H.E. NO. 80-40

STATE OF NEW JERSEY

BEFORE A HEARING EXAMINER OF THE

PUBLIC EMPLOYMENT RELATIONS COMMISSION

In the Matter of

STATE OF NEW JERSEY, DEPARTMENT OF

HUMAN SERVICES, DIVISION OF PUBLIC

WELFARE AND UNION COUNTY WELFARE BOARD,,

Respondents,

-and-	Docket No. CO-77-201-124

COMMUNICATIONS WORKERS OF AMERICA,

AFL-CIO,

Charting Party.

Appearances:

For the Respondent, State of New Jersey, John J. Degnan, Attorney General (Mr. Melvin E. Mounts, Of Counsel)

For the Respondent, Union County Welfare Board, Weiner & Mirabelli, Esqs. (Mr. Dominick A. Mirabelli, Of Counsel), succeeded by Mitzner & Kaczorowski, P.A. (Mr. Stanley J. Kaczorowski, Of Counsel)

For the Charging Party, Kapelsohn, Lerner, Reitman & Maisel, Esqs. (Mr. Sidney Reitman, Of Counsel)

HEARING EXAMINER'S RECOMMENDED

REPORT AND DECISION

On January 27, 1977, the Communications Workers of America, AFL-CIO, Local 10801/ filed a charge with the Public Employment Relations Commission ("Commission") alleging that the State of New Jersey, Department of Human Services, Division of Public Welfare ("State" or "Division" where appropriate) and Union County Welfare Board ("County") had engaged in unfair practices within the meaning of the New Jersey Employer-Employee Relations Act (the "Act").

Specifically, it is alleged that the State, although not the employer of certain employees of the County represented for purposes of collective negotiations by the Charging Party, exercised a veto power over the terms of a collective agreement between the County and Charging Party, by withholding its approval of certain terms and rejecting others and that the County, by refusing to implement the agreement absent State approval has thereby refused to negotiate, refused to sign and implement a negotiated agreement and violated the rules and regulations of the Commission in violation of N.J.S.A. 34:13A-
5.4(a)(1), (5), (6) and (7)2/ and the State by so interfering with the contractual relations between County and Charging Party has violated N.J.S.A. 34:13A-5.4(a)(1) and (7). The Charging Party further alleges, assuming arguendo that the State relied on certain valid statutory and regulatory authority in asserting power to determine the salary and related economic terms of the County - Charging Party collective agreement, it had no such authority to review or reject non-economic terms of the agreement. By exercising authority over non-economic terms, the State thus has violated N.J.S.A. 34:13A-5.4(a)(1). Finally, the Charging Party alleges that apart from the foregoing, the State, by its conduct at certain meetings it conducted with the County and CWA in August and December 1976, initially approving and then reneging on its approval of certain economic terms and belatedly objecting to other, primarily non-economic, terms approved in a series of prior agreements, thereby interfered with the establishment by the County and CWA of terms and conditions of employment for inclusion in a successor collective agreement in further violation of N.J.S.A. 34:13A-5.4(a)(1).

