P.E.R.C. No. 2026-1, Essex Cty

CaptionSTATE OF NEW JERSEY BEFORE THE PUBLIC EMPLOYMENT RELATIONS COMMISSION In the Matter of COUNTY OF ESSEX, Petitioner, -and- Docket No. SN-2025-021 FOP LODGE 106, Respondent. ¶

SynopsisSYNOPSIS ¶

The Public Employment Relations Commission grants the County’s request for a restraint of binding arbitration of the FOP’s request for arbitration of the County’s refusal to provide health insurance waiver opt-out payments to FOP members who received alternate State Health Benefits Plan (SHBP) ¶

health coverage through a spouse. Pursuant to the unfair practice remedy in P.E.R.C. No. 2023-60, the FOP filed for arbitration to resolve a dispute over a reimbursement claim related to the County’s change in health insurance to the SHBP. The Commission holds that N.J.A.C. 17:9-1.7(e) specifically preempts opt-out payments for employees receiving alternate SHBP coverage through a spouse. The Commission further holds that any changes to employee eligibility for health insurance waiver opt-out payments caused by the County’s change to the SHBP are preempted by N.J.S.A. 52:14-17.31a, which provides that the decision to provide waiver opt-out payments is non-negotiable. ¶

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 COUNTY OF ESSEX, Petitioner, -and- Docket No. SN-2025-021 FOP LODGE 106, Respondent. ¶

AppearancesAppearances: ¶

For the Petitioner, Genova Burns, LLC, attorneys (Joseph M. Hannon, of counsel) ¶

For the Respondent, C. Elston & Associates, LLC, attorneys (Catherine M. Elston, of counsel) ¶

DECISION ¶

On May 6, 2025, the County of Essex (County) filed a scope of negotiations petition seeking a restraint of binding arbitration of a grievance filed by FOP Lodge 106 (FOP). The arbitration request asserts that the County violated Article 21 of the parties’ collective negotiations agreement (CNA) by not compensating FOP members who had opted out of medical coverage after the County unilaterally changed its health insurance provider to the State Health Benefits Plan (SHBP) in 2017. The FOP asserts that the unilateral change to the SHBP, which the Commission found was an unfair practice, caused some FOP members to lose the ability to receive opt-out payments for waiving the County’s health insurance coverage. ¶

The County filed briefs, exhibits and the certifications County Administrator, Robert D. Jackson, and its counsel, Joseph M. Hannon. The FOP filed a brief, exhibits and the certification of its counsel, Catherine M. Elston.1/ These facts appear. ¶

The FOP represents all County Correction Sergeants, Lieutenants and Captains employed by the County. The County and FOP are parties to a CNA with a term of January 1, 2011 through December 31, 2013, a Memorandum of Agreement (MOA) with a term of January 1, 2014 to December 31, 2017, and an interest arbitration award setting the terms of the parties’ successor CNA for the period of January 1, 2018 through December 31, 2020. The parties’ grievance procedure ends in binding arbitration. ¶

Article 21(c) of the CNA is entitled “Waiver/Opt-Out” and provides that employees who waive health insurance coverage through the County will receive opt-out payments up to certain monetary/percentage saved limits depending on which type of coverage is waived. ¶

On January 1, 2017, the County entered the SHBP for active and retired employees. Following the FOP’s filing of an unfair practice charge along with several other of the County’s police unions, a Commission Hearing Examiner found that, as to the FOP Lodge 106 and PBA Local 382, the County violated subsections 5.4a(5) and (1) of the New Jersey Employer-Employee Relations Act (Act)2/, N.J.S.A. 34:13A-1 et seq., when it unilaterally changed their health benefits as a result of changing their insurance carrier from Aetna to the SHBP in 2017. Essex Cty., H.E. No. 2023-6, 49 NJPER 428 (¶105 2023). On June 29, 2023, the Commission affirmed the Hearing Examiner’s finding that the County committed an unfair practice and violated the Act when it unilaterally decreased the level of health insurance benefits for FOP and PBA Local 382 unit employees as a result of its change to the SHBP. Essex Cty., P.E.R.C. No. 2023-60, 50 NJPER 43 (¶15 2023). As a remedy, the Commission ordered, in part, that the County take the following affirmative action: ¶

