City Guilty Of ‘Direct Dealing’ In Offering Retiring Incentive

This article appears in the May 2022 issue of our monthly newsletter, Public Safety Labor News.

The City of Newark and the Newark Police Superior Officers’ Associa­tion (SOA) are parties to a collective bargaining agreement. As a result of the COVID-19 pandemic, the City experienced a dramatic reduction in revenue collections, including property, parking, and payroll taxes, as well as utility payments, permits, and licenses. In addition, the City had unexpected costs for workers and residents, including approximately $6,330,000 in costs for medical supplies, personal protective equipment, and emergency shelters.

To address the impending financial crisis, and to continue the efficient delivery of essential services to residents, the City submitted for approval to the Civil Service Commission a temporary layoff plan affecting non-essential employees. The Commission approved the layoff plan.

The City also announced a “Voluntary Severance Incentive Program” (VSIP). Among other things, the VSIP offered a $25,000 maximum buyout to eligible employees upon retiring or separating from the City by October 31, 2020. The VSIP also promised eligibility for enhanced post-retirement health benefits for employees with 25 years or more of service who participated in the VSIP.

The SOA demanded to bargain over the implementation of the VSIP. The City refused, asserting its “managerial rights to implement the VSIP as a tool to reduce staff and offset the budget gap as a result of the Coronavirus pandemic.” The SOA responded by filing an unfair labor practice complaint with New Jersey’s Public Employment Relations Commission.

PERC found that the City’s actions violated the law. PERC noted that “PERC and the courts have held that changes in negotiable terms and condi­tions of employment must be addressed through the collective negotiations process because unilateral action is destabilizing to the employment relationship and contrary to the principles of our Act. We have further held that public employers violate the law by negotiating directly with individual employees or groups of employees rather than with their majority representative over nego­tiable terms or conditions of employment, even where individual negotiations resulted in greater benefits.

“Health benefits for future retirees are mandatorily negotiable so long as the particular benefit at issue is not preempted by statute or regulation. The City’s refusal to negotiate with the SOA over these subjects was a per se violation of the Act, and an unfair practice, as was the City’s decision to deal directly with individual employees regarding the VSIP program.

“Here, the fact that the City imple­mented the VSIP without negotiating with the SOA, and while the parties were in negotiations for a successor contract, is not in dispute. Nor is there any dispute that the City then refused the SOA’s demand to negotiate over the program and refused its request to rescind it pending such negotiations. It is also clear that the City unilaterally expanded eligibility for paid retiree health benefits to SOA members who accepted a buyout under the VSIP, to a degree not available under the parties’ contract.

“There is also no dispute that the VSIP agreement was presented directly to all City employees, including SOA members, and required those signing it to waive their rights under the contract and the Act. The City does not argue that negotiations are preempted by statute or regulation.

“We find the City’s economic, operational and policy justifications for not negotiating with the SOA over these issues to be unpersuasive. While the City has a prerogative to reduce its workforce for economic reasons, and it appears the City sought and obtained Civil Service Commission approval to do so here, the employees who resigned under the VSIP program, which is the subject of this dispute, were not laid off. And, although it contends it had a need to protect the health, safety, and continued operation of the City during the COVID-19 pandemic, the City offers no specific facts explaining how its unilateral implementation of the VSIP was necessary to achieve those ends, or how negotiation with the SOA would have frustrated those objectives.

“Nevertheless, we find that under the circumstances here a sufficient remedy need not include rescission of the resignations of the three SOA members who, the record indicates, retired under the VSIP program, or of the City-paid retiree health benefits they received under that plan. It would unduly punish those individuals for the City’s unfair practice, as it was the City’s duty to negotiate with the SOA over the VSIP.”

City of Newark, 2022 WL 810185 (N.J. PERC 2022).

Also in the May 2022 issue:

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  • No Employment Right To Use Medical Marijuana At Home
  • ADA Violated By Routine Physical, Psychological Examinations
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  • Text Message Not Basis For Retaliation Lawsuit
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  • Q & A
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