S1412

An Act concerning police and fire interest arbitration, amending P.L.1977, c.85, and repealing various parts of the statutory law.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 3 of P.L.1977, c.85 (C.34:13A-16) is amended to read as follows:

3. a. (1) Negotiations between a public fire or police department and an exclusive representative concerning the terms and conditions of employment shall begin at least 120 days prior to the day on which their collective negotiation agreement is to expire. The parties shall meet at least three times during that 120-day period. The first of those three meetings shall take place no later than the 90th day prior to the day on which their collective negotiation agreement is to expire. By mutual consent, the parties may agree to extend the period during which the second and third meetings are required to take place beyond the day on which their collective negotiation agreement is to expire. A violation of this paragraph shall constitute an unfair practice and the violator shall be subject to the penalties prescribed by the commission pursuant to rule and regulation.

Prior to the expiration of their collective negotiation agreement, either party may file an unfair practice charge with the commission alleging that the other party is refusing to negotiate in good faith. The charge shall be filed in the manner, form and time specified by the commission in rule and regulation. If the charge is sustained, the commission shall order that the respondent be assessed for all legal and administrative costs associated with the filing and resolution of the charge; if the charge is dismissed, the commission shall order that the charging party be assessed for all legal and administrative costs associated with the filing and resolution of the charge. The filing and resolution of the unfair practice charge shall not delay or impair the impasse resolution process.

(2) Whenever those negotiations concerning the terms and conditions of employment shall reach an impasse, the commission, through the Division of Public Employment Relations shall, upon the request of either party, or upon its own motion take such steps, including the assignment of a mediator, as it may deem expedient to effect a voluntary resolution of the impasse.

b. (1) In the event of a failure to resolve the impasse by mediation, the Division of Public Employment Relations, at the request of either party, shall invoke factfinding with recommendation for settlement of all issues in dispute unless the parties reach a voluntary settlement prior to the issuance of the factfinder's report and recommended terms of settlement. Factfinding shall be limited to those issues that are within the required scope of negotiations unless the parties to the factfinding agree to factfinding on permissive subjects of negotiation.

(2) Notwithstanding the provisions of paragraph (2) of subsection a. of this section or paragraph (1) of this subsection, either party may petition the commission for arbitration on or after the date on which their collective negotiation agreement expires. The petition shall be filed in a manner and form prescribed by the commission. The party filing the petition shall notify the other party of its action. The notice shall be given in a manner and form prescribed by the commission.

Any mediation or factfinding invoked pursuant to paragraph (2) of subsection a. of this section or paragraph (1) of subsection b. of this section shall terminate immediately upon the filing of a petition for arbitration.

(3) Upon the filing of a petition for arbitration pursuant to paragraph (2) of this subsection, an arbitrator selected pursuant to paragraph (1) of subsection e. of this section shall conduct an initial meeting as a mediation session to effect a voluntary resolution of the impasse. An arbitrator may order additional meetings to be utilized as mediation sessions to resolve the impasse.

c. (Deleted by amendment, P.L.2010, c.105)

d. The resolution of issues in dispute shall be binding arbitration under which the award on the unsettled issues is determined by conventional arbitration. The arbitrator shall determine whether the total net annual economic changes for each year of the agreement are reasonable under the nine statutory criteria set forth in subsection g. of this section and shall adhere to the limitations set forth in section 2 of P.L.2010, c.105 (C.34:13A-16.7). The non-petitioning party, within five days of receipt of the petition, shall separately notify the commission in writing of all issues in dispute. The filing of the written response shall not delay, in any manner, the interest arbitration process.

e. (1) The commission shall take measures to assure the [impartial] selection of an arbitrator or arbitrators from its special panel of arbitrators. Upon receipt of a petition for arbitration, the commission shall communicate to the parties the option to mutually select an arbitrator from the special panel of arbitrators. The parties shall notify the commission in writing of the mutual selection within three business days. On the [first] fourth business day following receipt of an interest arbitration petition, if no notice of mutual selection is received and approved by the commission, the commission shall, independent of and without any participation by either of the parties, randomly select an arbitrator from its special panel of arbitrators. The selection by the commission shall be final and shall not be subject to review or appeal.

