Appellate Division Reverses PERC Decision on Dynamic Status Quo

For many years, public employers were required to pay increments on an expiring salary guide for its unionized workforce under a doctrine known as the dynamic status quo.  This doctrine was created by the Public Employment Relations Commission (“PERC”) in interpreting the Employer-Employee Relations Act, N.J.S.A. 34:13A-1, et. seq.  Recently, PERC abandoned the dynamic status quo doctrine in two matters holding that the doctrine no longer served the purposes of prompt labor disputes.  Accordingly, public employers were not required to pay increments upon the expiration of a collective negotiations agreement.

In the companion cases of County of Atlantic and PBA Local 243, et. al. and Township of Bridgewater and PBA Local 174, the Appellate Division reversed  PERC and held that PERC acted outside of its legislative mandate in abandoning the dynamic status quo.

PERC utilized the tax cap levy law and the 2% cap on interest arbitration awards as reasons why the dynamic status quo doctrine no longer served the interests of the parties.  PERC, using its expertise in this area, reasoned that these restrictions on public employers put significant restrictions on the parties’ flexibility in negotiations.  Therefore, PERC determined that employers were not required to pay these increments.

The Appellate Division reasoned that PERC went too far in abandoning the dynamic status quo doctrine.  The court determined that the tax cap levy law and the cap on interest arbitration law did not prohibit the payment of increments on an expired collective negotiations agreement.  Further, the court indicated that PERC did not appropriately interpret the Act.  In essence, public employers are free to negotiate not paying the increments or determining other methods to recoup the salary increments.

The practical effect of the decision is that public employers will again be subject to the dynamic status quo doctrine.  Accordingly, unless negotiated otherwise, salary increments will have to be paid once a collective negotiations agreement has expired and an agreement on a successor contract has not been reached.

For more information regarding the effects of this decision, please contact Joseph M. Hannon, Esq. at jhannon@genovaburns.com or 973-533-0777.