Establish a health benefits reimbursement fund to immediately reimburse all PBA Local 382 and FOP Lodge 106 unit employees (active or retired) for any costs or losses incurred since January 1, 2017 as a result of Essex County’s change in health insurance carriers from Aetna to the New Jersey State Health Benefits Program on January 1, 2017. ¶

[Essex Cty., 50 NJPER at 54.] ¶

The Commission further provided the following process for submitting reimbursement claims and resolving disputes over such claims: ¶

Employee claims for reimbursement may only be submitted to the County by their majority representative, i.e., PBA Local 382 or Lodge 106, as applicable, on their behalf. Disputes over health benefits reimbursement claims shall be reviewable in binding arbitration pursuant to the parties’ negotiated grievance procedures. ¶

[Essex Cty., 50 NJPER at 54.] ¶

On May 7, 2024, the Appellate Division affirmed the Commission’s decision, finding that “PERC properly concluded the County’s change in carriers violated its CNA with FOP 106,” that “[t]he County’s actions violated N.J.S.A. 34:13A-5.4(a)(5),” and that “PERC’s reimbursement remedy here was proper.” Essex Cty., *21, 28-29 (App. Div. 2024).3/ ¶

Requests for waivers of health benefits coverage require an employee to complete an annual “Opt-Out” form and provide supporting documentation for review by County Human Resources. The County Administrator certifies that, while it continues to grant health insurance waiver opt-out payments for eligible employees receiving health benefits from a family member in a non-SHBP plan, the SHBP prohibits the County from granting waiver requests made by County employees who receive healthcare coverage through a SHBP-participating family member. ¶

On April 4, 2024, the FOP emailed the County requesting opt- out payments for eleven (11) FOP members who allegedly waived the County’s healthcare coverage between 2017 and 2024. The County Administrator certifies that each of the FOP members who were denied opt-out payments were properly denied based on enrollment in their spouse’s SHBP medical coverage. The Administrator provided copies of the opt-out forms and related documentation submitted by each of these FOP members for the years in question. This record demonstrates that seven of the 11 FOP members were denied opt-out payments due to receiving health benefits coverage through their SHBP-participating spouses, two FOP members were granted opt-out payments for all of the years they submitted opt- out forms, and two FOP members were granted opt-out payments for years in which they received coverage through a spouse’s non-SHBP plan but were denied opt-out payments for years in which they received coverage through a spouse’s SHBP plan. ¶

On August 2, 2024, Counsel for the County sent a response to the FOP’s Counsel regarding the members whose requests for opt- out payments were denied. On October 28, 2024, the FOP filed a Request for Submission of a Panel of Arbitrators. This petition ensued. ¶

Our jurisdiction is narrow. The Commission is addressing the abstract issue of whether the subject matter in dispute is within the scope of collective negotiations. We do not consider the merits of the grievance or any contractual defenses that the employer may have. Ridgefield Park Ed. Ass’n v. Ridgefield Park Bd. of Ed., 78 N.J. 144, 154 (1978). ¶

The scope of negotiations for police officers and firefighters is broader than for other public employees because N.J.S.A. 34:13A-16 provides for a permissive as well as a mandatory category of negotiations. Paterson Police PBA No. 1 v. City of Paterson, 87 N.J. 78, 92-93 (1981), outlines the steps of a scope of negotiations analysis for firefighters and police: ¶

First, it must be determined whether the particular item in dispute is controlled by a specific statute or regulation. If it is, the parties may not include any inconsistent term in their agreement. State v. State Supervisory Employees Ass’n, 78 N.J. 54, 81 (l978). If an item is not mandated by statute or regulation but is within the general discretionary powers of a public employer, the next step is to determine whether it is a term or condition of employment as we have defined that phrase. An item that intimately and directly affects the work and welfare of police and firefighters, like any other public employees, and on which negotiated agreement would not significantly interfere with the exercise of inherent or express management prerogatives is mandatorily negotiable. 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 policymaking 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. ¶

Arbitration is permitted if the subject of the grievance is mandatorily or permissively negotiable. See Middletown Tp., aff’ g P.E.R.C. No. 82-90, 8 NJPER 227 (¶13095 1982). Thus, if a grievance is either mandatorily or permissively negotiable, then an arbitrator can determine whether the grievance should be sustained or dismissed. Paterson bars arbitration only if the agreement alleged is preempted or would substantially limit government’s policy-making powers. ¶

