H.E. NO. 95-4

STATE OF NEW JERSEY

BEFORE A HEARING EXAMINER OF THE

PUBLIC EMPLOYMENT RELATIONS COMMISSION

In the Matter of

COUNTY OF CAMDEN

Respondent,

-and-	Docket No. CO-H-93-219

CAMDEN COUNCIL No. 10, N.J.C.S.A.,

Charging Party.

Appearances:

For the Respondent,

Murray, Murray and Corrigan, attorneys

(David F. Corrigan, of counsel)

For the Charging Party,

Tomar, Seliger, Simonoff, Adjourian & O'Brien, attorneys

(Mary L. Crangle, of counsel)

HEARING EXAMINER'S REPORT

AND RECOMMENDED DECISION

On December 21, 1992, Camden Council No. 10, N.J.C.S.A. filed an unfair practice charge (C-1)1/ with the Public Employment Relations Commission against the County of Camden.

The charge was amended on January 13, 1993 and March 31, 1993. Council 10 alleges that the County violated the New Jersey Employer-Employee Relations Act ("Act"), N.J.S.A. 34:13A-1 et seq.,

1/	Crefers to the Commission exhibits received into evidence at the March 2, 1994 hearing held in this matter. CPand Rrefer to the Charging Party's exhibits and Respondent's exhibits, respectively, received into evidence at the hearing. "T" refers to the transcript of the hearing.

specifically, Section 5.4(a)(1), (2), (3) and (5)2/ by unlawfully unilaterally implementing salary increases for certain bargaining unit employees based upon alleged "outstanding performances during 1992"; by unlawfully establishing an Employee Relations Committee for the purpose of dealing directly with employees concerning terms and conditions of employment in contravention of Council 10; by unlawfully communicating directly with Council 10 represented employees with the purpose of interfering with the collective negotiations status of Council 10 and for the purpose of undermining and denigrating Council 10 through its March 19, 1993 letter, copied to "Merit Increase Recipients" and "Employee Relations Committee".

On April 28, 1993, the Director of Unfair Practices issued a Complaint and Notice of Hearing (C-1). On June 18, 1993, the County filed an Answer to the Second Amended Complaint (C-2) denying any unfair practices. It, however, admits that on December 14, 1992, it announced it was considering a proposed plan to restructure the Department of Health and Human Services and that on December 17,

2/	These subsections prohibit public employers, their representatives or agents from: "(1) Interfering with, restraining or coercing employees in the exercise of the rights guaranteed to them by this act. (2) Dominating or interfering with the formation, existence or administration of any employee organization. (3) Discriminating in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage employees in the exercise of the rights guaranteed to them by this act. (5) Refusing to negotiate in good faith with a majority representative of employees in an appropriate unit concerning terms and conditions of employment of employees in that unit, or refusing to process grievances presented by the majority representative."

1992, it adopted the restructuring plan. It also admits that the County sent a March 19, 1993 letter to the Council 10 President regarding the Meritocracy Program and that a copy of such letter was sent to several people including the "Merit Increase Recipients" and the "Employees Relation Committee", but denies the remaining allegations.

The County asserts several Affirmative Defenses; that the second amended charge does not state a claim upon which relief can be granted; that the charge alleges merely a contract violation which should be dismissed under State of New Jersey (Department of Human Services), P.E.R.C. No. 84-148, 10 NJPER 419 (¶15191 1984); that the charge should be deferred to binding arbitration; that the charge is time barred by the statute of limitations; that the County exercised its management prerogative by restructuring the Department of Health and Human Services to utilize its personnel and facilities in the most efficient manner and that the County exercised its right under the doctrine established in Black Horse Pike Regional Board of Education, P.E.R.C. No. 82-19, 7 NJPER 502 (¶12223 1981) to comment on the activities or attitudes of an employee representative which it believes are inconsistent with good labor relations by virtue of its March 19, 1993 letter to Council 10's President.

After three adjournments requested and consented to by the parties, a hearing was held in this matter on March 15, 1994 in Trenton, New Jersey, at which time the parties were afforded the opportunity to examine witnesses, present relevant evidence and argue orally. The parties filed post-hearing briefs by May 26, 1994. The County filed a reply brief by June 6, 1994.

