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New Interest Arbitration Law


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. Arbitrators in these cases are required to render their decision within 45 days of the case being assigned to them. This bill extends the time to render the decision to 90 days and requires the arbitrator to conduct an initial meeting as a mediation session to affect a voluntary resolution of the impasse. Current law allows an aggrieved party seven days to file a notice of appeal of the arbitrator’s decision. This bill extends the time to appeal to 14 days. The bill also increases the time frame allotted PERC to render its decision in an appeal of an arbitration award from 30 to 60 days. The bill further increases the maximum amount arbitrators can be compensated for their services from $7,500 to $10,000.

Between January 1, 2011 and April 1, 2014, there was a two-percent cap on base salary increases in arbitration awards. This two-percent cap expired on April 1, 2014. The bill extends the two-percent cap until December 31, 2017 and makes the cap retroactive to April 2, 2014.

The bill also makes changes to the calculation of the two-percent cap. Under current law, an arbitrator may not render an award which, on an annual basis, increases the base salary items by more than two-percent of the aggregate amount expended by the public employer on base salary items for the members of the affected employee organization in the year immediately preceding the expiration of the agreement. Under the bill, after the first year of the agreement, the award could not exceed two-percent of the base salary items as annually compounded at the end of each agreement year.

Finally, the bill extends the reporting requirements applicable to the Police and Fire Public Interest Arbitration Impact Task Force from April 1, 2014 to December 31, 2017 to comport with the extension of the two-percent cap.



TRENTON – Rules that limit the size of raises an arbitrator can award if a New Jersey municipality’s contract negotiations with police officers or firefighters stall are on the cusp of being reinstated.

A 2 percent cap on arbitration awards that was put in place in 2010, to line up with the cap imposed that year on property tax levy increases, expired in April after Gov. Chris Christie vetoed the version of the extension that has been approved by the Legislature. Assembly Speaker Vincent Prieto, D-Hudson, and Christie finally struck a compromise on the concept last week.

The new bill extends the cap on salary increases in arbitration awards through the end of 2017 but allows the awards to be compounded for each year of the contract. Time periods from the original law would be doubled — arbitrators would have 90 days to make a decision, a losing party would have 14 days to appeal and the Public Employment Relations Commission would have 60 days to rule on appeals.

"We got for them compounding that was able to be able to grow by another 2 percent of whatever that contract was during that year, as municipalities are offered compounding in their own budget-wise for their tax levy,” Prieto said. “So I think it was a fair compromise for everybody."

"It couldn’t come at a more opportune time,” said William Dressel Jr., executive director of the State League of Municipalities. “Most of the contracts expire in December, and per the law mayors have got to begin discussions with the unions over the contracts this month. So this is a tremendous signal that the Legislature is serious about the spending cap. That will go a long way in saving property taxes."

The bill was approved Monday by the Assembly in a 78-0 vote and is expected to be approved Thursday by the Senate. New Jersey State Polic/emen’s Benevolent Association executive vice president Keith Dunn called the proposal "unnecessary interference in the fair and open collective bargaining process."

"The passage today of a bill to extend the cap on arbitration awards is merely a continuation of the myth that arbitration is a leading cause of tax increases. There has not been a shred of any data to show that this cap has caused anyone's taxes to go down or that any arbitration has led to taxes going up," Dunn said. Lawmakers credited Prieto for reaching a compromise with Christie.

"It’s not often enough that any one of us in this chamber gets to stand up and say, ‘This is how government ought to work,’ but this is one of those instances," said Assemblyman Declan O’Scanlon, R-Monmouth.