Landmark Arbitration Reform Heads To Governor’s Desk

Senate Unanimously Passes Bipartisan Compromise

TRENTON – The Senate today unanimously passed bipartisan compromise legislation championed by Senate President Stephen M. Sweeney to overhaul the method by which towns and public safety unions have their cases decided by arbitration, reforming the process to make it fair.

“Reforming the arbitration system is essential if communities are going to be able to live under the property tax cap,” said Sweeney (D-Gloucester/Cumberland/Salem). “For too long, the system has been tilted in favor of the public unions and arbitrators have enjoyed too free a hand in crafting contracts that did not even have to consider a town’s ability to pay. This compromise legislation will ensure that taxpayers are protected and that workers are treated fairly. It’s a revolutionary change for arbitration in general, and especially for New Jersey.”

Under the bipartisan legislation (S-5/A-3393) – the result of a compromise struck last week among Sweeney, Assembly Speaker Sheila Y. Oliver and Governor Chris Christie – arbitrator awards for police and fire personnel salaries and longevity payments would be capped at an average of 2 percent annually over the life of a contract. Arbitrators also would be prohibited from writing new economic rewards into a new contract that did not exist in the prior agreement.

The measure also would create a new randomized system for assigning arbitrators, who also would be required to meet new and more stringent quality standards. Arbitrator compensation similarly would be capped at $1,000 per day and $7,500 per case, whichever is lower.

Once a dispute enters arbitration, arbitrators would be required to rule within 45 days. Appeals of an arbitrator decision would be required to be adjudicated within 30 days. Arbitrators who miss a deadline would be subject to financial penalties.

“Today we are delivering on the promise we made to local officials when the property tax cap was signed that we would revolutionize the arbitration process before the end of the year,” said Sweeney. “This legislation is the result of hard work, long discussions and real compromise. And those are always the best ways to create policy.”

The measure also is sponsored by Senators Joseph Kyrillos (R-Monmouth/Middlesex) and Michael Doherty (R-Warren/Hunterdon).

The bill passed 40-0, and now heads to the Governor to be signed into law.

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