It appearing that the allegations of the charge, if true, may constitute unfair practices within the meaning of the Act, a Complaint and Notice of Hearing was issued on May 20, 1977. At first the State, in lieu of answer, by letter dated June 3, 1977, filed its statement of position previously submitted in response to the charge. In reliance on various statutory authority, the State therein argued that the Commission lacked jurisdiction to rule upon the legal relationship between the State and County and that the charge should be dismissed. That response was followed by a Motion to Dismiss and Stay Proceedings filed with the Commission's Chair on August 22, 1977 and accompanied by a supporting brief.3/ Upon receipt of answering brief from Charging Party and letter reply thereto filed by the State, by letter dated September 9, 1977, reaffirmed by further letter dated September 15, 1977 after receipt of response from the County joining the State's Motion, the Chairman referred the Motion to the undersigned Examiner pursuant to N.J.A.C. 19:14-4.8(a). By written ruling dated September 12, 1977, the undersigned Examiner reserved decision on the State's Motion, with leave to renew the same at the close of Charging Party's case or hearing. Final ruling on the Motion will be incorporated in this Report. The State had accompanied its Motion with an appendix containing a proposed answer to the Complaint. By letter dated September 15, 1977 this was adopted by the State as an amendment to its submission in lieu of answer previously filed and, together with the earlier submission, constitutes its amended answer to the Complaint. In it, the State denied the material allegations of the Complaint, except it did admit that at no time during the negotiations culminating in a memorandum of agreement executed by the County and CWA on May 27, 1976, constituting a final agreement on all matters affecting wages, hours and other terms and conditions of employment between the parties, did any representative of the Division of Public Welfare or the State participate or attempt to participate in such negotiations (CO-1, paras. 2 and 6; CO-2, Appendix A; CO-12). The County by answer filed August 26, 1977 incorporated the position of the State as its position in answer to the Complaint, thereby denying the material allegations of the Complaint, except it averred that the County shall be empowered to negotiate a contract concerning basic local conditions which do not affect salaries, and as an affirmative defense, asserted that the series of agreements it has entered with the Charging Party call for the contract to be reviewed and approved by the State Department of Human Services, Division of Public Welfare and its predecessors.

Hearings were held on September 16, October 6, 11 and 13, November 1, 1977, March 13,4/ 15 and 16, May 19,5/ August 10,6/ 11, 16, 17 and 18 and December 4,7/ 1978. The record did not close until January 11, 1979, when counsel were advised by the undersigned Examiner that Charging Party had determined not to call further rebuttal witnesses and following a post-hearing conference convened on January 8, 1979 to review the issues to be briefed and to establish a briefing schedule (CO-13). Unfortunately, counsel were unable to maintain that schedule, in part because of the complexity of the issues and the length of the record, consisting of 1738 pages of testimony and many lengthy exhibits, and it part because in the interests of not impeding efforts underway among the parties to amicably resolve the underlying dispute, joint requests to extend the briefing schedule were granted from time-to-time. That effort proved unsuccessful. Main post-hearing briefs were filed by the County on August 23, the State on August 28, and the CWA on September 19, 1979, and reply briefs were filed by the CWA on October 25 and the State on October 30, 1979. Each of these briefs has been duly considered.

Upon the entire record in the case and from my observation of the witnesses and their demeanor I make the following:

FINDINGS OF FACT

Negotiations between the County and the CWA originated in 1970 when the first labor agreement between the parties, CP-1, was signed.8/ CP-1 was the only full, formal agreement set out until 1976. Until that time the original agreement was merely updated by addenda or "memoranda of agreement." The words "subject to approval by the state" appeared in the original agreement and in each of the subsequent addenda. The Division of Public Welfare, by its Director, G. Thomas Riti (since November 1972) or his predecessor, in fact approved each agreement, including the original.

At no time did the CWA concede the Division's right to review the contract terms reached by it and the County. Respondents agree that at every relevant moment the CWA objected to the State's actual or anticipated participation in the relationship between the Union and the County. Neither, for that matter, did the State ever suggest that its authority over the contract was less than complete, or that anything agreed upon by the CWA and the County was not subject to its approval.

The CWA described the submission of the agreements to the State as an effort made to have the contracts implemented expeditiously; all submissions were made "under protest" by the CWA. The CWA did not concede that the submissions to the State of all contracts with other county welfare boards were "standard practice." (Tr.334).

The Union had confronted the authority of the State once before when the matter of a disapproved contract reached the Appellate Division. The case, CWA v. Union County Welfare Board, 126 N.J. Super. 517 (1974) settled the authority of the State over economic items particularly salary ranges in contracts negotiated by the county welfare board.9/ The Court in Union County did not rule that county employees were without rights regarding economic items,10/ nor were allegations of unfair practices made of the kind presented in the present matter.