Upon the entire record, I make the following:

FINDINGS OF FACT

1. Council 10 and the County are parties to a collective negotiations agreement which runs from January 1, 1992 to December 31, 1994 (J-1). The agreement covers approximately 1700 employees in a broad-based unit of blue and white collar supervisory and non-supervisory employees employed by the County. Wage rates are negotiated and are set forth in a six-step salary schedule which is adjoined to the agreement (T22-T24; J-3).

Employees advance through a negotiated performance evaluation system. Employees are evaluated annually and upon achieving a satisfactory or better evaluation, they move to the next step and receive a performance increase (J-1; T24). The performance evaluation system has never been used to determine whether to change an employee's hours or title (T230-T231). There is no performance evaluation system applicable to employees at the top step. These employees receive across the board increases only (T25).

2. Jeffrey L. Nash, Camden County Freeholder since January 2, 1992, is the Freeholder liaison to the Department of Health and Human Services and oversees the operations of that Department (T153). Because the department was "in a shambles" due to layoffs that occurred in 1991, Nash decided to create an Employee Relations Committee, and by an April 13, 1992 letter invited all employees to serve on the Committee (T29, T54; J-4). Out of the 60 employees

responding, one from each of the nineteen units in the Department was selected (T157). Three of those selected were Council 10 officials at that time or another (T158). Nash did not request or select anyone for the Committee to serve as a representative of Council 10 (T67, T188).

Prior to its first meeting, Nash informed then Council 10 President Richard Riggs that the purpose of the Committee was to improve morale, solidify the department and improve working conditions. Nash also felt there was a need to have direct communications with employees (T33-T34). He repeated this avowed purpose to Committee members at the first Committee meeting in April 1992 and indicated that the Committee was not there in place of Council 10 and that it was not his intention to deal with union related matters (T72, T150-T151, T155-T156). Council 10 had no objection to or concerns over the Committee at that time (T34, T49, T158-T159).

3. From the beginning of the Committee, Nash hoped to establish a meritocracy type of system to fill certain needs in the Department (T163). The meritocracy system was discussed at several Committee meetings (T132, T186, T191; CP-5, CP-6, CP-7, CP-8). At the June 26, 1992 Committee meeting, Nash discussed that he was considering how promotions and hirings could be based on merit (T77-T78; CP-5). At the September 25, 1992 meeting, Nash indicated that the meritocracy system would be used to reward those that deserved recognition because of job performance; that he was having

Max Wallenberg in the Health Department work on the program; and that Council 10 member and Committee chair Michael Quinn would be involved in selecting people for the Meritocracy Committee (T79-T80, T127, T133-T134, T150, T159, T164-T165; CP-6). A number of people raised concerns about the program being fair and that the program may have to be negotiated with Council 10 (T81-T82).

At the next meeting on November 17, 1992, Nash indicated that there was to be a Meritocracy Program and that division heads were being asked to make recommendations of who was deserving of merit increases and that those people would be given promotions or changes in hours to reflect their merit. Employees raised concerns about the fairness of this process to which Nash responded that division heads were the best people for making the recommendations (T85-T86). Nash also outlined a program to train management to do evaluations for the Program and a process whereby the Meritocracy Committee would meet with the personnel manager to work out the system (T87-T88; CP-7).

On December 14, 1992, Nash issued J-5 to all Department employees, establishing the Meritocracy Program (T88, T134, T165). He intended the Program to be "a fair system by which outstanding employees would see the benefit of their labor" (T163-T164). Attached to J-5 was a list of proposed transfers and a list of employees for whom salary and/or title adjustments were proposed "based upon outstanding performances during 1992" (T39-T40, T165).

4. At Riggs' request, he met with Nash and his aide on December 15 or 16, 1992 about the Meritocracy Program (T37-T38). Riggs did not object to the transfers proposed in J-5, but objected to the meritocracy aspect, involving the proposed salary adjustments and title changes (T39-T40, T50-T51). Riggs indicated that he felt that the Program was a violation of the parties' agreement, because the aspect of providing merit increases is covered by the agreement,3/ and that the establishment of a new merit program for just the Department had to be negotiated with Council 10 (T37-T38). Nash responded that it was within the realm of the parties agreement to establish a merit program to reward employees within the Department (T38-T39).

