In a narrowly-written opinion, the N.J. Supreme Court found that agreements between Atlantic County and Bridgewater Township and their respective public safety unions required public employers to continue to pay anniversary date-based step increases even when the parties are working under an expired contract.

The Supreme Court decision highlights the importance of contract language and past practice regarding increment payments in school districts.

Atlantic County and various public safety unions were parties to collective negotiations agreements that expired Dec. 31, 2010. Shortly before expiration, the county notified the PBA that it was suspending salary guide movement and not paying anniversary date-based step increases after contract expiration, and prior to successor agreements being ratified. In the past, once an employee reached his or her anniversary date, they were given a step increase.

The unions filed unfair practice charges against the county, claiming the employer unilaterally changed a term and condition of employment in violation of the New Jersey Employer – Employee Relations Act (PERC Act). PERC found that under then-current circumstances the dynamic status quo concept – which required post-expiration step movement for these employees – was no longer consistent with the underlying goals of the PERC Act to promote the prompt resolution of labor disputes. Therefore, it was not an unfair practice to not pay the step increase.

On appeal, the N.J. Appellate Division reversed and reinstated the unfair practice finding against the county. The court found that PERC’s “abandonment of the dynamic status quo doctrine [and its compulsion of post-expiration step increases] was action outside the scope of its legislative mandate.” In a companion case that was consolidated with Atlantic County, In the Matter of Township of Bridgewater and PBA Local 174, the Appellate Court found that whether post-expiration step movement was automatic was a negotiable term and condition of employment. The employers then appealed to the Supreme Court of New Jersey, which consolidated the two cases.

The N.J. Supreme Court granted certiorari, and found that salary step increments are a mandatorily-negotiable term and condition of employment. It relied on the parties’ explicit written contract language and did not reach the efficacy of the “dynamic status quo” doctrine. The court wrote, “[h]ad the Atlantic County and Bridgewater Township agreements been silent about whether the terms of the salary increment system were to continue, the issue in this appeal would be more complicated. It might have required careful consideration of past practices, custom and the viability of the dynamic status quo doctrine.”

The vast majority of school collective negotiations agreements do not explicitly address the post-expiration salary guide treatment. School districts in New Jersey have customarily negotiated discrete salary policies for each year of the collective negotiations agreement. Over the last two decades, local boards of education and the unions that represent school employees have not negotiated evergreen salary policies that require increment advancement beyond a contract’s expiration. Rather, the consistent practice has been to freeze teaching staff members and other employees in the unit at the salary they were receiving at the date of contract expiration.

In closing dictum the court wrote “Our decision today does not govern future negotiations, other than to suggest that parties would be wise to include explicit language indicating whether a salary guide will continue beyond the contract’s expiration date.” Given the extensive history and custom in school bargaining, that may not be necessary for local boards, but there may be specific local circumstances, so districts are urged to consult their board attorney.