The agreement which gave rise to the instant dispute was reached by the County and CWA only after impasse was declared and a mediator called in. The impasse did not concern the County insistence on submission of the agreement to the State. The CWA representatives testifying explained that the issue never came to a head during negotiations with the County since the CWA believed that the County would side with it in any contest with the State. Seven months later on May 27, 1976 a memorandum of agreement, CP-
8, was signed. The County reiterated that the State would then have to ratify the contract11/ and the CWA held to its position that the County could implement the contract without consulting the State. Nonetheless the CWA and the County planned to meet with representatives of the State on August 4, 1976 to discuss the agreement that had been reached. Without State approval of the contract it had fully negotiated with the Union, the County was subject to the imposition of fiscal sanctions grounded upon alleged deviations from Ruling 11. Such sanctions involve the withholding of State financial participation in the administrative costs of the County (Tr. 1100-1101).

Before this meeting took place, in July 1976 Riti had had a meeting with Henry Nobrega, Division Personnel Administrator, on the Memorandum of Agreement. The entire memorandum was not covered in what was apparently only a brief discussion, but Nobrega does recall going over the salary items (Tr. 894). Michael C. Galuppo, Director of Union County Welfare Board, was present for a few minutes and discussed the exclusion of new employees from the planned salary increment (Tr. 897). Nobrega had no recollection of the substance of his discussion of salaries with Riti that July. Riti was not available to attend the August 4 meeting and this absence was more significant than the parties apparently envisioned at that time. The August 4, 1976 meeting was the State's first input on the agreement between the County and the CWA. The character of the State's participation in this meeting is central to this case. Present on August 4 were: (1) CWA - Edward Schultz, International Representative and Clair Allen, New Jersey Director; (2) County Welfare Board - Galuppo and Mirabelli; (3) Division of Public Welfare - Nobrega; (4) Department of Human Services - David Einhorn, Deputy Commissioner; (5) Liaison between Division of Public Welfare and Governor's Office of Employee Relations - George Kambis; (6) Governor's Office of Employee Relations - Wesley Merrrit.

August 4 - Discussion of Economic (salary) Terms

The CWA alleges that Kambis informed it and the County on August 4 that the salary increases that had been agreed upon should be expressed in dollars rather than percents. (Ruling 11, while not specifying differentials by either percentages or dollars, sets out salary ranges in dollars. The salary ranges in the new Ruling 11 - effective July 1, 1976 - represented a 7% increase over the salary ranges promulgated in the previous Ruling 11). He also told them that the agreed upon differential,12/ i.e., a percentage of the regular salary negotiated and paid in addition to the increases negotiated, must be calculated on the base of the salary range rather than on the actual employee salary. This is specified in Ruling 11. This change could have a negative impact on the amount of the differential actually received since many employees had salaries above the base of their range. In fact, Schultz testified without contradiction that 19 of 70 clericals would receive no increments under this plan (Tr. 506).13/ Some employees could have their salaries reduced under this scheme (Tr. 1458), but the Division representatives agreed to "red circle" these employees. The CWA agreed to revise the salary calculations, despite the effect on actual dollars this would have. Both the CWA and the State representative, Nobrega, appeared to think that compliance would result in approximately the same dollar amount for the clerical employees. Strangely, at no point before or during this litigation did any of the parties attempt to cost out their proposals (Tr. 811-12).

At the hearing, Kambis insisted that he was only presenting options at the August 4 meeting. But under heavy cross examination, he admitted that he had described only one option likely to be approved. He agreed that only one figure--10%--had been discussed at length on August 4, and that 10% was in reference to the salary differential for clericals, the figure agreed upon by the County and CWA.

Allen had stated at the start of the August 4 meeting that the CWA was not in attendance to negotiate-but the CWA was there to get their contract implemented. The CWA clearly understood that if it complied with Kambis' recommendation, the contract would be approved. Accordingly, the CWA changed the salary items to conform to the presentation made by Kambis. At the very least, Kambis gave the impression that a contract revised to his formula would be approved. When the meeting ended, the parties left with the understanding that all substantive issues had been resolved. Riti testified that he was later informed of the resolution of all significant matters. Riti further testified that when the issue arose before him, both Schultz and Galuppo told him that Kambis had approved a 10% differential on August 4.14/

