New Jersey Supreme Court Says Salary Step Increments are Negotiable, but Avoids Dynamic Status Quo Issue

In a highly anticipated decision, the New Jersey Supreme Court held that the issue of salary step increments is a mandatorily negotiable term and condition of employment.  However, the Court did not decide whether New Jersey’s Public Employment Relations Commission was correct to adopt the static status quo doctrine in lieu of the dynamic status quo doctrine.  Instead, the Court determined that the express terms of the parties’ expired CNAs required the public employer at issue to advance employees along those CNAs’ salary step guides, even after those CNAs expired.

The issues presented to the Supreme Court originated in the cases of In re County of Atlantic and In re Township of Bridgewater.  In County of Atlantic, PERC determined that, given the current landscape, the static status quo doctrine would advance labor negotiations between New Jersey’s public employers and employees better than the dynamic status quo doctrine, which PERC previously followed.  Under the static status quo doctrine, employees do not advance along a contract’s salary step guide between the time that the contract expires and before a subsequent contract is executed, whereas the opposite is true under the dynamic status quo doctrine.  On the heels of County of Atlantic, PERC decided Township of Bridgewater, in which it concluded that the issue of salary step increases after contract expiration is not a term and condition of employment and therefore not mandatorily negotiable.  On appeal, New Jersey’s Appellate Division reversed PERC.  The Appellate Division found that PERC was not authorized to depart from the dynamic status quo doctrine in the manner that it did, and that post-contract step increases are terms and conditions of employment that cannot be terminated unilaterally.

Ultimately, the Supreme Court affirmed the Appellate Division’s decision on “other grounds.” Nevertheless, the Supreme Court undermined PERC’s Bridgewater decision, when the Court concluded that the issue of salary step increments is a mandatorily negotiable term and condition of employment because that issue “is part and parcel to an employee’s compensation for any particular year.” However, because the Supreme Court’s decision rested upon specific contract language, the Court did not decide the issue of which status quo doctrine is appropriate. Nevertheless, the Court suggested that a contract that is silent with respect to the impact of contract expiration on step increases may require “careful consideration of past practices, custom and the viability of the dynamic status quo doctrine.” Accordingly, the Supreme Court advised that “parties would be wise to include explicit language indicating whether a salary guide will continue beyond the contract’s expiration dates.”

For more information about the Supreme Court’s decision and how it may impact your public entity’s labor contract negotiations, please contact James J. McGovern, III, Chair of the firm’s Labor Law Practice Group, at jmcovern@genovaburns.com or 973-535-7122, or Joseph M. Hannon, Counsel in the firm’s Labor Law Practice Group, at jhannon@genovaburns.com or 973-535-7105. Please also sign-up for our free Labor & Employment Law Blog at www.labor-law-blog.com to keep up-to-date on the latest news and legal developments affecting your workforce.