The Paterson Deputy Fire Chiefs Association represents Deputy Fire Chiefs in the City of Paterson, New Jersey. For about ten years, the City has been designated as a “city in distress” by the New Jersey Department of Community Affairs (DCA). As a result, the City entered into a Memorandum of Understanding with the DCA. The City receives “transitional aid” from the state in exchange for the DCA having near total financial control over City spending, including but not limited to the negotiation of union contracts, hiring decisions, and salary increases. If the City violates the MOU, the DCA is unilaterally entitled to withhold transitional aid.
Under the CBA between the Union and the City, deputy fire chiefs are entitled to be paid at the fire chief’s salary when working in that role. The City’s former fire chief retired on August 1, 2023, and the City interviewed new applicants. One deputy chief (the Grievant) was selected for the role effective November 20, 2023. His salary as deputy chief was $210,702.43, and as chief he earned $225,000. The former chief earned $263,556. Between the former chief’s retirement and the Grievant’s promotion, the Grievant worked as the acting fire chief.
The Union filed a grievance, alleging that during this period, the Grievant was paid at the deputy chief rate, and should have earned the former chief’s salary, or at the very least, the new chief’s salary approved by DCA. The Union demanded arbitration, and the City petitioned the New Jersey Public Employment Relations Commission (PERC) to restrain the arbitration, arguing that the dispute was outside of an arbitrator’s jurisdiction because, among other reasons, it was preempted by state municipal aid laws.
The first law identified by the City was the Municipal Stabilization and Recovery Act (MSRA). The MSRA empowers the state to assist distressed municipalities “by requiring prudent fiscal management and operational efficiencies in the provision of public services.” Another New Jersey law provides that the DCA may review and approve any arbitration award involving a municipality receiving funds under the MSRA. PERC rejected this argument, finding that MSRA was not applicable to this dispute, as the City did not provide written notices or draft a recovery plan as required by that statute. Furthermore, the MOU made no mention of MSRA.
The second law identified by the City was the Special Municipal Aid Act (Aid Act), which empowered the DCA to create a financial review board to control a distressed municipality’s finances. The Aid Act does not similarly empower the DCA to approve or reject arbitration awards. PERC found that the MOU was executed pursuant to the Aid Act, and that neither the Aid Act nor the express terms of the MOU required DCA approval of arbitration awards pursuant to public employment contracts. Accordingly, PERC rejected the City’s petition, and allowed the Union’s grievance to proceed to arbitration.
City of Paterson and Paterson Deputy Fire Chiefs Association, No. SN-2024-019, 2024 WL 1138011 (N.J. Pub. Emp. Rel. Comm., 2024).