Nash chose not to utilize the existing performance evaluation system in J-1 because he did not feel that it was accomplishing what he had hoped (T192-T193). Nash, however, did not ask Council 10 to negotiate a different kind of evaluation system prior to establishing the Meritocracy Program (T194).

The title and salary adjustments listed on J-5 were adopted by the Freeholder Board by resolution, J-6 (T41, T171-T172,). Three individuals were listed in J-5 for a proposed salary adjustment without a change in title or increase in hours. These adjustments

3/	Although Riggs referred to the agreement covering merit increases, the agreement does not specifically refer to or provide for merit increases. Article VI contains the performance evaluation system which provides for step increases based on a satisfactory or above performance evaluation.

were proposed, but were left to the County to negotiate with Council 10, but that never happened (T167, T170-T171).

As to the employees named in J-6 who received a salary adjustment by way of a title change or increase in hours, no indication was given to Council 10 that the employee's circumstances, i.e. his or her department or assignment changed (T63-T64). Nor did Nash convey to employees that the proposed salary adjustments in J-5 were filling needs or that new positions were being created in the Department (T183, T186, T188).

5. Riggs attended the Freeholder meeting where J-6 was adopted. Prior to its adoption, Riggs informed the Freeholders that he felt the proposed personnel actions constituted an unfair practice because the actions had not been negotiated with Council 10, and requested that the matter be tabled (T41-T42).

Riggs thereafter filed the instant unfair practice charge (C-1). Nash sent a January 5, 1993 memo to Michael Quinn concerning the charge and the Meritocracy Program (T46-T47; CP-2). The charge was discussed at the January 19, 1993 Committee meeting at which Nash expressed disappointment that Council 10 was fighting the Meritocracy Program and that so many employees were unhappy about it (T92-T94; CP-8). Nash, thereafter, sent Riggs a March 19, 1993 response to the charge, refusing to rescind the adjustments and disband the Employee Relations Committee (T178; CP-1). Nash expressed disappointment over Council 10's response to his efforts and invited Council 10 to work with him over the next several months

"to fine tune the system to meet with everyone's satisfaction" (CP-1). His letter was copied to the merit increase recipients and the Employee Relations Committee (CP-1; T44-T46).

6. Prior to 1992, it was common for the County to unilaterally change employees' hours and titles, including those of Council 10 represented employees (T53-T54, T102-T104, T143-T144, T225-T229; R-2). The County would decrease hours when it reduced the workday and would increase hours because of an increase in workload or workday (T47-T48; T244-T245). If hours were adjusted upward, the employee would receive a pro rata adjustment upwards. If hours were adjusted downward, the employee's salary would be pro-rated downward (T54-T55, T102-T103).

The County has also unilaterally changed employees' titles based on the work they performed, a move to a different work location, a promotional exam, or as the result of an audit (T48, T144, T233). Employees would then be slotted into the negotiated salary for the new title (T53-T54, T144, T227-T228). The County has also changed employees' titles and increased employees hours at the request of a supervisor, department head or Freeholder because the employee was doing a good job (T234, T243-T244).4/

Employees have not, prior to 1992, received salary increases for Department of Health and Human Service employees, by

4/	While Richard Dodson, County Director of Human Resources, testified to this effect, he could not cite one example where a Freeholder asked for an increase in an employee's hours because the employee was doing a good job (T242-T243).

way of increases in hours or changes in title, as a result of a department wide meritocracy program (T63, T232-T234), nor has the County previously instituted merit increases for employees outside the negotiated performance evaluation system (T47).

ANALYSIS

The County Violated the Act

by Unilaterally Implementing

Salary Increases Pursuant to

The Meritocracy Program.

The Union claims that the County, through Freeholder Nash's December 14, 1992 memo (J-5) unlawfully and unilaterally implemented a merit pay program, or Meritocracy Program for Department of Health and Human Service employees, whereby employees would receive salary adjustments by way of increased hours or title changes, based upon outstanding performances in 1992.