The County asserts that arbitration should be restrained because N.J.S.A. 52:14-17.31a preempts the issue of health insurance waiver opt-out payments. It argues that a public employer has the sole, non-negotiable discretion to decide whether to offer a health insurance waiver opt-out payment and in what amount within the statutory limits. The County asserts that, even where a public employer offers opt-out payments, N.J.A.C. 17:9-1.7(e) prohibits such payments for any employee who waives coverage based on other SHBP coverage, which is the case for the employees the FOP asserts should have received opt-out payments. The County contends that a preempted opt-out payment cannot be a reimbursable loss under P.E.R.C. No. 2023-60, supra, and that the unfair practice remedy in that case provides for disputes to be settled through grievance arbitration, which includes the scope of negotiations process. ¶

The FOP asserts that the County’s attempt to restrain arbitration circumvents the Commission’s remedy in P.E.R.C. No. 2023-60 that all losses caused by the County’s unilateral change to the SHBP be reimbursed. It argues that the health insurance waiver opt-out payments have been a longstanding term of employment in Article 21 of the CNA. The FOP contends that if the County had not committed an unfair practice by unilaterally switching to the SHBP, then all of its employees who waive health insurance would still be receiving the opt-out payments. The FOP asserts that N.J.A.C. 17:9-1.7(e) would not be applicable to prohibit opt-out payments for employees receiving other SHBP coverage if the County had remained on a private health insurance plan and not violated the Act by unilaterally switching to the SHBP. The FOP argues that the loss of the waiver opt-out payments for employees who otherwise would have been eligible is a loss within the remedy of P.E.R.C. No. 2023-60. ¶

Initially, we address the FOP’s argument that the County cannot raise a preemption challenge to the FOP’s reimbursement request for opt-out payments because the Commission’s decision in P.E.R.C. No. 2023-60 already ordered a reimbursement remedy. The remedial order in P.E.R.C. No. 2023-60, affirmed by the Appellate Division, explicitly provides that “disputes over reimbursement claims shall be reviewable in binding arbitration pursuant to the parties’ negotiated grievance procedure.” That arbitration process necessarily includes the Commission’s jurisdiction to consider a party’s scope of negotiations petition seeking to restrain binding arbitration based on a preemption argument or any other legal grounds outlined by the Supreme Court in Paterson, supra. See N.J.S.A. 34:13A-5.4d. ¶

We turn to the County’s preemption argument. Where a statute or regulation addresses a term and condition of employment, negotiations are preempted only if it speaks in the imperative and fixes a term and condition of employment expressly, specifically, and comprehensively. Bethlehem Tp. Ed. Ass’n v. Bethlehem Tp. Bd. of Ed., 91 N.J. 38, 44-45 (1982); State v. State Supervisory Employees Ass’n, 78 N.J. 54, 80-82 (1978). ¶

The SHBP’s regulations provide that when non-State public employers like the County who choose to offer an incentive for waiving their SHBP coverage, such opt-out payments are not permitted for employees who waive coverage because of other SHBP or SEHBP coverage. N.J.A.C. 17:9-1.7 is entitled “Employer Incentives for Non-enrollment in the SHBP.” N.J.A.C. 17:9-1.7(e) provides: “If the member is waiving coverage because of other SHBP or SEHBP coverage, no monetary incentive is allowed.” The Commission has therefore held that “the issue of waiver payments when the alternate coverage is under the SHBP is preempted by N.J.A.C. 17:9-1.7,” as it expressly bars “non-State local employers who participate in the SHBP from making waiver payments to employees whose other eligible coverage is through the SHBP.” Maplewood Tp., P.E.R.C. No. 2024-38, 50 NJPER 350, 353 (¶83 2024).4/ ¶

