The City of Paterson, New Jersey, appealed from an interest arbitration award issued on April 11, 2025, which set the terms for a successor collective negotiations agreement covering firefighters represented by Paterson Firefighters Association Local 2 to the Public Employment Relations Commission. The Arbitrator awarded a four-year contract with annual salary increases of two percent, retroactive to January 1, 2024, along with step movement on the salary guide. The award also maintained the existing “City Time” provision, which credits time worked for the City in any capacity for salary guide placement, and made no change to Medicare Part B retirement coverage.
Principally, the City argued the Arbitrator failed to comply with the mandatory requirement of N.J.S.A. 34:13A-16d to “determine whether the total net annual economic changes for each year of the agreement are reasonable under the nine statutory criteria.” The City contended that the award lacked a detailed “cost-out” calculating the net economic effect of the increases, including the compounded cost of the 2% base increase combined with step movement. This was especially critical because the City is a recipient of state transitional aid, and a memorandum of understanding with the Department of Community Affairs (DCA) stipulated that any collective agreement increasing annual compensation by more than 2% on average could render the City ineligible for future aid without the DCA’s approval. The City also argued the Arbitrator did not adequately explain his analysis of all nine statutory criteria set forth in N.J.S.A. 34:13A-16g, did not give due weight to the City’s receipt of transitional aid, and erred in denying the City’s proposal to eliminate the “City Time” provision.
PERC held that the Arbitrator’s failure to include a detailed cost-out of the net annual economic changes was a critical omission. PERC emphasized that this calculation is mandatory under the statute, “even though the ‘2% hard cap’ provision of N.J.S.A. 34:13A-16.7 is expired for new contracts.” PERC found this analysis “particularly important where the award may exceed the 2% increase in base wages which the City could not voluntarily agree without DCA approval,” as the combination of a 2% base increase and step movement could push the total annual economic change above that threshold. PERC remanded the award to the Arbitrator with instructions to calculate the total net economic change for each year of the agreement. To facilitate this, PERC ordered the City to provide the Arbitrator with “a complete scattergram of employees as of December 31, 2022,” which was deemed a necessity for an accurate calculation.
Regarding the statutory criteria, PERC found that while the Arbitrator’s analysis was not perfect, it was largely sufficient. The award stated that all nine 16(g) factors were relevant, identified three as most important, and provided a discussion of the evidence related to them. PERC noted that “the statute does not require that each of the criteria should be labeled and discussed” in a rigid format, even if that is a best practice. Factors like comparison with other employees (16g(2)) and overall compensation (16g(3)) were discussed by implication in the Arbitrator’s analysis of external and internal comparables. However, on remand, PERC directed the Arbitrator to “amend his analysis of the statutory factors as necessary, by further elaborating on the documentary evidence and testimony he relied on in fashioning the financial aspects of the award.”
ERC rejected the City’s argument that the Arbitrator failed to give due weight to the financial limitations imposed by transitional aid and DCA oversight. The Arbitrator had found the City’s receipt of aid to be a “statutory restriction [that] carries a great deal of weight and must be respected.” However, after reviewing the MOU and testimony, the Arbitrator concluded the relationship with the DCA was one of “oversight” and “partnership,” not “total fiscal domination,” as the City characterized it. PERC deferred to this finding, noting the MOU explicitly allowed for 2% annual increases without special approval and only required “substantial” compliance. PERC found “the record evidence reasonably supports the Arbitrator’s treatment of DCA oversight and was appropriate.”
Finally, PERC affirmed the Arbitrator’s denial of the City’s proposal to eliminate the “City Time” provision. The Arbitrator found that the City failed to meet its burden to justify changing the status quo, noting the provision’s intent was clear, it was recently written by the City itself into a 2022 MOU, and had been approved by the DCA. PERC held that “the party proposing a change in the employment condition bears the burden of justifying that proposed change,” and the City provided insufficient evidence that the provision was a “windfall” or should be excised.
City of Paterson, 52 NJPER ¶ 8 (NJ PERC 2025)