H.E. NO. 86-20

STATE OF NEW JERSEY

BEFORE A HEARING EXAMINER OF

THE PUBLIC EMPLOYMENT RELATIONS COMMISSION

In the Matter of

COUNTY OF ESSEX,

Petitioner,

-and-	Docket No. SN-85-11

AFSCME, COUNCIL 52,

LOCAL 1247, AFL-CIO,

Respondent.

Appearances:

For the Petitioner, David H. Ben-Asher, Essex County Counsel

(Elaine K. Hyman, Assistant County Counsel)

For the Respondent, Oxfeld, Cohen & Blunda, Esqs.

(Arnold S. Cohen, of Counsel)

HEARING EXAMINER'S

RECOMMENDED REPORT AND DECISION

On August 29, l984, the County of Essex ("County") filed a scope of negotiations petition with the Public Employment Relations Commission. The petition seeks a restraint of binding arbitration of several grievances which AFSCME, Council 52, Local 1247, AFL-CIO ("Council 52") seeks to submit to binding arbitration. The grievances allege the County violated its agreement with Council 52 when it denied "merit pay" to several employees.

On October l0, l984, a Notice of Hearing was issued and I was assigned Hearing Examiner.

On March 7, l985, a hearing was held. Both parties examined and cross-examined witnesses, introduced exhibits and

argued orally. The parties filed post-hearing briefs and reply briefs by August 5, l985. On July ll, l985, the County moved to remand the matter, in part, to arbitration to permit the arbitrator to interpret the merit pay clause in the contract. On July l6, l985, AFSCME opposed this request.

Findings of Fact

1. Essex County is a public employer within the meaning of the Act.

2. AFSCME, Council 52, Local l247, AFL-CIO is a public employee representative within the meaning of the Act.

3. The County and Council 52 were parties to a collective negotiations agreement from January l, l98l to December 3l, l983. Included within the recognition clause are "all non-medical professional employees of Essex County at Essex County Hospital Center, Essex County Geriatric Center [and] County Guidance Center."

4. Each job classification contains a salary range. Employees move from the minimum to maximum of the range in annual incremental steps (T20-22). These "incremental steps," however, are not automatic under the parties' agreement. Article XXV provides:

The parties agree that the steps in the salary schedule are not automatic but effective l2/l/82 all those unit members who receive a "meritorious" evaluation shall receive an increase equal to l/2 of the difference between the employee's current step and the next step on

the schedule. This shall become an annual procedure effective l2/l of each year of the agreement and shall not apply to unit members at maximum salary. The period for evaluation for l982 shall be from the date of signing of the agreement until l0/l/82. Years following shall be annually from l0/l through 9/30.

The Merit Plan Program agreed to by the County and AFSCME provides:

All employees who have not reached the maximum of their Salary Range will be evaluated under this Merit/Increment Pay Program. No Merit Evaluation will be given to employees who are at the maximum of their salary range.

A.	EVALUATION PERIOD

For l982, employees will be evaluated from the date of agreement signed until October l, l982.

The next Evaluation Period will begin on October l, l982 and it will continue through September 30, l983. Any extension of this Evaluation Period beyond calendar year l983 will be negotiated in the next contract between the County and AFSCME.

B.	INITIAL INTERVIEW

The Supervisor and the Employee must meet at the beginning of each evaluation period to review the Objectives and Standards which have been previously established by the County and AFSCME. (See attached Objectives/Responsibilities and Standards). The Employee and Supervisor will sign the form indicating this has been accomplished.

C.	RATING INTERVIEW

Beginning date agreement is signed, the Supervisor must rate the Employee's performance for that Evaluation Period and must complete it and meet with the Employee to discuss the rating by October l5, l982.

D.	AWARDING OF MERIT INCREASES

There are l0 Objectives/Responsibilities on which an Employee will be rated. (See attached Rating Scale). An Employee will be eligible for a Merit/Increment Payment if the Employee receives an overall rating of 2.0 or higher. An Employee who leaves before the end of the Evaluation

Period will be eligible for a Merit/Increment Payment on a prorated basis; that Employee must be rated by his/her Supervisor prior to leaving.

Employees who begin employment after the Evaluation Period begins will be eligible for Merit/Increment Payment beginning with the next Evaluation Period. The Merit/Increment Payment will be made by the County on December l, l982.

E.	GRIEVANCE MECHANISM

If an Employee disagrees with the decision regarding his/her Merit/Increment Increase the Employee may grieve the decision through the Grievance Procedure described in this contract.