The extent of any authority invested in Kambis to make such a commitment is unclear. Kambis testified that by attending the August 4 meeting, he intended to indicate to the parties what the new Ruling 11 would be like (Tr. 1118; 1130). The State representatives also claimed that their purpose at that meeting was to get clarification of the proposed agreement (rather than to make specific objections). Only Kambis discussed salaries at any lengthy on August 4. Einhorn testified that Kambis had not been empowered to speak for the State and further that no one spoke for the State on August 4. Einhorn said that he himself would not have been prepared to discuss economic matters without Riti being present, but apparently he had no objection to Kambis making a presentation on economic matters. Nobrega agreed that Kambis did not speak for the State, but further testified that if Kambis had said something incorrect during the meeting, he, Nobrega, would have been obliged to set the meeting straight. Kambis did present himself as an authority on Ruling 11, if not more. Kambis told the County's attorney, Mirabelli, that he knew the new Ruling 11 almost as well as Riti and kidded him that he, Kambis, had made the guidelines and could tell Riti what was approvable. Kambis did not indicate that his recommendation was subject to further approval. The only caveat was supplied by Nobrega who stated at the August 4 meeting that anything discussed was still subject to Riti's approval. In the context of the entire meeting, particularly the greatly detailed recommendations and objections made by State representatives, this statement by Nobrega could only be taken as a reference to a pro forma approval by the Director. I conclude therefore that Kambis gave every indication that if the CWA complied with his recommendation by calculating the 10% differential on the base of the salary range, the resulting salary terms would be approvable by the Division.

August 4 - Non-Economic Discussion

The Division claims to have authority over all terms and conditions of employment, including non-economic items by virtue of the introductory paragraph to Ruling 11:

"State of New Jersey

Department of Institutions and Agencies

Division of Public Welfare

RULING NO. 11

INTRODUCTION

Classification, Compensation Plans, and time and leave regulations, or other regulations concerning terms and conditions of employment, heretofore adopted by county welfare boards, or successor agencies, both of which are hereafter referred to as county welfare boards, which are in effect as to the date of issuance of these revised regulations and which have been specifically authorized and approved by the New Jersey Division of Public Welfare prior to such date, stand approved on the part of such Division as of their respective dates. Any and all revisions or amendments to such plans, to include but not limited to all items specifically enumerated in these regulations, may not be effectuated unless and until such revisions or amendments are formally approved in writing by the New Jersey Division of Public Welfare. Deviations from the compensation and classification plan, time and leave regulations, and other guidelines relating to terms and conditions of employment may be granted at the discretion of the Commissioner of Institutions and Agencies consistent with the administration of amicable labor relations and in the furtherance of the public interest." (Revised Ruling 11, effective July 1, 1976 (RS-1)).

Neither this introduction nor any of the following provisions of Ruling 11 fix non-economic15/ terms or conditions of employment. Participants at the August 4 meeting went over each item with Einhorn leading the discussion on the non-salary items, as Kambis had led on the salary discussion. Einhorn had testified that he was not prepared to discuss economic matters outside Riti's presence. Einhorn was prepared, however, not only to discuss non-economic items, but to pass on each of them as approvable or not approvable (Tr. 323-29). Einhorn objected to most of the non-economic items in the memorandum of agreement.16/

Despite the numerous objections made to the agreement at the August 4th meeting, both on salary differential for clerical employees and on non-economic provisions, representatives of the County and State left the meeting with the sense that substantive matters had been resolved and only the final "wording" of the agreement remained to work out (Tr. 1607, 1630). The parties also agreed that the series of addenda to the original contract should not be extended, and a full length contract should be created. Riti testified that he was told that the salary package, when revised in accordance with the August 4 exchange, would be acceptable. (Recall that no figure other than a 10% differential had been discussed at that meeting.) The CWA was equally clear about the changes it would have to make to get the contract approved, and was willing to accommodate to almost all objections and recommendations made on August 4 subject to the condition that the parties would concur on the final agreement. The CWA refused to change only the two "non-economic" items later approved by Riti (see f.n. 16, supra) and added one provision not discussed on August 4, a $300 minimum raise that would mitigate the effect of calculating the differential on the base of the range rather than on actual salary.

