At the end of September, the New Jersey Supreme Court issued an important clarification of the law governing enforceability of public employee collective negotiation agreements. Justice LaVecchia, writing for a unanimous court in the matter of Robbinsville Township Board of Education v. Washington Township Education Association, held that, without more, a school district could not alter the terms an agreement (imposing uncompensated furlough days) because of what it deemed to be a “fiscal necessity.” The school district, the Public Employment Relations Commission (PERC) and the Appellate Division had relied on the Supreme Court’s 2015 decision in Borough of Keyport v. International Union of Operating Engineers to conclude that public employers could deviate from their employment agreements when facing a fiscal emergency. In reversing the Appellate Division, the court read Keyport narrowly, limited to its facts where the Civil Service Commission, in the face of the 2008 economic crisis, promulgated a formal regulation authorizing municipalities to alter employment agreements based on fiscal necessity. In the present case, there was no authorizing statute or regulation permitting such action by the public employer.

Justice LaVecchia noted that prior case law on the sanctity of public employee agreements divided issues into two categories: “subject matter comprised of mandatorily negotiable subjects and non-negotiable matters of government policy,” and in close cases courts had to determine “whether an issue is appropriately decided by the political process or by collective negotiations.” Justice LaVecchia cited the well-established test for whether an item was negotiable: “(1) the item intimately and directly affects the work and welfare of public employees; (2) the subject has not been fully or partially preempted by statute or regulation; and (3) a negotiated agreement would not significantly interfere with the determination of governmental policy.”

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