[J-2].

The grievance procedure culminates in binding arbitration. (See Article VI of J-1) and AFSCME and the County intended that disputes involving the plan be submitted to binding arbitration (T-23; T-l09).

Pursuant to this plan, employees are rated in the following ten categories:

1.	Assessment of Clients

2.	Participation in Staffing and Treatment Team Meetings

3.	Treatment Planning/Unit Planning

4.	Documentation and Record Keeping

5.	Knowledge of Work/Psychotherapeutic Treatment of Clients

6. Quality of Work

7. Work Output

8. Participation in the Work of the Unit

9. Attitude

10. Attendance

The employees are rated based upon the standards required in each of the ten categories and receive scores from 0 to 3 in each category. 0 signifies that the employee rarely meets the standard

expected of him; 1 signifies that the employee sometimes meets the standard; 2 signifies that the employee usually meets the standard; 3 signifies a high degree of consistency in meeting the standards. Employees who receive ratings of 2.0 or higher receive "Merit/Increment" Payments. Conversely, those below do not.

5. These standards were not unilaterally set by the County. Rather, they were mutually agreed to during negotiations with Council 52 (T26). There was testimony from County witnesses that the intent of the plan was that employees had to perform "above average" to receive a merit increment (T89). Those who were average do not (Tll3). While that may have been the unexpressed intent, I do not believe this resulted in an agreement between the County and AFSCME. Simply stated, the score of 2 means he usually met the standard required of him. That does not make him an above average employee. Conversely, an employee with a score of below 2, by definition, is considered to be an employee who does not usually meet the standards expected of him. Such an employee is not average under the plain language of the parties' agreed upon definition. An employee who does not usually meet the standards expected of him is a poor employee. From the County's perspective, the purpose of the plan was to increase efficiency and productivity (T102). The employees were evaluated by three supervisors ("unit managers") and the training officer (Tlll-ll2). Many of the categories involve subjective determinations (Tll3-ll6).

6. The Merit Pay Plan was agreed to on May 20 and provided for the following two evaluation periods: (l) June 1, l982 through

September l, l982 and (2) October l, l982 through September 30, l983. No employees were denied merit pay during the first evaluation period. Ten employees were initially denied merit pay during the second evaluation period (T6).

On October l7, l983, the union filed grievances contesting the County's failure to make merit payments to the affected individuals. The grievance alleges that the County violated Article XXV of the contract when it denied employees merit pay. As a remedy, it sought "Review with union, administration, supervisors and employee on merit forms (Explanation by supervisors) -- payment of merit pay to all employees who did not receive merit." Two grievances were resolved in favor of the union during the course of the grievance procedure: one was changed after a "technical error" was discovered1/ and the other after the County reconsidered (lT6). Three other grievances were not pursued because the affected individuals left County employ (lT6-7). The other five grievances were not resolved at the intermediate steps of the grievance procedure. Thus, on May 8, l984, the County advised:

As a follow-up to our last meeting and our telephone conversation yesterday, concerning the l983 Merit Denial Cases, please be advised that I've discussed their individual records and I agree with the original Merit determinations as expressed by their supervisors.

In addition, I am submitting a recommendation for Merit Payments for Karen Shubin and Harriet Power

1/	In the words of the County supervisor, a "gross error" had been made. (Tl02).

based upon recent documentation submitted to my Office.

Please contact me if you have any questions.

Council 52 sought to submit the unresolved grievances to binding arbitration, but the County filed this scope of negotiations petition and this proceeding followed. The parties voluntarily agreed to stay arbitration pending this determination.

The union has specifically contended that the denial of the merit increment violated the contract because:

(1)	The County did not advise the employees of the standards expected of them;

(2)	the attendance policy was changed in violation of the contract and merit program;

(3)	employees were not advised of the 65% patient contact time requirement until after their increment was denied;

(4)	certain in-service training was not considered;

(5)	certain employees received increments with the same or worse employment records than those not receiving increments;

(6)	grievants were not told who would evaluate them;

(7)	supervisors did not follow the proper scale in making the evaluation.

(T24-39).