Events Subsequent to August 4

On August 16, 1976, a public hearing was held on the new Ruling 11.17/ Riti had no recollection of any discussion of differentials on salaries during this hearing. This should not be surprising since no specific differentials or the possibility of any limitations being placed on differentials are mentioned in either the new Ruling 11 or its predecessor.18/ Kambis was firm in his recollection that no formal hearing was held on differentials for inclusion in the new Ruling 11 (Tr. 1340). Riti testified that sometime in August or September he reached a decision that a 6.5% differential would be the maximum for any county welfare board. This was after his July review of the memorandum of agreement, after the August 4 meeting with the State representatives, and very likely after the August 16 public hearing on the new Ruling 11.19/ At no time did the 6.5% figure appear in Ruling 11, which had never specified any limitation on differentials.

Riti testified that this decision was arrived at in consultation with a member of the Commissioner's office. The purpose of the 6.5% limit on the differential was to reduce the disparity in salaries between state and county employees in similar classifications. Riti not only testified that the prevention of escalation of disparity in salaries was the goal of the limitation on differential, h also testified that other factors such as difficulty of work or a comparison of salaries among counties were not considered. How this could be reconciled with the language of Ruling 11 or the Appellate Division decision in Union County upon which this language is presumably based was not brought up by either party. The new Ruling 11 stated that salary differentials must be based on special factors pertaining to the particular county (RS-1 #5) (see f.n. 18, supra.) The court's recognition of these factors appear at f.n. 10, supra. Riti stated that in order to achieve his goal, he had taken the highest differential previously approved, 13.5% (for middlesex County) and subtracted the 7% increase in salaries set out in the new Ruling 11, thus leaving 6.5% (Tr. 1540). I understand these figures to mean that a 6.5% differential would result in virtually no increase in actual dollars, despite Schultz's calculation that only 19 of 70 clericals would receive no salary increase. At one point Riti's testimony appears to support my interpretation: Riti recalled that the parties wanted a 10% differential because that would give them "more money, total money than they had gotten the year before." (Tr. 1549).

Here I feel obliged to set out my understanding of the various contract proposals, despite the parties willingness to do without a comparison of actual dollars (see, e.g., Tr. 811-12). Although I base this on a salary range of $100-$200 for arithmetical convenience, if these are construed as weekly figures they will correspond roughly to the clerical salaries in issue, i.e., $5200-$10,400 per annum.20/

DIFFERENTIAL ON SALARY

Ruling 11 salary ranges	Total with Differential

$X to $XX*	$X to $XX plus (up to

13.5%. No specified

upper limit. 12.5%

for Union County

CWA-County Contract

Under Prior Ruling 11	$100 to $200	Up to $113.50 to $227

(in Middlesex County)

$112.50 to $225 for

Union County

_________________________________________________

New Ruling 11-7/1/76

CP-8 memo of agreement	$X to $XX + 7%	$X to $XX + 7% plus 10%

May 1976	of actual salary

$107 to $214	$117.70 to $235.40

__________________________________________________

$X to $XX + 7%	$X to $XX + 7% plus 10%

of Base of Salary

range ($107)

Kambis' proposal

August 4 agreed to	$107 to $214	$107 + $10.70 to $214

by parties and sub-	+ $10.70, i.e.

mitted to Riti

November 1976	$117.70 to $224.70

__________________________________________________

$X to $XX + 7%	$X to $XX = 7% plus (up

to) 6.5% of Base of

Contract with Riti's	Salary range (Union

limit on differential	County to get 6.5%)

$107 to $214	$113.95 to $220.95

*For all purposes, $X = $100, $XX = $200.

Note that in these hypothetical salary ranges the most significant difference between the proposed formulas is in the effect on the upper end of the range. Comparing the old contract under the prior Ruling 11 with Riti's proposal, employees earning the base salary would receive a very slight increase, that is, of course, if any employees were earning only the base salary, a situation less likely since hiring need not be at base salary. Only CP-8 provided for increases for clerical employees earning at or near the maximum of their range. Both Kambis' and Riti's proposals made these employees subject to a reduction in wages. Riti never suggested, however, that he would cut wages, but clearly many employees would receive at best a negligible salary increase, and this is precisely what Riti intended. Galuppo's letter to Schultz, CP-14, shows that the County not only understood this, but was gravely concerned and attempted to provide some alternative protections for clericals.

