The two percent cap on interest arbitration awards expired at the end of the year 2017. In response, lawmakers in both the New Jersey Senate and Assembly recently introduced legislation to permanently extend the 2% Interest Arbitration cap, which limits how much compensation arbitrators can award police and firefighters who have reached a contract negotiation impasse with New Jersey municipalities. 
Interest Arbitration Cap
Under existing law, any time after a collective negotiation agreement between a public employer and a New Jersey police or fire department is up for renegotiation, either side can petition the New Jersey Public Employment Relations Commission (PERC) for arbitration. Since 2011, the law has also capped the amount arbitrators could award in base salary increases at two percent, as a means to control municipal budgets and prevent property tax hikes. In 2014, Gov. Chris Christie signed legislation extending the two-percent cap until December 31, 2017.
Assembly Bill 3378
The proposed legislation, Assembly Bill 3378, removes the sunset provision governing the two-percent cap on base salary increases in interest arbitration awards. It also makes various changes to New Jersey’s interest arbitration procedures for settling contractual impasses between public employers and their police and fire departments. They include:
- Collective negotiations agreements are required to be submitted to the Public Employment Relations Commission (PERC) within 15 days of a contract’s execution. The bill provides that collective negotiations agreements that are not filed within the 15-day time period or do not include a summary of contract or arbitration award terms are deemed null and void until properly submitted to PERC.
- Public employers must post on their municipal or county website a summary of the terms of each proposed collective negotiation agreement no later than 10 days prior to the execution of the contract. The public employer is required to forward to PERC the summary of the terms of each proposed collective negotiation agreement, which is to be conspicuously posted on the commission’s website no later than 10 days prior to the execution of the contract.
- The terms of the proposed collective negotiation agreement must be posted in a standard form developed by PERC. The form would display the estimated costs of compensation for each individual employee or group of employees, itemized by the specific form of compensation, the estimated cost of compensation at the time of the execution of the contract, and the incremental difference resulting from any changes for the previous contract. This information is required to be displayed for each year of a proposed collective negotiation agreement. The bill also requires the proposed collective negotiation agreement and accompanying employee compensation disclosure form to be made available for inspection by the general public, upon request, during the local unit’s normal business hours beginning at least 10 days prior to the execution of the contract.
- A public employer is required to suspend salary increases that are based upon a salary schedule following the expiration of a collective negotiation agreement until a subsequent collective negotiation agreement is executed.
As recommended in the 2017 report issued by the Police and Fire Public Interest Arbitration Impact Task Force, the bill preserves changes made the last time the cap was extended. It allows arbitrators 90 days to render a decision; allows an aggrieved party 14 days to file a notice of appeal; requires PERC to render its decision in an appeal within 60 days; and establishes an arbitrator’s compensation for services at $10,000. The provisions that provide for compounding the value of a two-percent cap over the length of the collective negotiation agreement and include previously negotiated cost increments within the definition of “base salary” also are preserved.
For more information about the proposed interest arbitration cap bill or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.