(2) Applicants for initial appointment to the commission's special panel of arbitrators shall be chosen based on their professional qualifications, knowledge, and experience, in accordance with the criteria and rules adopted by the commission. Such rules shall include relevant knowledge of local government operations and budgeting. Appointment to the commission's special panel of arbitrators shall be for a three-year term, with reappointment contingent upon a screening process similar to that used for determining initial appointments. [Arbitrators currently serving on the panel shall demonstrate to the commission their professional qualification, knowledge and experience, in accordance with the criteria and rules adopted by the commission, within one year of the effective date of this act. Any arbitrator who does not satisfactorily demonstrate such to the commission within the specified time shall be disqualified].

(3) Arbitrators serving on the commission's special panel shall be guided by and subject to the objectives and principles set forth in the "Code of Professional Responsibility for Arbitrators of Labor-Management Disputes" of the National Academy of Arbitrators, the American Arbitration Association, and the Federal Mediation and Conciliation Service.

(4) Arbitrators shall be required to complete annual training offered by the State Ethics Commission. Any arbitrator failing to satisfactorily complete the annual training shall be immediately removed from the special panel.

The commission may suspend, remove, or otherwise discipline an arbitrator for a violation of P.L.1977, c.85 (C.34:13A-14 et seq.), section 4 of P.L.1995, c.425 (C.34:13A-16.1) or for good cause. An arbitrator who fails to render an award within the time requirements set forth in this section shall be fined $ 1,000 for each day that the award is late.

f. (1) (a) The parties have a duty to exchange information including the written report of any expert who a party intends to call as a witness at the arbitration proceedings. The arbitrator shall have the authority to set deadlines for the exchange of information. If a party fails to timely exchange information or the report of an expert, the arbitrator shall have discretion as to the evidence that shall be included in the record.

(b) Prior to the commencement of the arbitration proceedings, the public employer shall provide the arbitrator and the employee representative with:

(i) a list of all unit members during the final year of the expired agreement, their salary guide steps during the final year of the expired agreement, and their anniversary date of hire, which shall mean the date or dates on which unit members advance on the guide;

(ii) costs of increments and the specific dates on which they are paid;

(iii) costs of any other base salary items and the specific dates on which they are paid;

(iv) the total cost of all base salary items for the 12 months immediately preceding the first year of the new agreement; and

(v) a list of all unit members as of the last day of the year immediately preceding the new agreement, their step, and their rate of salary as of that same day. The employee representative shall respond to the information provided by the public employer.

(c) At a time prescribed by the commission, the parties shall submit to the arbitrator their final offers on each economic and non-economic issue in dispute. The offers submitted pursuant to this section shall be used by the arbitrator for the purposes of determining an award pursuant to subsection d. of this section.

(2) In the event of a dispute, the commission shall have the power to decide which issues are economic issues. Economic issues include those items which have a direct relation to employee income including wages, salaries, hours in relation to earnings, and other forms of compensation such as paid vacation, paid holidays, health and medical insurance, and other economic benefits to employees.

(3) Throughout formal arbitration proceedings the chosen arbitrator may mediate or assist the parties in reaching a mutually agreeable settlement.

All parties to arbitration shall present, at the formal hearing before the issuance of the award, written estimates of the financial impact of their [last] final offer on the taxpayers of the local unit to the arbitrator with the submission of their [last] final offer.

(4) Arbitration shall be limited to those subjects that are within the required scope of collective negotiations, except that the parties may agree to submit to arbitration one or more permissive subjects of negotiation.

(5) The decision of an arbitrator or panel of arbitrators shall include an opinion and an award, and shall be rendered within [90] 150 calendar days of the commission's assignment of that arbitrator. Upon request of the arbitrator, the commission chair or designee shall have discretion to extend the time to issue the opinion and award, if the commission chair or designee determines it is warranted under the circumstances. Extensions, if granted, shall be limited to 30 days cumulatively, such that the time frame for issuance of the opinion and award shall not exceed 180 days.