Both parties have filed post-hearing briefs. The County contends that the dispute is non-arbitrable because it pertains to the evaluation of employees which involve matters of judgment and policy. It relies on, inter alia, Bd. of Education Bernards Tp. v. Bernards Tp. Ed. Ass'n, 79 N.J. 3ll (l979); Bethlehem Tp. Bd. of Ed.

v. Bethelehem Tp. Ed. Ass'n, 9l N.J. 38 (l982); Hoboken Board of Education, P.E.R.C. No. 84-139, l0 NJPER 353 (¶l5l64 l984); Brookdale Community College, P.E.R.C. No. 84-16, 9 NJPER 560 (¶l4234 l983). It further asserts that employees not receiving merit increments are not "disciplined" within the meaning of N.J.S.A. 34:l3A-5.3. It argues, instead, that this is a program designed to reward employees for above average work. It further asserts that this aspect distinguishes this case from East Brunswick Board of Education, P.E.R.C. No. 84-149, l0 NJPER 426 (¶l5l92 l984), aff'd App. Div. Docket No. A-5596-83T6 (decided 3/l9/85) where the Commission found that the denial of an increment of non-teaching staff members was an appropriate subject for binding arbitration. It contends that East Brunswick refers to situations where increments are denied for just cause.

AFSCME contends that the denials of the merit increment may be submitted to binding arbitration because "they constitute part of the salary of the County's employees." It relies on, among other cases, Bd. of Ed. of Englewood v. Englewood Teachers Ass'n, 64 N.J. 1 (l973); Galloway Tp. Bd. of Ed. v. Galloway Tp. Ed. Ass'n, 78 N.J. 25 (l978) and In re IFPTE, Local l95 v. State, 88 N.J. 393, 4l2 (l982). AFSCME further asserts the denial of merit pay salary increments, at least under the circumstances of this case, constitute discipline within the meaning of N.J.S.A. 34:l3A-5.3.

Discussion and Analysis

I first consider the County's motion to remand this matter to arbitration for an arbitrator to decide the following factual issue: whether the contractual merit pay clause limits merit pay to employees whose work is above average. I deny this motion. I do not believe his interpretation will aid my determination. In this regard, I deem it appropriate to note the Commission's limited jurisdiction:

The Commission is addressing the abstract issue: is the subject matter in dispute within the scope of collective negotiations. Whether that subject is within the arbitration clause of the agreement, whether the facts are as alleged by the grievant, whether the contract provides a defense for the employer's alleged action, or even whether there is a valid arbitration clause in the agreement, or any other question which might be raised is not to be determined by the Commission in a scope proceeding. Those are questions appropriate for determination by an arbitrator and/or the courts.

Ridgefield Park Ed. Ass'n v. Ridgefield Park Bd. of Ed., 78 N.J. l44 (l978); In re Hillside Bd. of Ed., P.E.R.C. No. 76-11, l NJPER 55 (l975).

Further, I would note that the County's request that the arbitrator decide this limited factual issue prior to the Commission's determination is contrary to the Appellate Division's admonition that "...if scope of negotiability turns on a dispute of facts...the Legislature contemplated that PERC, not the arbitrator, resolve that factual dispute." Camden Cty. Voc. Sch. Bd. v. CAM/VOC Teachers, l83 N.J. Super. 206, 2l4 (App. Div. l982). Indeed, it would appear that was the reason the Commission directed a hearing in this matter.2/

2/	I resolve this factual dispute to find that merit pay is to be

paid to employees who "usually" meet the standards expected of

(footnote continued on next page)

The issue here is whether the denial of merit increments under the circumstances of this case may be submitted to binding arbitration. I first note, though, that the various labels used by the parties (and myself) to describe this case ("increments," "discipline," "merit evaluations," "managerial prerogatives," and "compensation"), although not lacking in use, cannot dispositively answer the question presented. As our Supreme Court said in In re IFPTE Local l95 v. State, 88 N.J. 393, 402 (l982) "the mere invocation of abstract categories [in making scope of negotiations determinations] is not helpful." Rather, the central issue in a scope of negotiations determination..." depends on careful consideration of the legitimate interests of the public employer and the public employees." Id. at 40l.

I first consider whether the subject matter of the instant dispute involves "discipline" and therefore is arbitrable under the recent amendments to N.J.S.A. 34:l3A-5.3. As amended, the statute now reads:

...the majority representative and designated representatives of the public employer shall meet at reasonable times and negotiate in good faith

(Footnote continued from previous page)

him. Conversely, merit pay is denied to those who do not usually meet the standards. I do not think it necessary to characterize such an employee as "average" or "above average." However, I simply cannot accept the County's characterization of an employee who does not usually meet the standards expected of him as an "average" employee. Such an employee would more appropriately be characterized as "poor."

with respect to grievances, disciplinary disputes, and other terms and conditions of employment. Nothing herein shall be construed as permitting negotiation of the standards or criteria for employee performance.

