Ruderman & Glickman Obtains First Interest Arbitration To Comply With The New 2% Cap

April 18, 2012:  On behalf of the Borough of Ramsey, Mark S. Ruderman, Esq., has successfully obtained the first Interest Arbitration Award to comply with the 2% cap imposed upon such arbitration awards by the recent amendments to the Police and Fire Public Interest Arbitration Reform Act (the “Act”), N.J.S.A. 34:13A-14a, et seq.

The recent amendments to the Act, which became effective January 1, 2011 by the passage of P.L. 2010, Ch. 105, drastically revised the procedure for police and fire interest arbitration law in the State of New Jersey, and imposed a highly-publicized 2% cap on arbitration awards in certain circumstances. Specifically, the amendments to the Act prohibit arbitrators from rendering any Award, which annually increases “base salary items” by more than 2% of the total amount expended by the employer on such “base salary items in the twelve months immediately preceding the expiration of the collective negotiation agreement subject to arbitration.” N.J.S.A. 34:13A-16-7(b). The amendments define “base salary items” to include any wages, salary increments and/or longevity pay provided to employees. N.J.S.A. 34:13A-16.7(a).

Due to the significance of the 2% cap, arbitrators have been reluctant to apply it with full force in recent interest arbitrations. This has forced a number of public employers to expend additional time, effort and resources appealing from interest arbitration awards that do not comply with the 2% cap.

However, that was not the case on April 18, 2012, when the Arbitrator in Borough of Ramsey and Ramsey PBA Local 155, PERC Docket No. IA-2012-015, issued the first Interest Arbitration Award to fully comply with the 2% cap. Specifically, the Arbitrator in Borough of Ramsey issued an Award, which not only eliminated longevity pay for new hires, but froze the salary guide for the next three (3) years so that the increases on the salary guide and at maximum patrolman between 2012 and 2014 were 0%, 0%, and 0%.

This was a major victory for public employers, who are faced with increasingly harsh economic conditions and budgetary restraints, and is the first of its kind in the area of police and fire interest arbitration.