As reported by on July 1, 2013, the State of New Jersey revenue collections out paced Governor Christie’s administrations projections for the sixth consecutive month in May, according to state treasury figures, which were released that day. The strong revenue figures received a boost from better than expected income and sales tax collections, which account for more than half of the State’s overall revenue collections. The State’s Chief Economist, Charles Steindel, stated “the report reflects ongoing improvement in economic conditions of State residents,” “income tax collections continue to grow rapidly even after the receipt of large final payments in April.” Overall, income tax collections are up 13% in New Jersey this year and revenues from sales tax is up 3%. 

In the past strong revenue collections by the State of New Jersey would be good news for New Jersey Public Employment law enforcement labor unions as it would demonstrate the State’s “ability to pay” when arguing for a pay raise that could be collectively bargained for. The ability to pay is one of the nine (9) criteria cited in the New Jersey Employer/Employee Relations Act that must be taken into consideration by arbitrators in rendering an interest arbitration award. However, in 2010, the New Jersey State Legislature enacted new laws regarding how the interest arbitration processes is to be conducted in the State of New Jersey. The Legislature passed these modifying laws on or about December 13, 2010 and the same became effective on January 1, 2011. 

In simple terms, the legislation, which amended various provisions of NJSA 34:13A-16, et. seq., revised the procedure for police and fire contract disputes and imposed a cap on certain interest arbitration awards. According to the statement accompanying the bill, the legislation is supposed to streamline the procedure for resolving contractual impasses between public employers and their police and fire departments and imposes a 2% cap on arbitration awards under certain circumstances. The statue establishing the 2% cap reads as follows:




An arbitrator shall not render any award pursuant to section 3 of P.L.1977, c.85 (C.34:13A-16) which, on an annual basis, increases base salary items by more than 2.0 percent of the aggregate amount expended by the public employer on base salary items for the members of the affected employee organization in the twelve months immediately preceding the expiration of the collective negotiation agreement subject to arbitration. [1]



Thus, under this statutes provisions, an arbitrator’s award on disputed “base salary” items are subject to a 2% cap, calculated on an annual basis over the term of the collective bargaining agreement governed by the award. 

In a recent interest arbitration decision rendered in the Borough of Tenafly and PBA Local 376, Arbitrator Robert Gifford clarified how the 2% was to be applied in conjunction with the other criteria that must be considered in rendering an award. In this case, the PBA proposed a 2% across the board increase of each year of the three (3) years of the contract. In response, the Borough proposed a 0% increases for each year of a five (5) year contract, but agreed to allow movement on the salary guide.

After evaluating the parties respective offers, Arbitrator Gifford determined that the PBA’s offer would provide a 17.35% increase in base salary items over the three (3) years of the contract well in excess of the 6% allowable under the 2% cap. Similarly, Arbitrator Gifford determined that the Borough’s offer, even with a 0% across the board annual increase, would result in a 15.59% pay raise over five (5) years through movement on the salary guide alone. Thus, such an award would again, exceed the 6% allowable increase under the 2% salary cap. Therefore, given that each parties’ offer was in violation of the 2% cap, Arbitrator Gifford determined he could not award either final offer. Quite simply, Arbitrator Gifford reasoned that awarding either offer would be in violation of the applicable law and thus, reversed on appeal.

As such, Arbitrator Gifford eliminated the salary guides that were in effect, inserted additional steps on new salary guides that were created and instituted various longevity and salary freezes in order to comply with the 2% cap. This ruling by Arbitrator Gifford, in essence, nullifies the nine (9) criteria that are to be utilized and considered in rendering an interest arbitration award. Arbitrator Gifford makes in perfectly clear that any and all interest arbitration awards must comply with the 2% cap, no matter the weight that is given to the other criteria mandated under the New Jersey Employer/Employee Relations Act. Therefore, the increase in revenue realized by the State of New Jersey very well may be of no moment in many arbitration cases as a result of the strict reading and interpretation of the 2% cap that has been taken by arbitrators and PERC alike. However, it is important to note that Arbitrator Gifford’s award in The Borough of Tenafly and PBA Local 356 is being appealed by the Local.

[1] NJSA 34:13A-16.7(b)

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Photo of Donald C. Barbati Donald C. Barbati

Donald C. Barbati is a shareholder of Crivelli, Barbati & DeRose, L.L.C. His primary practice revolves around the representation of numerous public employee labor unions in various capacities to include contract negotiation, unfair labor practice litigation, contract grievance arbitration, and other diverse issues…

Donald C. Barbati is a shareholder of Crivelli, Barbati & DeRose, L.L.C. His primary practice revolves around the representation of numerous public employee labor unions in various capacities to include contract negotiation, unfair labor practice litigation, contract grievance arbitration, and other diverse issues litigated before the courts and administrative tribunals throughout the State of New Jersey. In addition, Mr. Barbati also routinely represents individuals in various types of public pension appeals, real estate transactions, and general litigation matters. He is a frequent contributor to the New Jersey Public Safety Officers Law Blog, a free legal publication designed to keep New Jersey public safety officers up-to-date and informed about legal issues pertinent to their profession. During his years of practice, Mr. Barbati has established a reputation for achieving favorable results for his clients in a cost-efficient manner.

Mr. Barbati has also handled numerous novel legal issues while representing New Jersey Public Safety Officers. Most notably, he served as lead counsel for the Appellants in the published case In re Rodriguez, 423 N.J. Super. 440 (App. Div. 2011). In that case, Mr. Barbati successfully argued on behalf of the Appellants, thereby overturning the Attorney General’s denial of counsel to two prison guards in a civil rights suit arising from an inmate assault. In the process, the Court clarified the standard to be utilized by the Attorney General in assessing whether a public employee is entitled to legal representation and mandated that reliance must be placed on up-to-date information.

Prior to becoming a practicing attorney, Mr. Barbati served as a judicial law clerk to the Honorable Linda R. Feinberg, Assignment Judge of the Superior Court of New Jersey, Mercer Vicinage. During his clerkship Mr. Barbati handled numerous complex and novel substantive and procedural issues arising from complaints in lieu of prerogative writs, orders to show cause, and motion practice. These include appeals from decisions by planning and zoning boards and local government bodies, bidding challenges under the Local Public Contract Law, Open Public Records Act requests, the taking of private property under the eminent domain statute, and election law disputes. In addition, Mr. Barbati, as a certified mediator, mediated many small claims disputes in the Special Civil Part.

Mr. Barbati received a Bachelor of Arts degree in history, magna cum laude, from Rider University in Lawrenceville, New Jersey. Upon graduating, Mr. Barbati attended Widener University School of Law in Wilmington, Delaware. In 2007, he received his juris doctorate, magna cum laude, graduating in the top five percent of his class. During law school, Mr. Barbati interned for the Honorable Joseph E. Irenas, Senior United States District Court Judge for the District of New Jersey in Camden, New Jersey, assisting on various constitutional, employment, and Third Circuit Court of Appeals litigation, including numerous civil rights, social security, and immigration cases.