The Appellate Division of the New Jersey Superior Court recently issued a key decision regarding public employee contributions to health insurance plans. The case, Paterson Police PBA v. City of Paterson, specifically addressed the definition of “base salary” under N.J.S.A. 40A:10-21(b).
The Facts of the Case
The city of Paterson, and plaintiffs, the Paterson Police PBA Local 1 and Paterson Police PBA Local 1 Superior Officers Association, engaged in compulsory interest arbitration with the N.J. Public Employment Relations Commission (PERC) after legislative pension and benefit reforms, namely N.J.S.A. 40A:10-21(b), required public employees to pay a contribution of 1.5 percent of base salary toward their health benefits. Under the resulting arbitration award, police officers were required to “make contributions toward health insurance coverage in the amount of 1.5% of base salary” pursuant to the statute.
The issue of contention in the case was the meaning of “base salary,” which is not defined in the statute or the arbitration award. The city of Paterson concluded that the term referred to an officer’s base pensionable salary and made deductions accordingly. Meanwhile, the plaintiffs maintained that “base salary” meant base contractual salary and excluded additional items of compensation such as longevity, educational incentives, and night and detective differentials. The trial judge ultimately sided with the plaintiffs.
The Court’s Decision
The Appellate Division reversed and ordered judgment in favor of the municipality. The court concluded that the legislative history surrounding the statute and subsequent legislation clearly favored the interpretation argued by the city of Paterson.
As noted by the court, “the enactment here was part of a comprehensive legislative effort to control costs by making changes to public employees’ pension benefits, health benefits programs, and other benefits.”
As further extrinsic evidence of the legislature’s desire to adopt a more expansive definition of base salary, the court further pointed to N.J.S.A. 34:13A-16.75, which amended the provisions of the Reform Act applicable to compulsory interest arbitration involving police and firefighters. It defined “base salary” to include “the salary provided pursuant to a salary guide or table and any amount provided pursuant to a salary increment, including any amount provided for longevity or length of service…”
To comply with the subsequent statute, the Appellate Division concluded that the arbitrator was required to employ the definition of “base salary” the Legislature mandated for use in making arbitration awards involving police and firefighters.
For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.