*	*	*

Public employers shall negotiate written policies setting forth grievance and disciplinary review procedures by means of which their employees or representatives of employees may appeal the interpretation, application or violation of policies, agreements, and administrative decisions, including disciplinary determinations, affecting them, that such grievance and disciplinary review procedures shall be included in any agreement entered into between the public employer and the representative organization. Such grievance and disciplinary review procedures may provide for binding arbitration as a means for resolving disputes.

(Emphasis added).

In East Brunswick Board of Education, P.E.R.C. No. 84-149, l0 NJPER 426 (¶l5l92 l984), the Commission held that a Board of Education's decision to withhold salary increments of non-tenured secretaries and custodians for "good cause" based upon the employees alleged unsatisfactory performance was arbitrable. It distinguished Bernards Tp., 79 N.J. 311 (l979) since that case involved the denial of a teacher's increment which the Legislature had delegated to the Board under N.J.S.A. l8A:29-14 and which was subject to the jurisdiction of the Commissioner of Education. With respect to whether the withholdings of increments constituted "discipline" within the meaning of the amended statute, the Commission said:

The legislative history offers some immediate guidance on [this] question. The Sponsor's Statement to Assembly Bill No. 706 - which was later revised, enacted, and codified in N.J.S.A. 34:l3A-5.3 - provided in part:

The proposed legislation does not challenge the exclusive power of the employer to initiate discipline or discharge a public employee for misconduct, incompetency or inefficiency so as to maintain an adequate and effective work force. It merely assures organized public employees that procedures to review such important considerations as the fairness of disciplinary actions can be available to them through negotiations, and may be examined by an independent third party, if the parties so agree in their contract.

This bill is not intended to deny any individual employee the right to elect to pursue a complaint over allegedly unjust discipline or discharge through procedures available under existing legislation, such as those procedures through which classified civil service employees may appeal disciplinary actions, denial of increments, etc. Nor is this bill intended to alter the existing procedures through which discharges or reductions in salary are sought against tenured personnel under N.J.S.A. l8A:6-10 et seq. or through which tenured or nontenured employees may appeal a denial of increments. It is intended to authorize the negotiation of binding arbitration merely as an alternative forum for the resolution of such disputes. Under the bill, the election of one forum will, however, preclude the employee from relitigating the grievances or disciplinary appeal through an alternative procedure.

(Emphasis supplied).

Thus, this bill, as originally introduced, obviously considered increment withholdings to be discipline and specifically would have made increment withholdings and other disciplinary determinations - regardless of whether or not they could be otherwise reviewed through specific statutory procedures such as N.J.S.A. l8A:29-l4 - reviewable through binding arbitration if the parties so agreed. The Legislature passed this bill, but the

Governor vetoed it and suggested that it be amended to confirm the employer's right to establish unilaterally performance criteria and statutory appeal procedure or source of statutory protection existed. The Legislature accepted these conditions and the Governor then signed the amendment to Section 5.3

From this legislative history, two points are clear. First, the Legislature from the beginning recognized that the denial of an increment constitutes discipline. Neither the Legislature nor the Governor ever made any subsequent statements to the contrary and instead their interchange focussed on the different question of the significance of whether or not other statutory appeal procedures or sources of statutory protection concerning such disciplinary determinations existed. Second, while the amendment to section 5.3 confirmed the employer's right to set performance criteria and standards without negotiations, it also recognized the disciplined employee's ability to challenge the fairness of the employer's application of these criteria and standards in his or her own case through binding arbitration when the parties had negotiated such a procedure for review of disciplinary determinations and there was no statutory appeal procedure or source of statutory protection available to that employee. In sum, decisions to withhold increments are disciplinary determinations which may be reviewed through binding arbitration (if the parties so agree), provided no other statutory appeal procedure or protection exists.

(Emphasis added).

In affirming, the Appellate Division said: "It is self-evident that denial of increments constitutes discipline and the Sponsor's Statement attached to A-706 in the chain of legislation confirms that this is the intent of the Legislature." (Slip opinion at 2).

