(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued March 18, 1997 -- Decided July 14, 1997
STEIN, J., writing for a unanimous Court.
In this appeal, the Court considers whether certain New Jersey Turnpike Authority (Authority)
employees can join collective negotiating units.
The New Jersey Employer-Employee Relations Act (Act) provides public employees with broad
power to form, join and assist employee organizations, with two exceptions: managerial executives and
confidential employees are not permitted to join employee organizations. Managerial executives are those
who formulate management policies and practices, and persons who are responsible for directing the
effectuation of those management policies and practices. Confidential employees possess functional
responsibilities or knowledge in connection with issues involved in the collective negotiations process that
would make their membership in a negotiating unit incompatible with their official duties.
In June 1991, American Federation of State, County and Municipal Employees (AFSCME)
petitioned the Public Employment Relations Commission (PERC), the body charged with enforcing and
implementing the Act, to represent eighty-eight Authority employees in a supervisory unit. The Authority
opposed the petition, claiming that all of the petitioned-for titles were inappropriate for inclusion in a
collective negotiating unit because they were managerial executives or confidential employees, because
supervisory conflicts existed between the titles, and also because the titles subject to the petition included
non-supervisory personnel who should not be represented in a supervisory unit.
PERC referred the matter to a hearing officer for fact finding and recommendation. The hearing
officer recommended that all but fourteen of the petitioned-for titles be certified. The Authority filed
exceptions to the report and recommendation of the hearing officer. PERC transferred the matter to itself
and issued a modified decision. PERC accepted the hearing officer's exclusion of the fourteen employees
from the negotiation unit. In order to prevent intra-unit conflicts, PERC excluded five non-supervisors from
the unit, as well as twenty employees who supervised lower-level supervisors in the unit. For the balance of
the petitioned-for employees, PERC generally rejected the Authority's claim that the affected employees
were either managerial executives or confidential employees.
In addressing the Authority's claims concerning managerial executive status, PERC relied on its
interpretation of the statutory language and on its decision in Borough of Montvale, wherein it determined
that to be considered a managerial executive, the affected employee must exercise a level of authority and
independent judgment sufficient to broadly affect the Authority's purposes or means of effectuating these
purposes. Concerning confidential employees, PERC reiterated its holding in State of New Jersey.
PERC certified the balance of the petitioned-for employees for membership in three separate
negotiating units. The Authority appealed all three certifications, claiming that the certified employees
should have been excluded because they were either managerial executives or confidential employees or
because public policy required their exclusion. The Appellate Division reversed and remanded, concluding
that PERC construed both the managerial executive and confidential employee exceptions too narrowly.
The Supreme Court granted petitions for certification filed by PERC and AFSCME. The New
Jersey State AFL-CIO, the International Association of Firefighter AFL-CIO, the New Jersey Deputy Fire
Chiefs, and the New Jersey League of Municipalities were granted leave to participate as amicus curiae.
HELD: PERC narrowed the scope of managerial executive beyond the statutory definition; therefore, the
Court excises from the Borough of Montvale the requirement that an employee must exercise
organization-wide power in order to fit within the managerial executive exception. PERC's
articulation in State of New Jersey of the standard for determining whether an employee falls within
the confidential-employee exception is consistent with the statutory definition.
1. Borough of Montvale is PERC's seminal case concerning the managerial executive exception. PERC
interprets the Act to require that managerial executives possess and exercise a level of authority and
independent judgment sufficient to affect broadly the organization's purposes or its means of effectuation of
these purposes. PERC construes this exception narrowly. Concerning the confidential-employee exception,
PERC continues to rely on the framework set forth in State of New Jersey and narrowly construes this
exception as well. (pp. 15-24)
2. Substantial deference must be accorded an agency charged with enforcing an act. An agency's
interpretation prevails unless the interpretation is plainly unreasonable. Moreover, if an agency's
interpretation is contrary to the statutory language, or if the agency's interpretation undermines the
legislative intent, no deference is required. (pp. 26-27)
3. A private employer's concerns are somewhat different from those of a public employer, especially in view
of the different labor relations dynamic that exists in the public sector. In affording supervisor's
organizational rights under the Act, it can be inferred that the Legislature appropriately took into account
the differences between public sector and private sector labor negotiations. Other distinctions recognized by
the Legislature include: the inability of public employees to strike; and the narrower scope of negotiations
than in the private sector. Public employees are given negotiation rights concerning only a limited range of
subjects that intimately and directly affect their work and welfare. (pp. 27-29)
4. PERC narrowed the scope of the managerial executive beyond the statutory definition. The requirement
that managerial executives “possess and exercise a level of authority and independent judgment sufficient to
affect broadly the organization's purposes or its means of effectuation of these purposes” is unduly
restrictive. The Court excises that requirement from Borough of Montvale. The statutory definition,
together with the Borough of Montvale standard as modified here, provides a functional test that is neither
plainly unreasonable, contrary to the language of the Act, nor subversive of the Legislature's intent. (pp. 30-33)
5. The Legislature did not intend to preclude those with mere access to confidential general personnel
information from joining a collective negotiating unit. The functional test set forth in the statutory definition
of “confidential employee,” together with the standards set forth by PERC in State of New Jersey, can
adequately address whether those employees with access to labor relations materials should be excluded from
unit membership. The initial inquiry is whether an employee's functional responsibilities or knowledge
would make their participation in a negotiating unit incompatible with their official duties. (pp. 33-36)
6. Employees who assimilate, evaluate, analyze and otherwise provide significant information to their
supervisors for use in the labor negotiations process will not be considered confidential employees per se.
