes were required to be paid. ¶

17. The annual gross income (salary and extra compensation) earned by and payable to Members generally for calendar year 2022 was not affected by the Board's utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

18. The annual net income (gross income less any taxes due) earned by and payable to Members for calendar year 2022 was not affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

19. However, the net income received each pay period by Members generally in stipend paychecks in the 2022 calendar year was affected by the Board's utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. Specifically, each pay period affected Members generally had less taxes withheld from stipends, which impacted the net income received that pay period. ¶

20. As a result, any Federal income taxes not withheld from stipend paychecks had to be paid directly by the Member at the end of the 2022 calendar year. ¶

21. The annual gross income (salary and extra compensation) earned by and payable to Members for calendar year 2023 was not affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

22. The annual net income (gross income less any taxes due) earned by and payable to Members for calendar year 2023 was not affected by the Board's utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

23. However, the net income received each pay period by Members generally in stipend paychecks in the 2023 calendar year was affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. Specifically, each pay period affected Members generally had less taxes withheld from stipends, which impacted the net income received that pay period. ¶

24. As a result, any Federal income taxes not withheld from stipend paychecks were paid directly by the Member at the end of the 2023 calendar year. ¶

25. The annual gross income (salary and extra compensation) earned by and payable to Members is not currently affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

26. The annual net income (gross income less any taxes due) earned by and payable to Members is not currently affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

27. However, the net income received each pay period by Members generally in stipend paychecks is affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. Specifically, each pay period affected Members generally had less taxes withheld from stipends, which impacted the net income received that pay period. ¶

28. As a result, any Federal income taxes not withheld from stipend paychecks must be paid directly by the Member at the end of the 2024 calendar year. ¶

29. The total amount of taxes owed (after application of any credits and/or deductions) for Federal income tax and/or New Jersey income tax by Members generally for calendar year 2022 was not affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

30. The amount of Federal taxes affected Members had remaining due at the end of the 2022 calendar year was affected by the Board’s utilization of SchoolFi software for payroll processing. In other words, despite no change to their total tax burden, affected Members had to pay a larger portion of their tax burden at the time they filed their income tax returns rather than having more taxes withheld throughout the year by way of income withholdings in accordance with their Form W-4, as had been done prior to September 15, 2022. ¶

31. The total amount of taxes owed (after application of any credits and/or deductions) for Federal income tax and/or New Jersey income tax by Members generally for calendar year 2023 was not affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

32. The amount of Federal taxes affected Members had remaining due at the end of the 2023 calendar year was affected by the Board’s utilization of SchoolFi software for payroll processing. In other words, despite no change to their total tax burden, generally Members had to pay a larger portion of their tax burden at the time they filed their income tax returns rather than having more taxes withheld throughout the year by way of income withholdings in accordance with their Form W-4, as had been done prior to September 15, 2022. ¶

33. The total amount of taxes owed (after application of any credits and/or deductions) for Federal income tax and/or New Jersey income tax by Members is not currently affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

34. The amount of Federal taxes remaining due by affected Members at the end of the 2024 calendar will be affected by the Board’s utilization of SchoolFi software for payroll processing and Members’ failure to submit a revised Form W- 4. In other words, despite no change to their total tax burden, affected Members will have to pay a larger portion of their tax burden at the end of the year rather than having more taxes withheld throughout the year by way of income withholdings in accordance with their Form W-4, as had been done prior to September 15, 2022. ¶

35. For all times relevant to this [UPC] (September 2022 to the present), each Member was paid via direct deposit, and this was not affected by the Board’s utilization of SchoolFi for payroll processing beginning on or about September 15, 2022. ¶

36. For all times relevant to this [UPC] (September 2022 to the present), the manner (whether on a salary basis or hourly basis) by which Members were paid compensation was not affected by the Board's utilization of SchoolFi for payroll processing beginning on or about September 15, 2022. However, the amount of tax withholdings was changed by the Board's utilization of SchoolFi such that generally no taxes were deducted for additional, stipend, services for affected Members. ¶

37. For all times relevant to this [UPC] (September 2022 to the present) each Member had access to their paystub information through an online portal (which changed with the change of payroll processing software) each pay period setting forth gross income earned and any deductions (voluntary and involuntary) therefrom. Neither portal or payroll processing system directly sent members their paystubs and deductions information with their paychecks, nor was such information directly sent separately, however, an email each pay period notifies Members that such information can be accessed. ¶