The County strenuously argues, however, that the employees involved in this proceeding have not been "disciplined." Rather, it asserts that they simply have not reached a level of performance that would merit an increment or bonus payment. A public employer's failure to award a merit increment arguably might not constitute discipline under certain circumstances. The employee is not punished. He continues to receive the same pay (indeed, he also receives cost of living increases) and apparently remains free to

continue working with the County. I cannot, however, accept this contention under the particular circumstances of this case. First, the County's claim (based upon the testimony of its supervisors) that only employees that perform "above average" receive increments is contrary to the plain language of the Merit/Increment Pay Program. Under it, employees who "usually" meet the standards expected of them receive increments. Conversely, employees who do not" usually" meet the standards do not receive increments. I simply do not believe that an employee who does not "usually" meet the standards expected of him is an average employee. It seems to me that he is a poor employee and by so labelling him as "not usually" meeting the standards constitutes "discipline" since it effectively amounts to a sanction.3/ Moreover, all employees have an expectation under the contract that they will reach maximum. The record reveals that most employees receive increments. The only way to get from minimum to maximum on the salary guide is through the receipt of the merit payments. Thus, in a practical sense, where most employees receive increments, the denial amounts to discipline within the meaning of N.J.S.A. 34:l3A-5.3. It is not important that they are not automatic. What is significant is that they are negotiated incremental salary steps which the County has denied.

3/	I am not suggesting that this is the severest form of discipline that could be leveled. To the contrary, an employee who does not usually meet the standards expected of him could be subject to discharge.

Given this, I believe East Brunswick controls and I recommend the denial of increments, under the circumstances of this case, is disciplinary within the meaning of N.J.S.A. 34:l3A-5.3.

I believe it appropriate to contrast this situation to that in which an employer grants discretionary salary payments to selected individuals for outstanding or above average performance based upon its evaluations of these employees. In other words -- a "bonus" increment payment. The County essentially argues this position, but the facts do not support this contention. Under such circumstances, I would agree that the failure to receive such payments would not be disciplinary within the meaning of N.J.S.A. 34:l3A-5.3. Nevertheless, even if the County's factual position was accepted, it would still be a mandatory subject of negotiations since this compensation program is predicated upon a negotiated agreement concerning a term and condition of employment. Even were it not to be "discipline," I would still have to apply the Local l95, supra, test to determine its negotiability:

...a subject is negotiable between public employers and employees when (1) the item intimately and directly affects the work and welfare of public employees; (2) the subject has not been fully or partially preempted by statute or regulation; and (3) a negotiated agreement would not significantly interfere with the determination of governmental policy. To decide whether a negotiated agreement would significantly interfere with the determination of governmental policy, it is necessary to balance the interests of the public employees and the public employer. When the dominant concern is the government's managerial prerogative to determine policy, a subject may not be included in collective negotiations even though it may intimately affect employees' working conditions.

[Id. at 404-405].

The first part of this test has been met. Compensation and rates of pay are, in the words of the Supreme Court, "prime examples of subjects that fall within this category." Bd. of Ed. of Woodstown-Pilesgrove v. Woodstown-Pilesgrove Ed. Ass'n, 8l N.J. 582, 589 (l980). The second test is not applicable. This subject has not been preempted by statute or regulation. I now consider the third test. It is true that submitting to an arbitrator the determination whether an employee has "usually" performed up to standards set by management will infringe, to some extent, on the determination of governmental policy. But, as our Supreme Court has stated "...most decisions of the public employer affect the work and welfare of public employees to some extent and that negotiation will always impinge to some extent on the determination of governmental policy. Local l95, supra at 404. Therefore, it is only those topics that significantly interfere that are non-negotiable. This "significant" limitation requires me to balance the interests of the public employer and the public employees, as stated in Local l95:

The requirement that the interference be "significant" is designed to effect a balance between the interests of public employees and the requirements of democratic decision making. As Justice Schreiber wrote in Woodstown-Pilesgrove,

The nature of the terms and conditions of employment must be considered in relation to the extent of their interference with managerial prerogatives. A weighing or balancing must be made. When the dominant issue is [a governmental] goal, there is no obligation to negotiate and subject the matter, including its impact, to binding arbitration. Thus these matters may not be

included in the negotiations and in the binding arbitration process even though they may affect or impact upon the employees' terms and conditions of employment

[88 N.J. at 404].