The County admits that it increased employees' hours and changed employees' titles and increased salaries accordingly; however, it claims it had the contractual right and the managerial prerogative to do so. It asserts that its actions were consistent with the long-standing practice of the parties.

Compensation, specifically the implementation of a merit pay program, is mandatorily negotiable. Hunterdon Cty. and CWA, P.E.R.C. No. 87-35, 12 NJPER 768 (¶17293 1986), P.E.R.C. No. 87-150, 13 NJPER 506 (¶18188 1987) aff'd App. Div. Dkt No. A-5558-86T8 (3/21/88), aff'd. 116 NJ 322 (1989); Rutgers University, P.E.R.C. No. 88-23, 13 NJPER 726 (¶18273 1987). An employee organization may

waive its right to negotiate over a mandatorily negotiable issue, however, the waiver must be clear and unequivocal. South River Bd. of Ed, P.E.R.C. No. 86-132, 12 NJPER 447 (¶17167 1986) aff'd App. Div. Dkt. No. A-5176-85T6 (3/10/87); Elmwood Park Board of Education, P.E.R.C. No. 85-115, 11 NJPER 366 (¶16129 1985). A waiver will be found if the contract explicitly allows the employer to make the changes or if the employer has consistently made the changes in the past without objection from the union. South River.

Here, the County unilaterally implemented salary increases for Department employees by way of title and hour changes based upon merit. (See J-5, J-6; CP-1). The salary and title adjustments proposed by Freeholder Nash in J-5 and implemented by J-6 were "based upon outstanding performances during 1992" (T182).5/ Nash's purpose was to "create a pure system of meritocracy that serves to benefit our truly outstanding and dedicated employees" (J-5) (T80-T81, T150, T192-T193; See also CP-1). At Committee meetings, Nash stated that division heads were being asked for recommendations of who was deserving of merit increases and those employees would receive title changes and increased hours to reflect their merit (T84-T85).

There is nothing in J-1 that would permit the County to unilaterally grant salary increases to Department employees, by way

5/	A list of transfers were also proposed in J-5. Council 10, however, did not object to this component of the program (T51).

of title changes and increases in hours, based upon merit, as with the Meritocracy Program. Article III(E) of J-1 merely provides that unit employees shall receive a salary predicated on the appropriate hourly rate for their title while Article VI(E) specifies that when an employee changes title, then his or her salary shall be adjusted. J-1, specifically Article VI, further contains a performance evaluation system which Nash specifically chose not to use (T192-T193). This language does not grant the County the right to unilaterally implement the instant Meritocracy Program for Department employees. Rutgers University; South River.

Moreover, there is no consistent past practice by the County of unilaterally implementing merit-based salary increases by way of title and hour changes for Department employees. South River. While the County has unilaterally changed employees' titles and hours in the past, this was never established pursuant to a department-wide merit program like the instant one (T47, T63, T232-T234). In the past, changes in hours and titles occurred as a result of departmental needs such as an increase in work duties, changes in the work day, as a result of a promotional exam or an audit (T48, T144, T233, T244-T245). While Dodson testified that employees have received changes in titles and hours because supervisors, department heads or Freeholders thought they were doing a good job, these changes were not made pursuant to a unilaterally

implemented Meritocracy Program like the present one (T232-T234)6/

Finally, although Nash testified that the instant hour and title adjustments were awarded to fill certain departmental needs, those chosen for the adjustments were chosen based on merit, as a reward for outstanding performances in 1992 (J-5, CP-1, CP-2; T80-T81, T85, T182). Moreover, prior to the hearing, Nash consistently indicated to the Employee Relations Committee, Council 10, and the merit increase recipients that the adjustments were a meritocracy system to reward outstanding employees in the Department (T38-T39, T63-T64, T85, T183-T184, T187-T188; J-5; CP-1; CP-2; CP-3; CP-5; CP-6; CP-7, CP-8).

Based on the above, I find that the County violated the Act by unilaterally implementing the salary increases by way of title changes and increases in hours, pursuant to the Meritocracy Program.