Application of the statute and PERC's review on a case-by-case basis is a more appropriate method of
determining whether to exclude employees from negotiating units. (pp. 36)
As MODIFIED, judgment of the Appellate Division remanding the matter to PERC for further
proceedings is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI and COLEMAN
join in JUSTICE STEIN'S opinion. JUSTICE POLLOCK did not participate.
SUPREME COURT OF NEW JERSEY
A-136/
137 September Term 1996
IN THE MATTER OF
NEW JERSEY TURNPIKE AUTHORITY,
Appellant-Respondent,
v.
AMERICAN FEDERATION OF STATE,
COUNTY AND MUNICIPAL EMPLOYEES,
COUNCIL 73,
Respondent-Appellant.
NEW JERSEY TURNPIKE AUTHORITY,
Appellant-Respondent
v.
AMERICAN FEDERATION OF STATE,
COUNTY AND MUNICIPAL EMPLOYEES,
COUNCIL 73, LOCALS 3912, 3913 and
3914,
Respondents-Appellants.
Argued March 18, 1997 -- Decided July 14, 1997
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
289 N.J. Super. 23 (1996).
Robert E. Anderson, General Counsel, argued
the cause for appellant Public Employment
Relations Commission.
Steven P. Weissman argued the cause for
appellants American Federation of State,
County and Municipal Employees, Council 73
and American Federation of State, County and
Municipal Employees, Council 73, Locals 3912,
3913 and 3914 (Weissman & Mintz, attorneys).
Michael K. Furey argued the cause for
respondent (Riker, Danzig, Scherer, Hyland &
Perretti, attorneys; Mr. Furey and James P.
Anelli, on the brief).
Michael L. Diller, Senior Deputy Attorney
General, argued the cause for amicus curiae
State of New Jersey (Peter G. Verniero,
Attorney General, attorney; Mary C. Jacobson,
Assistant Attorney General, of counsel).
Gerald L. Dorf argued the cause for amicus
curiae New Jersey State League of
Municipalities (Dorf & Dorf, attorneys; Mr.
Dorf and Mitchell L. Dorf, on the brief).
Joseph Licata submitted a brief on behalf of
amicus curiae New Jersey State AFL-CIO
(Loccke & Correia, attorneys; Richard D.
Loccke, of counsel; Mr. Licata and Leon B.
Savetsky, on the brief).
Sanford Oxfeld submitted a brief on behalf of
amicus curiae New Jersey Deputy Fire Chiefs
(Balk, Oxfeld, Mandell & Cohen, attorneys;
Randi Doner April, on the brief).
Paul L. Kleinbaum submitted a brief on behalf
of amicus curiae International Association of
Fire Fighters, AFL-CIO (Zazzali, Zazzali,
Fagella & Nowak, attorneys).
The opinion of the Court was delivered by
STEIN, J.
This appeal concerns whether certain New Jersey Turnpike
Authority (Authority) employees can join collective negotiating
units. The New Jersey Employer-Employee Relations Act (Act)
N.J.S.A. 34:13A-1 to -29, provides public employees with broad
powers to "form, join and assist" employee organizations.
N.J.S.A. 34:13A-5.3. Two important exceptions to that right
involve "managerial executives" and "confidential employees."
See ibid. Managerial executives are those who "formulate
management policies and practices, and persons who are charged
with the responsibility of directing the effectuation of such
management policies and practices . . . ." N.J.S.A. 34:13A-3(f).
Confidential employees possess "functional responsibilities or
knowledge in connection with the issues involved in the
collective negotiations process [that] would make their
membership in any appropriate negotiating unit incompatible with
their official duties." N.J.S.A. 34:13A-3(g).
Those statutory definitions have been interpreted by the
Public Employment Relations Commission (PERC), the body charged
with enforcing and implementing the Act. See N.J.S.A. 34:13A-5.2. Relying in part on its own interpretations of the
managerial executive and confidential employee exceptions, PERC
certified Authority employees for membership in three separate
negotiating units. The Authority appealed all three
certifications, claiming that the certified employees should have
been excluded because they were either managerial executives or
confidential employees or because public policy required their
exclusion. The Appellate Division reversed and remanded,
construing both the managerial executive and confidential
employee exceptions more broadly than did PERC, and noting that
"[t]he practical effect of PERC's decision is to leave the
Authority with only twenty members of its management team from
whom it can expect full loyalty uncompromised by union
membership."