38. For all times relevant to this [UPC] (September 2022 to the present), the paystub information that each Member had access to each pay period set forth any and all deductions from the gross income received for the applicable pay period, and for the year-to-date. ¶

39. For all times relevant to this [UPC](September 2022 to the present), the date on which Members received their paycheck was not affected by the Board’s utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

40. For all times relevant to this [UPC](September 2022 to the present), the frequency (bi-monthly) with which members of the [Association] received their paychecks was not affected by the Board's utilization of SchoolFi software for payroll processing beginning on or about September 15, 2022. ¶

41. Since the Board began using SchoolFi software for payroll processing on or about September 15, 2022, the gross amount received by any affected Member each pay period has not changed. The amount of Federal income taxes owed by members for any calendar year has not changed. The date on which unpaid Federal taxes are due, or tax returns are received, has not changed. However, the net amount received in affected Members’ stipend paychecks has changed, the amount of Federal income taxes withheld from extra compensation each pay period has changed and the affected Members generally will have to pay a larger portion of their tax burden when filing their income tax returns. ¶

42. The parties agree that the extent and remedy for damages, if any, in this matter will be addressed separately if the Association prevails on summary judgment for liability. ¶

STANDARD OF REVIEW ¶

Summary judgment will be granted if there are no material facts in dispute and the movant is entitled to relief as a matter of law. Brill v. Guardian Life Ins. Co. of America, 142 N.J. 520, 540 (1995); Judson v. Peoples Bank & Trust Co., 17 N.J. 67, 73-75 (1954). N.J.A.C. 19:14-4.8(e) provides: ¶

If it appears from the pleadings, together with the briefs, affidavits and other documents filed that there exists no genuine issue of material fact and that the movant or cross-movant is entitled to its requested relief as a matter of law, the motion or cross-motion for summary judgment may be granted and the requested relief may be ordered. ¶

In determining whether there exists a “genuine issue” of material fact that precludes summary judgment, we must “consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational fact finder to resolve the alleged disputed issue in favor of the non-moving party.” Brill, 142 N.J. at 540. We “must grant all the favorable inferences to the non-movant.” Id. at 536. The summary judgment procedure is not to be used as a substitute for a plenary trial. Baer v. Sorbello, 177 N.J. Super. 183 (App. Div. 1981), certif. denied, 87 N.J. 388 (1981). Summary judgment “should be denied unless the right thereto appears so clearly as to leave no room for controversy.” Saldana v. DeMedio, 275 N.J. Super. 488, 495 (App. Div. 1995). ¶

ARGUMENTS ¶

The Association argues that the Commission should grant its motion for summary judgment because the Board’s unilateral change to the payroll scheme, by creating two checks per pay period, one for salary and another for stipend compensation and eliminating automatic payroll deductions for federal taxes on the stipend paycheck, was a mandatorily negotiable change to the terms and conditions of employment, and thus, it violated the Act. The Association asserts that the Board’s unilateral change to the timing and amount of wages paid each payroll period resulted in each Association member paying substantially more in taxes when filing their returns at the end of the tax year. ¶

The Board responds that its cross-motion for summary judgment should be granted and the Association’s UPC should be dismissed because the undisputed facts show that the Association members have not lost wages nor has their tax burden been increased as a result of the Board’s change in payroll software vendor, which was a change within its managerial prerogative. Citing several federal tax statutes and regulations, the Board asserts that the proper amount to be withheld from employees’ paychecks is preempted by law, and thus, non-negotiable.3/ The Board asserts that Association members could have figured out from the paystubs that were available to them online what deductions were being made, and alerted the Board of any issues, but it did not do so. The Board argues that Association members were free to change their Form W-4 to increase the amount of federal tax withholdings to avoid underpayment when filing their tax returns, but they did not do so. ¶