Balancing these interests under the circumstances of this case convinces me that the employees' interest predominates. First, as already stated, compensation vitally affects all employees. No one would deny that. This must be balanced against the employer's interest in unilaterally determining whether to give the employee a merit increase. That determination affects governmental policy to some extent. See Bd. of Education Bernards Tp. v. Bernards Tp. Ed. Ass'n, 79 N.J. 3ll (l979). In this regard, I note that the underpinning of the County's argument is that since the determination to award the increases is dependent upon evaluations, it must be non-negotiable. It is true that public employers have the managerial prerogative to evaluate employees, to determine who is the evaluator, to determine the evaluation criteria and to use evaluations to promote and transfer employees. e.g., Bethlehem Twp. Bd. of Ed. v. Bethelehm Tp. Ed. Ass'n, 9l N.J. 38 (l982); State v. State Supervisory Employees Ass'n, 78 N.J. 54 (l978); State v. State Troopers NCO Ass'n, l79 N.J. Super. 80 (App. Div. l98l); Fair Lawn Bd. of Ed. v. Fair Lawn Ed. Ass'n, l74 N.J. Super. 554 (App. Div. l980); In re Byram Tp. Bd. of Ed., l52 N.J. Superl l2 (App. Div. l977); Brookdale Community College, P.E.R.C. No. 84-84, l0 NJPER lll (¶l4048 l984); Tenafly Bd. of Ed., P.E.R.C. No. 83-51, 8 NJPER 62 (¶l3297 l982); Willingboro Tp. Bd. of Ed., P.E.R.C. No. 82-67, 8

NJPER 104 (¶l3042 l982); Township of Edison Bd. of Ed., P.E.R.C. No. 83-40, 8 NJPER 599 (¶l328l l982); Rutgers, P.E.R.C. No. 82-47, 7 NJPER 67l (¶12303 1981). But, this program is part of a negotiated compensation package. The County retains the sole authority to evaluate employees to determine where the employee should be assigned; whether he should be promoted or even the standards to determine whether he should be retained. The Commission has never held, however, that an evaluation of an employee's work product can be used to unilaterally determine whether an employee will receive a scheduled increment payment and thereby unilaterally determine his place on the salary range set for his position. I do not believe it would so hold. Bernards Tp., supra, is some support for that position, but I believe it is distinguishable because it relied on a specific statutory provision and was issued prior to the disciplinary amendments evidencing a clear legislative intent that increment denials were appropriate subjects for negotiation and arbitration where there was not, unlike Bernard's, an alternate statutory appeal mechanism. The County's position goes too far. It asserts that it has the prerogative to determine compensation based upon its evaluation of the employees' work product. In short, good employees would receive salary increases; average and poor employees would not. I have no quarrel with that ultimate goal. Indeed, in this case neither does the union because it has specifically agreed to such a program. But the County's argument is more than that. It would unilaterally determine who is good and bad for purposes of

awarding salary increases. Further, this appears to be the County's primary goal -- these decisions could not be submitted to a neutral arbitrator for review even though the County has specifically agreed with the majority representative that such decisions were subject to arbitration. I do not doubt that a public employer has an interest in determining salaries unilaterally. It would be easier to pay those employees it wants to reward and not pay those it wants to penalize without the constraints of negotiations and binding arbitration, if it had so agreed. The essential and only relevant point is that our Legislature has determined otherwise. N.J.S.A. 34:l3A-5.3. What our Supreme Court said in Lullo v. Intern. Assoc. of Fire Fighters, 55 N.J. 409 (l970) concerning collective negotiation is applicable here:

...the wholesome purpose is to supersede the possible terms of individual agreements of employers with terms which reflect the strength and bargaining power and serve the welfare of the group. The terms and advantages of the collective agreement become open to every employee in the represented unit. It has been said that advantages to an employee through an individual contract "may prove as disruptive of industrial peace as disadvantages." Individually negotiated agreements constitute "a fruitful way of interfering with organization and choice of representatives; increased compensation, if individually deserved, is often earned at the cost of breaking down some other standard thought to be for the welfare of the group, and always creates the suspicion of being paid at the long-range expense of the group as a whole."

(Emphasis added) [Id. at 428].

The point is that our Legislature has determined that even though increased compensation may be individually deserved, it may result

in "breaking down some other standard." That is why collective negotiations exist in New Jersey. The flaw in the County's argument is that it looks only to the interests of the public employer. Indeed, to permit it to unilaterally decide merit increment increases, with no review of that decision whatsoever, would swallow what has been basic to mandatory negotiability. But our Supreme Court has directed us to balance the interests. Here, since compensation is dominant, I have no hesitancy in concluding that, even if the dispute is not "disciplinary," it nevertheless may be submitted to binding arbitration since it is a mandatory subject of negotiations.

Recommended Order

I recommend that the Public Employment Relations Commission deny the County of Essex' request to restrain binding arbitration.

David F. Corrigan

Hearing Examiner

DATED: Trenton, New Jersey

November 4, l985