Friday, July 21, 2006

The high cost of contract arbitration

Thursday, July 20, 2006

How contract arbitration works

Police arbitration in New Jersey is governed by the Police and Fire Public Interest Arbitration Reform Act.

According to the act, both sides are required to meet at least 120 days before the current contract ends.

If negotiations reach an impasse, either side may notify the Public Employment Relations Commission, a quasi-judicial administrative state agency that deals with labor relations issues concerning public employers, public employees and unions.

Both parties can select an arbitrator together, or have one randomly assigned by PERC.

The arbitrator tries to mediate a settlement. If that fails, the arbitrator holds a hearing where both sides present their final offers.

The arbitrator must make a decision based on the following eight factors:

• The interests and welfare of the public.

• Comparison with other employees performing similar work in the private sector, in the public sector in general and in the public sector in comparable jurisdictions.

• Overall compensation currently received by the employees.

• Stipulations of the parties.

• Lawful authority of the employer.

• Financial impact on the governing unit, residents and taxpayers.

• Cost of living.

• Continuity and stability of employment.

Arbitrators must make an award within 120 days of their selection, unless both sides agree to an extension.

Awards can be appealed to PERC within 14 days on the grounds that the arbitrator did not apply the criteria required by statute.

PERC's decision can be appealed to the Appellate Division of Superior Court.

About the arbitrators

So who are the arbitrators at the heart of the complaints?

The state's Public Employment Relations Commission picks them.

Applications, which include reference letters, are reviewed by PERC's director of arbitration and conciliation and the commission's seven members make three-year appointments.

PERC currently lists 23 interest arbitrators. Typically attorneys for a police union and town pick the arbitrator together; the parties also split the fees. If they cannot agree, PERC randomly assigns one. Last year, 106 arbitrators were chosen mutually and only one was appointed by lot, according to PERC records.

James W. Mastriani, a former chairman of PERC, is by far the most popular arbitrator; he's handled about one-third of the 272 cases listed recently on the PERC Web site since 1996. The next most popular arbitrators, Robert M. Glasson and Robert E. Light, handled 21 and 20 cases, respectively.

Gerald L. Dorf, a management attorney who also serves as labor counsel to the New Jersey State League of Municipalities, said it's clear why Mastriani is so popular.

"He's a very likable guy," Dorf said. "He is an effective mediator."

Mastriani said that "people are looking for predictability and competence."

Dorf said that if Mastriani weren't perceived as being fair, he wouldn't be chosen over and over again.

"The labor relations community is a small community," Dorf said. "We all know each other. There are times it's helpful."

The high cost of arbitration

Police contract arbitration is expensive, which may be one reason far fewer towns are using the process than before. Here is a breakdown of recent negotiation and arbitration costs for two Bergen County municipalities:

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Park Ridge*

Contract: Jan. 1, 2004 to Dec. 31, 2007

Contract: Jan. 1, 2004 to Dec. 31, 2008

Arbitrator fee: $7,905 (Robert M. Glasson)

Arbitrator fee: $6,330 (Ernest Weiss)

Labor attorney for arbitration: $40,633 (Dorf & Dorf)

Labor attorney: $4,675 (Murray Law Firm)

Borough attorney: $166 (John J. D'Anton)

Labor attorney: $3,613 (Raymond Wiss)

Labor attorneys: $76,127 (Apruzzese, McDermott, Mastro & Murphy)

Labor attorney: $30,095 (Joel Scharff)

Total cost: $53,213

Total cost: $116,331

*Park Ridge switched law firms during the course of negotiations.

Calls for change

The New Jersey State League of Municipalities has formed a committee to reexamine the arbitration process and recommend changes to the Legislature. Among the suggestions the committee is considering:

• Arbitrators would always be chosen randomly. Currently, the town and union can pick an arbitrator together.

• No arbitrator shall have more than four open cases at a time. Both sides complain the arbitration process often takes too long.

• No municipality or police union would have the same arbitrator assigned twice in a row. Towns argue this would cut back on an arbitrator's incentive to act a certain way with the next arbitration in mind.

• Limit salary increases so they cannot exceed the current state-mandated 2.5 percent to 3.5 percent cap on municipal budgets.

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About Me

Plainfield resident since 1983. Retired as the city's Public Information Officer in 2006; prior to that Community Programs Coordinator for the Plainfield Public Library. Founding member and past president of: Faith, Bricks & Mortar; Residents Supporting Victorian Plainfield; and PCO (the outreach nonprofit of Grace Episcopal Church). Supporter of the Library, Symphony and Historic Society as well as other community groups, and active in Democratic politics.