ANALYSIS ¶

N.J.S.A. 34:13A-5.3 requires that: “the majority representative and designated representatives of the public employer shall meet at reasonable times and negotiate in good faith with respect to grievances, disciplinary disputes, and other terms and conditions of employment.” “[U]nilateral imposition of working conditions is the antithesis of [the Legislature’s] goal that the terms and conditions of public employment be established through bilateral negotiation.” Atlantic Cty., 230 N.J. 237, 252 (2017), quoting Galloway Twp. Bd. of Educ., 78 N.J. 25, 48 (1978). Public employers are prohibited from “[r]efusing to negotiate in good faith with a majority representative of employees in an appropriate unit concerning terms and conditions of employment of employees in that unit.” N.J.S.A. 34:13A-5.4(a)(5). ¶

Local 195, IFPTE v. State, 88 N.J. 393 (1982), articulates the standards for determining whether a subject is mandatorily negotiable: ¶

[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. To decide whether a negotiated agreement would significantly interfere with the determination of governmental policy, it is necessary to balance the interests of the public employees and the public employer. When the dominant concern is the government’s managerial prerogative to determine policy, a subject may not be included in collective negotiations even though it may intimately affect employees’ working conditions. ¶

[Id. at 404-405]. ¶

Where a statute or regulation is alleged to preempt an otherwise negotiable term or condition of employment, it must do so expressly, specifically and comprehensively. Bethlehem Tp. Bd. of Ed. v. Bethlehem Tp. Ed. Ass’n, 91 N.J. 38, 44-45 (1982). The legislative provision must “speak in the imperative and leave nothing to the discretion of the public employer.” State v. State Supervisory Employees Ass’n, 78 N.J. 54, 80-82 (1978). We must balance the parties’ interests in light of the particular facts and arguments presented. City of Jersey City v. Jersey City POBA, 154 N.J. 555, 574-575 (1998). ¶

The Commission has held that procedural issues involving the use of payroll deduction for employee benefits payments are mandatorily negotiable, unless preempted. See, e.g. Neptune Bd. of Ed., P.E.R.C. No. 90-55, 16 NJPER 30 (¶21015 1989), aff’d, NJPER Supp.2d 248 (¶201 App. Div. 1991), certif. den., 126 N.J. 333 (1991) (date of payroll deductions for voluntary credit union and annuity plan payments was mandatorily negotiable, so employer’s unilateral change was an unfair practice); State of New Jersey (Dept. of Personnel), P.E.R.C. No. 92-65, 18 NJPER 50 (¶23021 1991) (in the event of non-negotiable departmental shutdown, the issue of dates and amounts of payroll deductions is a severable negotiable impact issue); Berkeley Tp., P.E.R.C. No. 2023-7, 49 NJPER 181 (¶42 2022) (Township’s refusal to allow PBA members to pay for their own voluntary supplemental disability insurance coverage via payroll deduction was mandatorily negotiable and legally arbitrable.) ¶

We find that the Board’s unilateral change to the payroll scheme, resulting in federal income taxes not being withheld from stipend compensation, was mandatorily negotiable. Thus, the Board’s decision to eliminate this income tax deduction benefit without negotiations and without notice to the affected Association members constituted a 5.4(a)(5) violation. As we found in Berkley, supra, the option of paying for a benefit, in that case supplemental disability insurance, through payroll deductions is a mandatorily negotiable term and condition of employment. Here, the Association members were able to utilize payroll deductions to pay for federal income tax on their stipend compensation under the previous payroll scheme. The Board’s unilateral change to the payroll scheme eliminated this option and affected the method by which Association members fulfilled their tax responsibilities. ¶

The Board argues that the Association members could have known that federal tax income withholdings were not being withheld from their stipend paychecks, and then adjusted their Form W-4 to avoid an underpayment of taxes when filing their tax returns. However, the stipulated facts make clear that Association members were not specifically informed by the Board, prior to the first payday using SchoolFi, that deductions for federal income taxes would generally no longer be taken from stipend payments. Thus, Association members had no prompting to review and adjust their withholdings/Form W-4s. ¶

Moreover, any managerial prerogative that may exist to change payroll software vendors does not relieve the Board of its obligation to negotiate the elimination of a payroll deduction benefit and provide notice of the change. Further, we do not find that the federal tax statutes and regulations cited by the Board are preemptive. The Board was able to deduct federal income tax from stipend compensation under the Systems 3000 software and does not provide any explanation for being unable to do so with the SchoolFi system. ¶

For all the foregoing reasons, we grant the Association’s motion for summary judgment and deny the Board’s cross-motion for summary judgment. As requested by the parties, this case is referred for a hearing for the sole purpose of determining the extent of any damages. ¶