Each arbitrator's decision shall be accompanied by a written report explaining how each of the statutory criteria played into the arbitrator's determination of the final award. The report shall certify that the arbitrator took the statutory limitations imposed on the local levy cap into account in making the award.

Any arbitrator violating the provisions of this paragraph may be subject to the commission's powers under paragraph (3) of subsection e. of this section. The decision shall be final and binding upon the parties and shall be irreversible, except:

(a) Within [14] 21 calendar days of receiving an award, an aggrieved party may file notice of an appeal of an award to the commission on the grounds that the arbitrator failed to apply the criteria specified in subsection g. of this section or violated the standards set forth in N.J.S.2A:24-8 or N.J.S.2A:24-9. The appeal shall be filed in a form and manner prescribed by the commission. In deciding an appeal, the commission, pursuant to rule and regulation and upon petition, may afford the parties the opportunity to present oral arguments. The commission may affirm, modify, correct or vacate the award or may, at its discretion, remand the award to the same arbitrator or to another arbitrator, selected by lot, for reconsideration. The commission's decision shall be rendered no later than [60] 90 calendar days after the filing of the appeal with the commission or the next commission meeting immediately following the 90th day.

Arbitration appeal decisions shall be accompanied by a written report explaining how each of the statutory criteria played into their determination of the final award. The report shall certify that in deciding the appeal, the commission took the local levy cap into account in making the award.

An aggrieved party may appeal a decision of the commission to the Appellate Division of the Superior Court.

(b) An arbitrator's award shall be implemented immediately. The parties shall meet no later than 10 days after the issuance of the award to complete the implementation of the award and resolve any issues to avoid the filing of appeals. The meeting shall not stay the time to file an appeal.

(6) The parties shall share equally the costs of arbitration subject to a fee schedule approved by the commission. The fee schedule shall provide that the cost of services provided by the arbitrator shall not exceed [$1,000] $1,500 per day. The total cost of services of an arbitrator shall not exceed [$10,000] $15,000. If the parties cancel an arbitration proceeding without good cause, the arbitrator may impose a fee of not more than $500. The parties shall share equally in paying that fee if the request to cancel or adjourn is a joint request. Otherwise, the party causing such cancellation shall be responsible for payment of the entire fee.

g. 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 factor 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; 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).

h. A mediator, factfinder, or arbitrator while functioning in a mediatory capacity shall not be required to disclose any files, records, reports, documents, or other papers classified as confidential received or prepared by him or to testify with regard to mediation, conducted by him under this act on behalf of any party to any cause pending in any type of proceeding under this act. Nothing contained herein shall exempt such an individual from disclosing information relating to the commission of a crime.

i. The Director of the Division of Local Government Services in the Department of Community Affairs may notify the commission, through the Division of Public Employment Relations, that a municipality deemed a "municipality in need of stabilization and recovery" pursuant to section 4 of P.L.2016, c.4 (C.52:27BBBB-4) will not participate in any impasse procedures authorized by this section. Upon such notice, any pending impasse procedures authorized by this section shall immediately cease, and any pending petition for arbitration shall be vacated. Nothing in this subsection shall be construed to limit the scope of any general or specific powers of the Local Finance Board or the director set forth in P.L.2016, c.4 (C.52:27BBBB-1 et al.).

The provisions of this subsection shall no longer be applicable on and after the first day of the sixth year next following the determination by the Commissioner of Community Affairs that the municipality shall be deemed "a municipality in need of stabilization and recovery" pursuant to section 4 of P.L.2016, c.4 (C.52:27BBBB-4); however, actions taken pursuant to this subsection prior to the effective date of P.L.2021, c.124 (C.52:27BBBB-4 et al.) shall be final and shall not be subject to reconsideration.

j. The Local Finance Board may provide that any arbitration award, including but not limited to an interest arbitration award, involving a municipality deemed a "municipality in need of stabilization and recovery" pursuant to section 4 of P.L.2016, c.4 (C.52:27BBBB-4) shall be subject to the review and approval of the Director of the Division of Local Government Services in the Department of Community Affairs, including those on a collective negotiations agreement where the matter has been submitted to an arbitrator pursuant to law, and no such award shall be binding without the approval of the director. Nothing in this subsection shall be construed to limit the scope of any general or specific powers of the Local Finance Board or the director set forth in P.L.2016, c.4 (C.52:27BBBB-4).