Unaware of the 6.5% limitation to be imposed by Riti, the CWA made the accommodations it thought necessary to gain approval. Between late August and October the County and the CWA had five or six negotiating sessions, taking the State's comments into account and focusing on "money." The parties agreed that social workers20/ would be moved up two salary ranges. Each salary range represented a 5% increase. Since they understood that the Division felt it could not permit clerical employees to move up by salary range, they wanted to give the clericals a 10% differential in order to grant them an equitable increase.

The resulting contract, CP-9, incorporates the latest contract terms as understood after the August 4 meeting, plus the $300 minimum raise provision which had not been discussed along with the provisions contained in the basic agreement and later amendments as to which there had been no objections or any discussion other than the agreement to create a full length contract rather than another addenda to the original. Along with CP-9 the parties also entered a side letter of agreement incorporating six non-economic items from the May 27, 1976 memo of agreement representing issues discussed and agreed upon during their 1976 negotiations but expressly not included in the contract language (CP-10; Tr. 113-114).21/ CP-9 was submitted to Riti on November 8, 1976.

At this point, Riti had before him a full agreement incorporating all prior amendments and revisions for the first time since 1970. By letter to Galuppo dated December 1, 1976,22/ Riti responded with a request to schedule a meeting between the State and County to discuss items that were not approvable. "It would be very difficult to try and list each of these items" he wrote. (RS-4; CP-11). Riti met with the County and CWA on December 9, 1976. This was the first discussion among the parties of the 6.5% limitation on differentials. Riti informed them that 6.5% was the maximum for any county. Schultz declared that there had already been agreement on a 10% differential and that Riti's position constituted an unfair practice.

Riti objected to several of the provisions incorporated from earlier contracts despite the fact that they had been approved when the earlier contracts had been submitted. Among the items Riti objected to for the first time were:

- Assignment of presumptive eligibility cases as contrary to Title 44.

- Fact Finding by an arbitrator in grievance procedure. Riti wanted this subject to State review, and available only at Union, not individual request.

- Re-employment - Riti said former employees were not part of the bargaining unit. No mention was made of the rights of those currently employed to demand such provision.

- Dental-eyeglass plan - Riti said this was not spelled out enough to approve (Tr. 1439).

- Social Welfare Research Council - Riti said this was contrary to Ruling 11 despite its prior approval (Tr. 1571).

Riti did not mention the $300 minimum raise provision. He did want several changes in wording for the sake of clarity and to update certain captions and titles. The CWA objected to this on the grounds that the State's authority did not extend to the wording of a contract which would not affect the "plan" of a merit system. Riti was willing to "negotiate" certain salary consequences. He suggested making the permissible hiring rate which was above the base salary, the minimum hiring rate. Schultz, countered, according to Riti, by asking that the differential be calculated on the minimum hiring rate instead of the base. Schultz denied any possible agreement on less than a 10% differential. No agreement was reached on any matters and all potential concessions by the CWA were still conditioned on reaching a satisfactory agreement.

On December 16, 1976, the County Welfare Board passed a resolution expressing its support for the 10% differential for clericals and enumerating reasons why it was necessary and equitable in this particular county (CP-13). Another meeting was held with Riti on December 20, 1976. Schultz testified that he was still trying to reach an agreement, although he had stated his intention to file unfair practice charges with the Commission. At the December 20th meeting, Schultz continued to insist that a commitment had been made by the State to a 10% differential (although it would be calculated on the base salary rather than actual salary). At the December 20th meeting both Einhorn and Kambis were present and denied having made any commitment to the 10% differential. The unfair practice charge described in the introduction was subsequently filed. The parties stipulated that county employees would be paid at the rant determined by Riti, i.e., with a 6.5% differential pending the outcome of this litigation. (CP-17).