OrderORDER ¶

The Association’s motion for summary judgment is granted. The Board’s cross-motion for summary judgment is denied. The charge is referred for a hearing to determine the extent and remedy for damages, if any, for this N.J.S.A. 34:13A-5.4(a)(5) violation. ¶

The Union Township Board of Education is ordered to: ¶

A. Cease and desist from: ¶

1. Refusing to negotiate in good faith with the Union Township Education Association concerning terms and conditions of employment of employees in all units represented by the Association including by unilaterally changing the number of paychecks received per pay period and the amount of federal tax withholdings - from one per pay period with all federal taxes withheld to two paychecks per pay period with no federal tax withheld for stipend compensation. ¶

B. Take the following action: ¶

1. Negotiate in good faith with the Association over terms and conditions of employment prior to changing or modifying terms and conditions of employment, including but not limited to changing the number of paychecks received per pay period and the amount of federal tax withholdings - from one paycheck per pay period with all federal taxes withheld to two paychecks per pay period with no federal tax withheld for stipend compensation. ¶

2. Restore the payroll deduction scheme in effect prior to September 15, 2022, where on each payday, Association members received a single paycheck (via direct deposit) for all teaching periods, including stipend compensation and Federal income taxes were withheld from Association members’ full compensation. ¶

3. Post in all places where notices to employees are customarily posted, copies of the attached notice marked as ¶

Appendix “A.” Copies of such notice shall, after being signed by the Respondent’s authorized representative, be posted immediately and maintained by it for at least sixty (60) consecutive days. Reasonable steps shall be taken to ensure that such notices are not altered, defaced or covered by other materials. ¶

4. Notify the Chair of the Commission within twenty (20) days of receipt what steps the Respondent has taken to comply with this ORDER. ¶

BY ORDER OF THE COMMISSION ¶

Chair Hennessy-Shotter, Commissioners Eaton, Ford, Higgins, Kushnir, and Papero voted in favor of this decision. None opposed. ¶

ISSUED: December 12, 2024 ¶

Trenton, New Jersey ¶

Notice to employeesWE SHALL cease and desist from refusing to negotiate in good faith with the Union Township Education Association concerning terms and conditions of employment of employees in all units represented by the Association including by unilaterally changing the number of paychecks received per pay period and the amount of federal tax withholdings - from one paycheck per pay period with all federal taxes withheld to two paychecks per pay period with no federal tax withheld for stipend compensation. WE SHALL negotiate in good faith with the Association over terms and conditions of employment prior to changing or modifying terms and conditions of employment, including but not limited to changing the number of paychecks received per pay period and the amount of federal tax withholdings - from one paycheck per pay period with all federal taxes withheld to two paychecks per pay period with no federal tax withheld for stipend compensation. WE SHALL restore the payroll deduction scheme in effect prior to September 15, 2022, where on each payday, Association members received a single paycheck (via direct deposit) for all teaching periods, including stipend compensation and Federal income taxes were withheld from Association members’ full compensation. ¶

Note1/ These provisions prohibit public employers, their representatives or agents from: “(5) Refusing to negotiate in good faith with a majority representative of employees in an appropriate unit concerning terms and conditions of employment of employees in that unit, or refusing to process grievances presented by the majority representative.” ¶

2/ The Joint Stipulation of Facts was submitted on July 30, 2024. Any modifications are in brackets. ¶

3/ Citing N.J.S.A. 54A:7-1(a), 26 U.S.C. § 3402(a), and additional IRS guidelines regarding income tax withholding on supplemental wages, the Board argues “the proper amount to be withheld from employees’ paychecks is preempted by statute and non-negotiable as a matter of law.” However, the Board concedes that “whether employees are issued two separate checks for regular wages and additional compensation, is not preempted by law.” See Board’s brief at 17-18. ¶

Notice to employeesDocket No. CO-2023-157 Union Township Board of Education (Public Employer) Date: By: This Notice must remain posted for 60 consecutive days from the date of posting, and must not be altered, defaced or covered by any other material. If employees have any question concerning this Notice or compliance with its provisions, they may communicate directly with the Public Employment Relations Commission, 495 West State Street, PO Box 429, Trenton, NJ 08625-0429 (609) 292-9830 APPENDIX “A” ¶