In Maplewood Tp., we restrained arbitration over the denial of an employee’s SHBP waiver payment because it was undisputed that the grievant was covered under the SHBP plan of his wife’s employer. Similarly, in this case, the record demonstrates that the employees whose health insurance waiver opt-out payments were denied had received coverage through their SHBP-participating spouses in the years in which they were denied. Compare Somerville Bor., P.E.R.C. No. 2021-11, 47 NJPER 199 (¶44 2020) (arbitration not restrained due to factual dispute over whether grievant’s spouse had SHBP coverage or not). Here, the FOP has not disputed the County’s certification and exhibits indicating that FOP members received opt-out payments when they received coverage from a spouse’s non-SHBP/SEHBP plan, and were denied opt-out payments only in years when they were ineligible based on their alternate SHBP coverage. Accordingly, as N.J.A.C. 17:9- 1.7(e) explicitly preempts a “monetary incentive” for “waiving coverage because of other SHBP or SEHBP coverage,” the issue of opt-out payments for these FOP members is not legally arbitrable. ¶

We next turn to the FOP’s assertion that N.J.A.C. 17:9- 1.7(e) only became applicable due to the County’s unfair practice and that it should not preempt a remedy that includes opt-out payments. We recognize that if the County had continued providing a non-SHBP health insurance plan with opt-out payments for waiving coverage, then N.J.A.C. 17:9-1.7(e) would not bar opt-out payments to employees with other SHBP coverage. However, as N.J.S.A. 52:14-17.31a(c) explicitly provides that the decision of whether to provide for any opt-out payments “shall not be subject to the collective bargaining process,” the FOP had no entitlement to such payments and is statutorily preempted from enforcing Article 21 of the CNA in binding arbitration. See, e.g., Clinton Tp., P.E.R.C. No. 2013-33, 39 NJPER 212 (¶70 2012); City of Linden, P.E.R.C. No. 2023-42, 49 NJPER 462 (¶113 2023); Town of Westfield, P.E.R.C. No. 2018-12, 44 NJPER 144 (¶42 2017); and State of New Jersey, P.E.R.C. No. 2014-78, 40 NJPER 547 (¶177 2014). Thus, whether or not the County had switched to the SHBP, the health insurance waiver program was within its non-negotiable discretion to implement.5/ ¶

Furthermore, this case is distinguishable from the City of Orange Tp., P.E.R.C. No. 2019-37, 45 NJPER 325 (¶86 2019) and Sayreville Bor., P.E.R.C. No. 2020-35, 46 NJPER 315 (¶77 2020) relied on by the FOP. In those cases, the Commission reiterated its statutory interpretation finding that health insurance opt- out payments are non-negotiable, but held that, in a given year in which the employer has already exercised its discretion under N.J.S.A. 40A:10-17.1 and/or N.J.S.A. 52:14-17.31a to accept health insurance waivers in exchange for an annual opt-out payment, arbitration over the employer’s alleged failure to properly effectuate payment for that year is not preempted. ¶

OrderORDER ¶

The County of Essex’s request for a restraint of binding arbitration is granted. ¶

BY ORDER OF THE COMMISSION ¶

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

ISSUED: August 28, 2025 ¶

Trenton, New Jersey ¶

Note1/ The FOP Lodge 106 submitted a certification of its counsel encompassing Exhibits A-G. However, the FOP did not recite all pertinent facts supported by certification(s) based upon personal knowledge. N.J.A.C. 19:13-3.6(f). ¶

2/ These provisions prohibit public employers, their representatives or agents from: “(1) Interfering with, restraining or coercing employees in the exercise of the rights guaranteed to them by this act” ; and “(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.” ¶

3/ This decision is published in the New Jersey Public Employee Reporter at: 51 NJPER 15 (¶5 App. Div. 2024). ¶

4/ See also State of New Jersey Department of Community Affairs, Division of Local Government Services, Local Finance Notice (LFN) 2016-10 ( “[I]f the local unit is in SHBP, and the alternate coverage is also under SHBP . . . , the employee cannot receive a waiver payment.” ) ¶

5/ See Essex Cty., P.E.R.C. No. 2020-40, 46 NJPER 359 (¶88 2020), 47 NJPER 429 (¶102 App. Div. 2021) (where a different County police union alleged that “the County’s move to the SHBP reduced eligibility for the waiver opt-out payments provided in Article 21, Section 7 of the CNA because the SHBP prohibits opt-out payments for employees who continue to receive SHBP coverage through their spouse,” the Commission held: “Regardless of whether the PBA members are covered under a private plan or the SHBP, the issue of health care waiver opt-out payments is preempted from negotiations by N.J.S.A. 40A:10-17.1 (non-SHBP) and N.J.S.A. 52:14-17.31a (SHBP).” ) ¶