Background on the 2010 Reforms

Arbitration Reform Bill, A-3393

On December 21, 2010, Governor Christie signed the Arbitration Reform Bill, A-3393 (PDF), into law. These reforms marked a dramatic change to the Arbitration process and took effect on January 1, 2011. The reforms capped arbitration awards on base salaries to no more than 2%, provided for random selections of arbitrators, expedited the determination of awards, required the arbitrator to provide a written report detailing the weight accorded to each of the statutory requirements and expedited appeal process.

A summary of S-5/A-3393 is as follows:

2% Cap

  • Arbitrator shall not award increases on base salary items, on an annual basis, by more than 2.0% expended by the employer on base salary items in the twelve months immediately preceding expiration of the agreement.
  • The parties may agree, or the arbitrator may decide, to distribute the aggregate monetary value of the award over the term of the agreement in unequal annual percentage.
  • Base salary includes longevity and other items previously understood to mean base salary in the prior contract.
  • Base salary does not include non-salary economic items, pension and health and medical insurance costs.
  • An award shall not include "base salary" items and "non-salary economic issues" which were not included in the prior collective negotiations agreement.
  • All parties to arbitration shall present at the formal hearing before issuance of the award, written estimates of the financial impact of their last offer on the taxpayers of the local unit to the arbitrator with submission of their last offer.

45 Day Fast Track

  • Conventional Arbitration not fair and final
  • The interest arbitration award shall be rendered within 45 days of the commission's assignment of the arbitrator
  • No extensions allowed
  • An arbitrator who fails to render an award within the time requirements shall be penalized $1,000 for each day that the award is late
  • Within 5 days of receipt of the petition, the non-petitioning party shall notify the commission in writing of all issues in dispute

Appeal of Awards

  • Within 7 days of receiving an award, an aggrieved party may file notice of an appeal to the commission
  • The commission's decision shall be rendered no later than 30 days after the filing of the appeal with the commission

Selection of Arbitrator

  • On the first business day following receipt of an interest arbitration petition, the commission shall randomly select an arbitrator from its special panel of arbitrators
  • Arbitrator appointed is not subject to appeal
  • The parties shall share equally the costs of an arbitration
  • An arbitrator's cost of services shall not exceed $1,000 per day
  • The total cost of the services of an arbitrator shall not exceed $7,500
  • If the parties cancel the arbitration, the arbitrator may impose a fee not exceeding $500
    • The parties share equally in paying that fee if it is a joint request. Otherwise, the party causing such cancellation shall be responsible for the entire fee
  • Applicants for initial appointment to the commission's special panel of arbitrators shall be chosen based on their professional qualifications, knowledge, and experience, in accordance with the criteria and rules adopted by the commission
  • Arbitrators currently serving on the panel shall demonstrate to the commission their professional qualification, knowledge and experience, in accordance with the criteria and rules adopted by the commission, within one year of the effective date of this bill
  • Arbitrators serving on the commission's special panel shall be guided and subject to the objectives and principles set forth in the "Code of Professional Responsibility for Arbitrators of Labor-Management Disputes"

Unfair Practice Charge for Failure to Negotiate

  • Prior to expiration of their agreement, either party may file an unfair practice charge alleging that the other party is refusing to negotiate in good faith.
  • If the charge is sustained, the respondent pays for all legal and administrative costs associated with the filing and resolution of the charge.
  • If the charge is dismissed, the charging party pays for all legal and administrative costs associated with the filing and resolution of the charge.

Police & Fire Interest Arbitration Impact Task Force

  • The Police and Fire Interest Arbitration Impact Task Force is created to analyze the effects of this bill
  • Task force is compromised of eight members: 4 appointed by the Governor, 2 appointed by the Senate President, 2 appointed by the Speaker of the General Assembly
  • All collective negotiations agreements must be submitted to PERC within 15 days of contract execution

Effective Date

  • Applies to all collective negotiations agreements between public employers and unions of a public police department or public fire department expiring on the effective date of the act or any date thereafter until the first day of the 40th month
  • Act becomes inoperative on the first day of the 40th month but for whom a final settlement has not been reached
  • Any party that entered into a contract that expires on the effective date of this act or any date thereafter until the first day of the 40th month, and the terms of that contract meet the criteria of this act, shall not be subject to this act when negotiating a future contract