Only the period which would have been covered by the 1976 contract is currently in dispute, with, of course, whatever impact the resolution of the 1976 figures may have on subsequent agreements. The authority of the State, and the manner in which it exercises this authority is also in issue.

DISCUSSION AND CONCLUSIONS

The State's Motion to Dismiss shall be dealt with first. Its argument in support has been renewed in the post-hearing brief. The State argues that the parameters of the legal relationship of the Division with county welfare boards for administering a system of public welfare has been legally determined in CWA v. Union County Welfare Board, supra and other more recent cases,23/ including the legal authority of the Division to approve or disapprove collective labor agreements between county boards and various employee organizations. As there is no provision in the Act granting the Commission jurisdiction to review the Division's exercise of this authority, its authority under federal and state law and regulations must supercede the Act. This argument is buttressed by reference to R 2:2-3(a)(2) of the Rules of Court which provides for judicial review by the Appellate Division of decisions or actions of any State administrative agency or officer or to review the validity of any rule promulgated by such agency or officer, and by State v. State Supervisory Employees Assn., 78 N.J. 54, 79 (1978) which held, inter alia, that negotiations with respect to matters beyond the lawful authority of the public employer are impermissible. The State here notes that in In re Bethlehem Twp. Bd. of Ed., P.E.R.C. No. 80-5, 5 NJPER para. 10159 p. 298 (1979) the Commission declined to assert jurisdiction in a scope of negotiation proceeding to determine a challenge to State authority to adopt regulations dealing with the subject matter at issue, in reliance on the Administrative Procedure Act, N.J.S.A. 52:14B-1 et seq. and R. 2:2-3(a).

The State's Motion to Dismiss must be denied. The relationship between the State and County is not an issue in this proceeding. However, the authority of the State to approve terms of a collective negotiations agreement is an issue because of the defense asserted by the County and State that the exercise of such authority insulates each from a finding of violation. None of the cases cited by the State except for CWA v. Union Cty. examined the issue of the limitations imposed on State authority by virtue of the obligations to negotiate enforceable under the Act. In fact, CWA v. Union Cty. Welfare Board represents litigation of claims of unfair labor practice against the County and State, albeit without a factual record, at a time, in 1974, before the grant of exclusive jurisdiction over such matters to the Commission in Chapter 123, Laws of 1974 (eff. January 20, 1975).

Neither does either the cited portion of the Court Rule or Bethlehem Twp. Bd. of Ed., supra, aid the State's cause. R. 2:2-
3(a)(3) provides in relevant part that "unless the interest of justice requires otherwise, review pursuant to R. 2:2-3(a)(2) shall not be maintainable so long as there is available a riht to review before any administrative agency or officer." The Commission's review of the State and County's conduct is clearly administrative review contemplated by this Rule and is consistent with the recognized principle requiring exhaustion of administrative remedies as a condition of institution of litigation. As noted, the Commission's authority to determine whether unfair practices have been committed by these public employers is exclusive in this proceeding pursuant to N.J.S.A. 34:13A-5.4(c). No question of conflict with the authority of any other administrative agency is here presented. See City of Hackensack v. Winner, et al, ___ N.J. ___ (Jan. 1980). In light of Bethlehem Twp. Bd. of Ed., supra, the Union in its post hearing briefs has dropped its contention earlier asserting that Ruling 11 is ultra vires the State's authority to establish a modern personnel system for employees of county welfare agencies based upon federal legislative requisites under the various programs of the Social Security Act.24/ Finally, in citing State Supervisory Employees Assn., supra, the State misconstrues the nature of the issue posed with respect to the State's authority. I am required by the Supreme Court determination to examine whether the legislature in adopting N.J.S.A. 44:7-6 and the State in promulgating Ruling 11 have placed any of the subject matters contained in the County-Union agreement beyond County authority to determine. The Commission (and its Hearing Examiners) have full authority to make that examination and conclude whether the County's negotiating authority has been unlawfully circumscribed. Thus, as exclusive jurisdiction to determine this and related issues resides in the Commission, the State's Motion to Dismiss is denied.

