In 2015 the Public Employee Relations Commission (PERC) issued what has become known as the “Clementon” decision in which it concluded that employee bargaining associations may not negotiate a lower Chapter 78 employee rate of contribution towards health care coverage in a successor agreement until they complete their tier 4 contribution in their current agreement. According to the 2015 PERC decision, if members of a bargaining association reach their tier 4 contribution in the first year of a new contract, regardless of what the parties negotiate, any reduction from the 4th tier rate of contribution for the balance of the bargaining agreement is pre-empted by Chapter 78.
In a decision on May 3, 2019 involving the Ridgefield Park Board of Education and the Ridgefield Park Education Association the Appellate Division in a unanimous decision overturned the Clementon ruling finding that this was an “absurd” result.
The court ruling stemmed from an appeal by the Education Association of the Board’s unilateral decision to impose the tier 4 contribution rate for the balance of the 2014-2018 collective bargaining agreement; this irrespective of the fact that the parties had agreed to have employees pay the statutory minimum contribution rate of 1.5% of salary effective the year following completion of their tier 4 contribution payment. The Board unilaterally imposed the tier 4 rate of contribution in January 2016 and also planned to recoup the difference between the 1.5% contribution and the tier 4 contribution retroactively to July 1, 2015.
Given that the Board had implemented the 1.5% contribution rate for six months, from July 1, 2015 to January 1, 2016, the Appellate Division said it was clear that the parties “did not contemplate” that Chapter 78 would preempt “the 1.5% contribution rate” they had negotiated. The court went on to state that precluding a reduction in the contribution rate just because the employees had completed their tier 4 contribution in the first year of their current contract, as opposed to the last year of the prior agreement, “creates an absurd result.” The court said:
To require them to contribute at the Tier 4 level over the entirety of the 2014-2018 CNA, and not just the one year they did for July 1, 2014 through June 30, 2015, is contrary to the clear intent that public employees make these statutorily imposed increases over the course of four years,
Effectively, the court said that PERC’s decision resulted in having employees pay their 4th tier contribution for longer than 4 years – more than the statute requires – irrespective of what the parties may want to negotiate. The court held that if parties reach agreement to reduce the rate of contribution after completion of the tier 4 payment they should be able implement the lower payment schedule regardless of when payment of the 4th tier is completed.
Obviously, this is an important decision for Ridgefield Park. But any precedent that this case may have is limited, largely because at this point all public employees have reached and completed their tier 4 payment. Therefore, the preemption on negotiations noted in Clementon no longer has practical applicability. But, this decision is significant for any bargaining unit which in 2014 or 2015 found itself in a similar situation as the Ridgefield Park Education Association and challenged a board’s decision to impose a tier 4 payment in lieu of a lower negotiated contribution rate. For those bargaining groups this decision holds the promise of retroactive relief.