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April 13, 2011

RE: PERC Decision Clears Way for Collection of 1.5% Employee Health Benefits Contribution

Dear Mayor:

League Labor Relations Counsel Brian Kronick, Esq., has provided us with an analysis of the latest decision of the Public Employment Relations Commission (PERC) regarding its interpretation of the law requiring public employees to contribute towards the costs of their health benefits.

PERC recently issued a decision reversing earlier Commission decisions regarding the applicability of the employee health care contributions law, P.L. 2010, c. 2, to expired collective negotiations agreements.  In its recent decision, the Commission has made clear that P.L. 2010, c. 2 is applicable to expired collective negotiations agreements.

In the Commission’s February 3, 2011 decision in Township of Edison, P.E.R.C. No. 2011-60 (February 3, 2011), the Commission reversed its earlier holdings and stated “We agree that there was no successor agreement in force covering the IAFF when P.L. 2010, Ch. 2 took effect.”  The Commission had earlier held that whether the agreement was expired when the Township imposed health care contributions was an issue of contract interpretation best suited for the arbitrator.  Township of Edison, P.E.R.C. No. 2011-49 (November 23, 2010).  With regards to its earlier decision in Township of Edison, the Commission stated in its February 3, 2011 decision that “we conclude our prior ruling was erroneous…”  Based on the Commission’s analysis in its February 3, 2011 decision, the Commission’s decision in Township of South Orange, P.E.R.C. No. 2011-47 (November 23, 2010), holding that whether a successor agreement was in effect was a matter of contract interpretation, is similarly erroneous.

Unions have relied on the earlier Township of Edison decision and Township of South Orange decision in arguing that a collective negotiations agreement was not expired, even if its term had ended, when it contained language that the agreement would continue in full force and effect until a successor agreement was executed.  The Commission’s February 3, 2011 Township of Edison decision makes clear that its earlier holdings, which held that whether a successor agreement was in effect is a matter of contract interpretation, are incorrect. 

Based on the Commission’s recent decision, municipalities operating under expired collective negotiations agreements may require health care contributions from its employees under P.L. 2010, c. 2 without fear of a grievance having to proceed to arbitration.

Please share this information with your municipal attorney and labor relations counsel. We thank Mr. Kronick for his work on this and will keep you posted of all further developments.

Very truly yours,


William G. Dressel, Jr.
Executive Director                           



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