The next issue posed is whether State authority derived from N.J.S.A. 44:7-6 and implementing Ruling 11 is sufficient, generally, to preclude county negotiations as to any of the terms of the agreement it entered with the Union in the Fall of 1976 (CP-9). The Union has consistently argued that the Court's holding in CWA v. Union Cty. Welfare Board, supra, has been superceded by provisions of Chapter 123 which manifest a legislative intent to broaden the scope of subject matter which public employers such as the County are compelled to negotiate in spite of State authority to the contrary and which bestow exclusive unfair practice authority upon the Commission. I conclude that, contrary to the Union's claim, the Appellate Division determination in Union County, supra, has been affirmed by the Supreme Court in State Supervisory Employees, supra, at least to the extent of the State's authority, exercised by the Division, to prescribe minimum and maximum salary ranges for County employees beyond the power of the County fo fix such compensation. "The New Jersey Supreme Court in State v. State Supervisory Employees, 78 N.J. 54 (1978), stated that a specific term and condition of employment which is expressly set or established by statute and/or regulation cannot be contravened by an inconsistent provision of a negotiated agreement, and any negotiations over such a set term of employment are precluded, having been preempted by the specific statute or regulation."25/ To the extent therefore that Ruling 11 fixes salary ranges and any other terms and conditions of employment26/ it precludes County - CWA agreement to the contrary. However, the facts show that the parties to the collective bargaining relationship did not deviate from the claimed salary terms of Ruling 11 with respect to any categories of employees other than clerical employees and with respect to clericals, only as to the differential.

With respect to the keenly disputed subject of differential for clerical employees, guidance must be sought from State Supervisory Employees, supra, as to whether negotiations between the parties over that time has been precluded.27/ In State Supervisory Employees the Supreme Court dealt with this question in the following language:

"...we affirm PERC's determination that specific statutes or regulations which expressly set particular terms and conditions of employment, as defined in Dunellen for public employees may not be contravened by negotiated agreement. For that reason, negotiation over matters so set by statutes or regulations is not permissible. We use the word 'set' to refer to statutory or regulatory provisions which speak in the imperative and leave nothing to the discretion of the public employer..." 78 N.J. 54 at 89. [Emphasis supplied].

The important operative phrase here is 'discretion' of the public employer. As we have seen, while Ruling 11 provides for the granting of salary differentials based on the minimum step of the applicable salary range, the regulation itself fails to specify the amount of such differential, either absolutely or by percentages, or even a maximum and minimum range for the granting of such differentials, and fails in either case to specify the clearly identifiable special factors pertaining to the particular county which the State in Ruling 11 itself is enjoined to examine and determine.28/

Furthermore, the Court in CWA v. Union County Welfare Board required the State to conduct a public hearing before the compensation schedules contained in the State plan could become effective. It is inconceivable that the State can comply with the condition precedent of a hearing without also providing notice of the differentials being considered and giving interested persons, including this Union and others, an opportunity to be heard on the proposed differential or range of differentials as affected by the special factors in the counties under consideration. Yet, the record shows that neither the proposed Ruling 11 nor the published notice nor any other form of notice brought home to these clerical employees or their representative nor did they have an opportunity to comment at the hearing on, the limitation on differential which was ultimately orally recommended by Riti and approved by the Commissioner within her "discretion." It was only some months after the formal hearing, indeed as late as November or December 1976, that a maximum differential of 6.5% was approved. That approval was made not on the basis of the special factors which the Appellate Division and Ruling 11 itself required the State to examine but solely on the basis of an intention of reducing a claimed disparity between State and County employees in similar classifications and by using a formula which had to be perceived as eliminating any real increase in salary so as to reduce that disparity. Riti's willingness knowingly to select a percentage differential which ignored the very criteria necessary to its final calculation is particularly significant. The chart which portrays the result of Riti's insensitivity to the County's needs and Galuppo's anguish at the problem of recruitment and retention of clericals in the County are poignant reminders of this. Under these circumstances29/ I am constrained to conclude that the State's attempt to regulate the differential agreed to by the parties is not supported by precedent or any rational interpretation of the negotiations obligation of the County under the Act. As noted by the Commission, "The decision [State Supervisory Employees, supra, also emphasizes