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January 8, 2014

Re:      Important PERC Decision re: Step Increases

Dear Mayor:

We would like to make you aware of a recent decision from the Public Employment Relations Commission (PERC) regarding the payment of increments at the expiration of a collective negotiations agreement.  In County of Atlantic and PBA Local 243, et. al., PERC No. 2014-40, the Commission overturned long-standing policy, known as the dynamic status quo, which previously required public employers to pay employee increments for moving vertically along the salary guide once the collective negotiations agreement expires but before an agreement on a successor contract has not been reached.

Historically, the dynamic status quo doctrine meant that a public employer must pay an employee’s increment, i.e. vertical movement on a salary guide, after the expiration of the collective negotiations agreement.  This was so even if the parties had not reached an agreement on a successor contract.  The rationale behind this doctrine was to encourage the parties to reach an agreement. PERC had previously reasoned that paying increments benefitted neither party in negotiations.

However, in County of Atlantic, the Commission acknowledged that paying automatic increments after the expiration of a collective negotiations agreement would actually serve to hinder the parties in seeking to reach a resolution of the contract.  The tax levy cap and the 2% interest arbitration cap for police and fire coupled with a requirement to pay automatic increments were leaving parties with little room to maneuver to craft an agreement.  As such, the Commission determined that continuing this doctrine in light of the recent changes in public sector labor negotiations was neither practicable nor wise.

Public employers should be mindful of this decision and act accordingly when their contracts expire to give themselves the greatest amount of flexibility in negotiations.  We recommend that you discuss it with counsel. The League will continue to monitor this issue and keep you abreast of any developments
Questions can be directed to the League’s Labor Counsel, Joseph M. Hannon, Esq. at Genova Burns Giantomasi Webster LLC, at 973-533-0777 or

Very truly yours,

William G. Dressel, Jr.
Executive Director



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