The County Violated the Act by

Dealing Directly with Employees

Concerning Terms and Conditions of

Employment Through the Employee

Relations Committee

N.J.S.A. 34:13A-5.3 provides in pertinent part:

Representatives designated or selected by public employees for the purposes of collective negotiation by the majority of the employees in a unit appropriate for such purposes or by the

6/	As noted, supra, Dodson could not cite one example where a Freeholder asked for an increase in an employee's hours because the employee was doing a good job. See footnote 4.

majority of the employees voting in an election conducted by the commission as authorized by this act shall be the exclusive representatives for collective negotiations concerning the terms and conditions of employment of the employees in such unit.

The exclusivity principle is a "cornerstone of the Act's structure for regulating the relationship between public employers and public employees." Mt. Olive Bd. of Ed., P.E.R.C. No. 84-73, 10 NJPER 34 (¶15020 1983); New Jersey Dept. of Law and Public Safety, I.R. No. 83-2, 8 NJPER 425, 427 (¶13197 1987); See Lullo v. Inter. Assoc. of Fire Fighters, 55 N.J. 409, 426 (1970).

When the Employee Relations Committee was implemented, its purpose, as described by Nash, was to improve morale, solidify the department and improve working conditions in the department (T33-T34, T39, T155). Council 10 did not have any objection to this stated purpose of the Committee (T34, T49, T158-T159). The Committee became objectionable to Council 10, however, when the topic of the Meritocracy Program was discussed with Committee members. Over the course of several meetings, Nash discussed the establishment of the Meritocracy Program whereby employees would be rewarded with merit pay increases for outstanding performances during the prior year (T77-T78, T80, T85, T133-T134, T191; CP-5, CP-6, CP-7, CP-8). Nash discussed with Committee members the development of the Program and that he was assigning employees to work out standards for the Program and to select people for the Program. Employees expressed concern over the fairness of the program and suggested that all employees have the opportunity to

participate in the Program and know what they had to do to qualify for a merit increase (T78, T80-T82, T85, T87-T88, T133-T134, T150, T191; CP-5, CP-6, CP-7, CP-8).

As discussed previously, compensation, specifically, a merit pay program, is a mandatorily negotiable term and condition of employment. Rutgers University. Thus, when the County met and dealt directly with employees on the Committee about the Meritocracy Program, it undermined Council 10's exclusive representative status. Newark Board of Education, P.E.R.C. No. 85-24, 10 NJPER 545 (¶15254 1984).

The County claims that Council 10 officials were part of the Committee and that no negotiations over terms and conditions took place. However, the County never sought to formally involve Council 10 as a representative on the Committee (T67, T188). Although union officials served on the Committee, they did not serve on it in the capacity of a Council 10 representative, but in the capacity of an employee within the department (T67, T188). Compare Mt. Olive, P.E.R.C. No. 84-73, 10 NJPER 34 (¶15020 1983). Finally, while negotiations between the Committee members and the County did not take place, the discussion and solicitation of suggestions about a mandatorily negotiable subject violate the Act. Newark Bd. of Ed.

Based on the above, I find that the County violated the Act by dealing directly with employees represented by Council 10 on the topic of the Meritocracy Program.

The County Did Not Violate the

Act by Virtue of Freeholder's

Nash's March 19, 1993 Letter

In Black Horse Pike Regional Board of Education, P.E.R.C. No. 82-19, 7 NJPER 502 (¶12223 1981), the Commission held:

A public employer is within its rights to comment upon those activities or attitudes of an employee representative which it believes are inconsistent with good labor relations, which includes the effective delivery of governmental services, just as the employee representative has the right to criticize those actions of the employer which it believes are inconsistent with that goal.

A balance must be struck between conflicting rights: the employer's right to free speech against the employees' right to be free from coercion, restraint or interference when exercising protected rights. Cty of Mercer, P.E.R.C. No. 86-33, 11 NJPER 589 (¶16207 1985); State of New Jersey, D.U.P. No. 92-25, 18 NJPER 327 (¶23142 1992).

Here, Nash's March 19, 1993 letter does not contain statements violative of the Act. The statements are not disrespectful to the majority representative. Nor are they inherently threatening or coercive. State of New Jersey. Rather, Nash merely expresses disappointment over Council 10's response to the Meritocracy Program and that he intends to stand by the Program and the Employee Relations Committee. He also suggests that he and Council 10 work together to fine tune the system and offers to meet to resolve the matter without litigation. I do not perceive these statements to be prohibited under Black Horse Pike.

