A Contract is a Contract is a Contract: In re County of Atlantic

August 23, 2017

Jennifer Vorih, Esq.

Ty Hyderally, Esq.

The Supreme Court of New Jersey recently affirmed, on other grounds, an Appellate Division decision that employers cannot unilaterally decide not to follow a salary step guide after the expiration of a contract, when the contract states that the terms and conditions of employment set forth in the contract should continue during negotiations. In re Cty. of Atlantic, 2017 N.J. LEXIS 821, *1, 44 NJPER P12, 2017 WL 3272102 (N.J. Aug. 2, 2017).

This case was two separate cases, involving three different union contracts with two different employers: Atlantic Lodge #34 of the Fraternal Order of Police and PBA Local #77, and Atlantic County; and the Policeman’s Benevolent Association. Local #174 and Bridgewater Township. In each contract, the parties agreed that the terms and conditions of the contract should continue after the expiration of the contract, during negotiations for a new contract. Additionally, the employer in each contract had historically followed the contract language and paid employees according to the salary step guide contained in the contract, during periods of negotiation after a contract had expired.

Despite the clear language in these contracts and despite their history of having paid employees according to the guides set forth in the contracts during periods of contract negotiation, both Atlantic County and Bridgewater Township unilaterally decided to not pay employees according to those guides. Instead, the employers informed the involved unions that they did not have to follow the guides, because circumstances had changed. Atlantic County argued that financial pressures, coupled with the Property Tax Levy Cap and the Interest Arbitration Award Cap, made it unnecessary for them to continue to pay employees according to the salary step guides after a contract expired. Atlantic Lodge #34 and PBA Local #77 filed charges against the County with the Public Employment Relations Commission (PERC), which ultimately agreed with the County. Bridgewater Township then followed suit and told Local #174 that it would discontinue the salary step increases after the current contract expired.

After several legal battles, the New Jersey Supreme Court agreed with the unions. The Court held that the parties had to be held to the contracts they had agreed to, and that the employers had breached those contracts and committed an unfair labor practice.

Before the case got to the Supreme Court, it went to the Appellate Division, which took a circuitous route to reach the same conclusion. The Appellate Division held that, in finding for Atlantic County, PERC had unreasonably abandoned the “dynamic status quo doctrine.”

It is a well-settled legal principle that, “Courts cannot make contracts for parties. They can only enforce the contracts which the parties themselves have made.” Id., quoting Sellars v. Cont’l Life Ins. Co., 30 F.2d 42, 45 (4^th Cir. 1929). The New Jersey Supreme Court found that each of the contracts in question contained language which called for the parties to follow the terms and conditions of the contract during periods of renegotiation: “Each contract contained language that touched on the continuation of benefits.” In re Cty. of Atlantic, supra, at *15.

In this case, the New Jersey Supreme Court avoided the questions of, “whether, as a general rule, an employer must maintain the status quo while negotiating a successor agreement.” Id., at *13. Instead, the Court relied solely on contract principles. The Court, “suggest[ed] that parties would be wise to include explicit language indicating whether a salary guide will continue beyond the contract’s expiration date.” Id., at *33. This decision is a breath of fresh air for employees and their attorneys who may feel that, in and out of contract negotiations, the deck is stacked against unions and employees.

The above blog post was written over one year ago. The information in this blog post may not be current due to changes in the law or recent case decisions. We encourage you to contact our firm, at 973-509-8500, for information on this particular post and to make sure the content is still current.

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