(cf: P.L.2021, c.124, s.5)

2. The following sections are repealed:

Section 2 of P.L.2010, c.105 (C.34:13A-16.7);

Section 3 of P.L.2010, c.105 (C.34:13A-16.8); and

Section 4 of P.L.2010, c.105 (C.34:13A-16.9).

3. This act shall take effect immediately and apply to petitions filed on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).

STATEMENT

This bill makes several changes to the current law governing arbitration awards in disputes between public employers and their police and fire departments.

Under current law, any time after a collective negotiation agreement between a public employer and a public police or fire department expires, either party may petition the New Jersey Public Employment Relations Commission (PERC) for arbitration. Current law outlines the ways in which public employers are to negotiate these contractual disputes when the parties have reached impasse and are unable to resolve their dispute.

This bill provides that both parties have a duty to exchange information including the written reports of any experts intended to be called as a witness by a party at the arbitration proceedings. The arbitrator would be required to have the authority to set deadlines for the exchange of information. If a party fails to timely exchange information or the report of an expert, the bill allows the arbitrator to have discretion as to the evidence that is to be included in the record.

The bill also establishes certain requirements for the public employer. Under the bill, the public employer is required to provide prior to the commencement of the arbitration proceeding, the arbitrator and the employee representative with the following:

· a list of all unit members during the final year of the expired agreement, their salary guide steps during the final year of the expired agreement, and their anniversary date of hire, meaning the date or dates on which unit members advance on the guide;

· costs of increments and the specific dates on which they are paid;

· costs of any other base salary items and the specific dates on which they are paid;

· the total cost of all base salary items for the 12 months immediately preceding the first year of the new agreement; and

· a list of all unit members as of the last day of the year immediately preceding the new agreement, their step, and their rate of salary as of that same day. The employee representative would be required to respond to the information provided by the public employer.

Under current law, arbitrators selected to make determinations pertaining to these contractual disputes are employees of PERC. The commission is required to take measures to assure the impartial, random selection of an arbitrator from its panel of arbitrators. This bill provides that upon receipt of a petition for arbitration the commission is required to communicate to the parties the option to mutually select an arbitrator from the panel. Under the bill, the parties would have three business days to notify the commission of the mutual selection. If there is no mutual selection on the fourth business day, the bill requires the commission to randomly select an arbitrator without participation of either party. The bill also removes the requirement that arbitrators serving on the panel are required to demonstrate to the commission their professional qualification, knowledge and experience, in accordance with the criteria and rules adopted by the commission.

The bill also extends the time frame during which an arbitrator is required to render an opinion to 150 days of the commission’s assignment. Current law requires an arbitrator or panel of arbitrators to render an opinion with 90 days of the commission’s assignment. Under the bill, an arbitrator may request an extension and the commission chair or a designee may grant the extension if warranted. The bill limits the extension time to 30 days cumulatively but in no case more than 180 days. The bill also extends from 14 days to 21 days the amount of time that an aggrieved party may file an appeal under certain circumstances. Under the bill, the parties would be required to meet within 10 days after the issuance of an award to complete the award’s implementation and resolve any issued to avoid filing of an appeal.

The bill also increases the fees associated with the cost of arbitration that are equally shared by the parties. Specifically the bill increases the cost of services provided by the arbitrator from $1,000 to $1,500 per day. The total cost of services of an arbitrator would be increased from $10,000 to $15,000.

Finally, the bill repeals sections from current law that place a limitation on the amount that may be awarded during an arbitration proceeding and establish an Police and Fire Interest Arbitration Impact Task Force.