Passaic County in New Jersey employs sheriff’s officers and corrections officers represented by three Policemen’s Benevolent Association locals (PBAs). Collective bargaining agreements that were in effect from 2007 through 2014 provided that “[u]pon retirement, the Employer will continue to provide and pay for” medical benefits and that “[t]he County of Passaic shall pay in full, all medical and prescription premiums for all members who retire with twenty-five (25) years of service or more.” Those provisions guaranteed County-funded healthcare for qualifying retirees.
In 2011, the New Jersey Legislature enacted Chapter 78, which required public employees to contribute toward health-insurance premiums through a tiered, phased-in schedule. Chapter 78 also included a sunset provision and expressly contemplated that, once the highest tier was fully implemented, contribution levels in future collective agreements would be subject to bargaining. After Chapter 78 took effect, the parties entered memoranda of agreements covering 2015 through 2018. Those agreements incorporated Chapter 78’s contribution framework but did not remove the existing retiree healthcare language. During that period, non-exempt retirees paid contributions at the phased-in rates, eventually reaching Tier IV.
When the 2015–2018 agreements expired, negotiations for successor contracts stalled and proceeded to compulsory interest arbitration. At that stage, the County affirmatively proposed eliminating the contract provisions requiring it to pay for retiree healthcare. The PBAs opposed that change. The interest arbitrators rejected the County’s proposal and preserved the retiree healthcare language in the existing contracts. The County did not appeal those interest arbitration awards.
After interest arbitration concluded, the County continued collecting premium contributions from retirees. The PBAs filed grievances with the New Jersey Public Employment Relations Commission, and the matters were consolidated and submitted to grievance arbitration. The County argued that Chapter 78 required retiree contributions as a matter of law and preempted any contrary contract interpretation. The arbitrator rejected that position.
In a written decision, the grievance arbitrator analyzed the relevant contract provisions. She focused on the clause stating that “[a]ll employees in the [PBA] shall be subject to the contributions outlined in Chapter 78” and contrasted it with provisions requiring the County, “upon retirement,” to “continue to provide and pay for” retiree medical benefits. She concluded that the Chapter 78 contribution clause addressed employees, while the retiree-specific provisions governed retirees. The arbitrator further found that “[n]either interest arbitrator specifically awarded changes to Chapter 78 contributions to retirees” and that “[b]y not removing the fully paid language as the County proposed, the arbitration awards created a distinction between employees and retirees’ benefits.” On that basis, she ordered the County to stop collecting contributions from retirees and to refund amounts already collected.
The County sought to vacate the award in the Superior Court of New Jersey, arguing that the grievance arbitrator exceeded her authority, misapplied the contract, and issued an award contrary to Chapter 78 and public policy. The trial court denied relief, and the Appellate Division affirmed.
The Appellate Division emphasized that “[j]udicial review of an arbitration award is very limited” and that an arbitrator’s interpretation of a collective agreement is entitled to substantial deference. The Court rejected the County’s claim that the arbitrator ignored or rewrote the contract, explaining that the arbitrator reviewed the pertinent contract language and reached a plausible interpretation. Even if the County’s reading were also plausible, the arbitrator’s reading was “not an unreasonable interpretation and application of the Agreements given their language.”
The County also argued that retiree contributions were never decided in interest arbitration and therefore remained governed by Chapter 78 as a matter of law. The Appellate Division rejected that framing. The Court explained that when the County proposed to eliminate the retiree healthcare benefit, the County itself placed retiree healthcare (and contribution obligations) at issue. The arbitrator’s rejection of that proposal preserved the existing contract language governing retiree healthcare. Having lost that issue in interest arbitration and failed to appeal those awards, the County could not later recast the dispute as unresolved to challenge it through the grievance arbitration.
Finally, the Court held that the award did not violate Chapter 78 or public policy. Once Tier IV was fully implemented and the statute’s sunset occurred, contribution levels became negotiable terms in successor agreements. The arbitrator’s award enforcing those retiree healthcare provisions therefore did not contravene a clear mandate of public policy.
County of Passaic v. Policemen’s Benevolent Association Local Nos. 197, 197A, & 286, 2025 WL 3626170 (N.J. App. Div. Dec. 15, 2025).