The Ridgefield Park Education Association (“Association”) filed an appeal with the New Jersey Appellate Division challenging a ruling by the Public Employment Relations Commission (“PERC”) in favor of the Ridgefield Park Board of Education (“Board”), which held that Chapter 78 preempted the terms of the parties’ collective negotiations agreement (“CNA”) for the period July 1, 2014 to June 30, 2018. On May 3, 2019, the Appellate Division reversed PERC’s determination in In the Matter of Ridgefield Park Board of Education and Ridgefield Park Education Association and remanded the matter to PERC to implement a remedial mechanism to refund the excess health insurance contributions to the Association members.
Chapter 78 gradually increased the health insurance contribution rates for public employees over a four-year period beginning July 1, 2011. The increasing rates are designated as Tier 1, Tier 2, Tier 3, and Tier 4. The parties’ CNA covering July 1, 2011 to June 30, 2014 and the subsequent CNA covering July 1, 2014 to June 30, 2018 stated that the Association members contribute 1.5% of their salary or the minimum set forth by statute, regulation, or code towards health insurance.
During the first and second years of the 2011-2014 CNA, the Association members contributed at the Tier 1 and 2 levels, respectively. During the last year of the 2011-2014 CNA, the Association members contributed at the Tier 3 level. Thereafter, in the first year of the 2014-2018 CNA, the Association members contributed at the Tier 4 level. At the start of the second year of the 2014-2018 CNA on July 1, 2015, the Association members initially contributed 1.5% of their salary. However, in December 2015, the Board unilaterally altered the contribution rate to the Tier 4 level for the duration of the 2014-2018 CNA, relying upon Chapter 78 and PERC’s August 13, 2015 decision in Clementon Bd. of Educ. v. Clementon Educ. Ass’n. In short, the Board argued that Chapter 78 preempted the terms of the 2014-2018 CNA regarding a 1.5% contribution level.
Based on the facts above, the Appellate Division determined that the parties did not contemplate that Chapter 78 would preempt the 1.5% contribution rate for the last three years of the 2014-2018 CNA. Rather, the Appellate Division found that the parties believed that Chapter 78 had been fully implemented at the end of the first year of the 2014-2018 CNA because the Association members completed all of their Tier 1 through 4 contributions at that point and at the beginning of the second year of the 2014-2018 CNA, the contribution level was 1.5%.
Unlike PERC, the Appellate Division did not find it dispositive that full implementation of Chapter 78 occurred over two CNAs. The Appellate Division rejected PERC’s interpretation that Chapter 78 preempts any other contribution level in a multi-year successor agreement, such as the 2014-2018 CNA, for the first year as well as any additional years of the CNA until the “next” agreement when employee contribution levels would become negotiable.
Instead, the Appellate Division reasoned that interpreting Chapter 78 to require the Tier 4 contribution level for the remaining three years of the 2014-2018 CNA after the Association members contributed at the Tier 4 level in the first year of that CNA would create an “absurd result.”
