November 27, 2013
Re: Important Health Insurance Contribution Decision
An important decision was issued today by the Appellate Division regarding employee contributions to health insurance plans. The League was amicus curiae in this case. In 2010 the Legislature passed a series of pension and benefit reforms, including P.L. 2010 c. 2, which required that employees covered by the SHBP make a 1.5% contribution of their “base salary” towards their plan. The main issue of this case, Paterson Police PBA v. City of Paterson, was the definition of “base salary.” The term was not defined in the statute itself. The DCA issued LFN 2010-12, which advised municipalities that this term meant the salary used to determine pension contributions. This would mean, for the purposes of the law, that a police officer’s salary included longevity payments, educational incentives and night and detective pay differentials. The PBA argued that these others payments should not be included. The city and the League disagreed. We argued that the legislative intent was clear, that those payments should be included in calculating employee contributions.
Today the Appellate Division sided with the City of Paterson and the League. It held that the legislative history of P.L. 2010 c. 2, along with the other laws passed during that legislative session, clearly defined “base salary” as including the longevity payments, etc. This is a sound decision, and a good one for municipalities which will help strengthen strained municipal finances. It is broad based. Had the decision gone the other way it would have negatively impacted every municipality in the state. The League would like to congratulate the City of Paterson. We would also like to thank Brian Kronick Esq., counsel to Paterson, for his outstanding work on this case. If you have any questions please contact the League staff attorney, Ed Purcell, at (609) 695-3481 x 137 or firstname.lastname@example.org
A copy of the decision can be found here: http://www.judiciary.state.nj.us/opinions/a1263-11.pdf
Very truly yours,
William G. Dressel, Jr.
*- Note deletion of “overtime” from earlier advisory. Overtime is not included in determining “base salary” for health benefits contribution.