Finally, although Council 10 alleged in its charge that the County violated subsection 5.4(a)(3) of the Act, it did not present any evidence at the hearing to support that allegation. I, therefore, recommend that the allegation be dismissed.

CONCLUSIONS OF LAW

1. The County violated 5.4(a)(5) and derivatively (a)(1) of the Act by unilaterally implementing salary increases for Department of Health and Human Services employees by way of title changes and increases in hours, pursuant to the Meritocracy Program.

2. The County violated 5.4(a)(2) and derivatively (a)(1) of the Act by dealing directly with employees represented by Council 10 through the Employee Relations Committee on the topic of the Meritocracy Program.

3. The County did not violate the Act by virtue of Freeholder Nash's March 19, 1993 letter to Council 10 President Riggs that was copied to the Employee Relations Committee and merit increase recipients.

4. The County did not violate 5.4(a)(3) of the Act.

RECOMMENDED ORDER

I recommend that the Commission ORDER:

A. That the County cease and desist from:

1. Interfering with, restraining, or coercing employees in the exercise of the rights guaranteed to them by the

Act by unilaterally implementing salary increases for Department of Health and Human Service employees, by way of title changes and increases in hours, pursuant to the Meritocracy Program, and from dealing directly with employees represented by Council 10 through the Employee Relations Committee on the topic of the Meritocracy Program.

2. Dominating or interfering with the existence or administration of Council 10 by dealing directly with Council 10 represented employees through the Employee Relations Committee on the topic of the Meritocracy Program.

B. That the County take the following action:

1. Immediately rescind Freeholder resolution (J-6) implementing the proposed adjustments to salary and/or title based upon outstanding performances during 1992 set forth in J-5 and restore the status quo for those employees who received the adjustment.7/

2. Negotiate in good faith with Council 10 over any Meritocracy Program like the present one, involving merit-based salary adjustments by way of increases in hours or changes in titles, for employees represented by Council 10.

3. Cease and desist from dealing directly with Council 10 represented employees through the Employee Relations

7/	I do not recommend that the status quo be restored retroactively as requested by Council 10. I believe recouping the money would make employees who received the merit increases suffer unnecessarily for the County's unlawful action. Camden Cty. and Camden Council 10, P.E.R.C. No. 94-121, NJPER (¶ 1994).

Committee on the topic of the Meritocracy Program, or on any other mandatorily negotiable term and condition of employment.

5. Post in all places where notices to employees are customarily posted, copies of the attached notice marked as Appendix "A." Copies of such notice shall, after being signed by the Respondent's authorized representative, be posted immediately and maintained by it for at least sixty (60) consecutive days. Reasonable steps shall be taken to ensure that such notices are not altered, defaced or covered by other materials.

6. Notify the Chairman of the Commission within twenty (20) days of receipt what steps the Respondent has taken to comply with this order.

Regina A. Muccifori

Hearing Examiner

DATED:	July 22, 1994

Trenton, New Jersey

WE WILL NOT interfere with, restraine, or coerce employees in the exercise of the rights guaranteed to them by the Act by unilaterally implementing salary increases for Department of Health and Human Service employees, by way of title changes and increases in hours, pursuant to the Meritocracy Program, and from dealing directly with employees represented by Council 10 through the Employee Relations Committee on the topic of the Meritocracy Program.

WE WILL NOT dominate or interfere with the existence or administration of Council 10 by dealing directly with Council 10 represented employees through the Employee Relations Committee on the topic of the Meritocracy Program.

WE WILL immediately rescind Freeholder resolution (J-6) implementing the proposed adjustments to salary and/or title based upon outstanding performances during 1992 set forth in J-5 and restore the status quo for those employees who received the adjustment.

WE WILL negotiate in good faith with Council 10 over any Meritocracy Program like the present one, involving merit-based salary adjustments by way of increases in hours or changes in titles, for employees represented by Council 10.

WE WILL cease and desist from dealing directly with Council 10 represented employees through the Employee Relations Committee on the topic of the Meritocracy Program, or on any other mandatorily negotiable term and condition of employment.