289 N.J. Super. 23, 26 (1996). PERC and the
American Federation of State, County and Municipal Employees,
Council 73 (AFSCME) petitioned for certification. We granted
both petitions.
147 N.J. 261 (1996).
The New Jersey Turnpike Authority was created by the
Legislature in 1948 to design, construct, operate and maintain a
high speed, limited access roadway. See L. 1948, c. 454, § 1
(codified as amended at N.J.S.A. 27:23-1). The Turnpike is now
148 miles long; an average of approximately 550,000 vehicles per
day traveled the Turnpike in 1995. Manual of the Legislature of
New Jersey 168 (1997). Approximately 2365 employees work for the
Authority. Ibid.
Testimony before PERC's hearing officer revealed that the
Authority's Commissioners ultimately are responsible for all
policies, budget approval, personnel actions, negotiations, and
contract administration approval, subject to the Governor's veto
power. Below the Commissioners in the Authority's management
structure is an Executive Director, who is responsible for the
day-to-day management of the Authority. See N.J.A.C. 19:9-7.2.
At the time of the PERC decisions, the Authority was divided into
nine departments, each run by a department director:
engineering; maintenance; tolls; operations; finance and budget;
law; public affairs; human resources; and administrative services
and technology.
In June 1991, AFSCME petitioned PERC to represent eighty-eight Authority employees in a supervisory unit. The petitioned-for employees occupied positions subordinate to that of
department director. The Authority opposed the petition,
claiming that all of the petitioned-for titles were inappropriate
for inclusion in a collective negotiating unit because they were
managerial executives or confidential employees, because
supervisory conflicts existed between the titles, and also
because the titles subject to the petition included non-supervisory personnel who should not be represented in a
supervisory unit. PERC referred the contested matter to a
hearing officer for factfinding and recommendation. The hearing
officer heard fourteen days of testimony, after which she
produced a 163-page report recommending that all but fourteen of
the petitioned-for titles be certified. H.O. No. 93-2, 19
N.J.P.E.R. ¶ 24154 (1993).
The Authority filed exceptions to the hearing officer's
report. PERC transferred the case to itself pursuant to N.J.A.C.
19:11-8.8 (subsequently recodified at N.J.A.C. 19:11-9.1) and
issued a decision that modified the hearing officer's
recommendations slightly. P.E.R.C. No. 94-24, 19 N.J.P.E.R. ¶
24218 (1993). PERC accepted the hearing officer's recommendation
to exclude fourteen employees from the negotiating unit.
Additionally, PERC, in order to prevent intra-unit conflicts,
excluded five nonsupervisors from the unit, as well as twenty
employees who supervised lower-level supervisors in the unit.
Although PERC's decision excluded more employees from unit
membership than the hearing officer's report, PERC generally
rejected the Authority's claim that many of the affected
employees were either managerial executives or confidential
employees. Ibid. When considering the Authority's claims
concerning managerial executive status, PERC relied largely on
its decision in Borough of Montvale, P.E.R.C. No. 81-52, 6
N.J.P.E.R. ¶ 11259 (1980). That opinion reads in pertinent part:
A person formulates policies when he develops
a particular set of objectives designed to
further the mission of the governmental unit
and when he selects a course of action from
among available alternatives. A person
directs the effectuation of policy when he is
charged with developing the methods, means,
and extent of reaching a policy objective and
thus oversees or coordinates policy
implementation by line supervisors. Simply
put, a managerial executive must possess and
exercise a level of authority and independent
judgment sufficient to affect broadly the
organization's purposes or its means of
effectuation of these purposes. Whether or
not an employee possesses this level of
authority may generally be determined by
focusing on the interplay of three factors:
(1) the relative position of that employee in
his employer's hierarchy; (2) his functions
and responsibilities; and (3) the extent of
discretion he exercises.
PERC determined that "[n]one of [the petitioned-for employees] exercises a level of authority and independent judgment sufficient to broadly affect the Authority's purposes or means of effecting these purposes." 19 N.J.P.E.R. ¶ 24218. After considering, among other things, "the Act's policy favoring organization of all employees desiring it," PERC determined that, with the exception of one employee, "the petitioned-for employees
do not meet the narrow definition of managerial executive."
Ibid.
Concerning confidential employees, PERC reiterated its
holding in State of New Jersey, P.E.R.C. No. 86-18, 11 N.J.P.E.R.
¶ 16179 (1985):
The Commission's approach to confidential
employee disputes has thus been consistent
since 1970. We scrutinize the facts of each
case to find for whom each employee works,
what he does, and what he knows about
collective negotiations issues. Finally, we
determine whether the responsibilities or
knowledge of each employee would compromise
the employer's right to confidentiality
concerning the collective negotiations
process if the employee was included in a
negotiating unit.
After engaging in an individualized analysis of the employees
claimed by the Authority to be confidential, PERC excluded one
employee who had been promoted since the hearing officer's report
to a position involving the analysis and formulation of
collective negotiations strategies relating to possible changes
in employee medical insurance benefits. 19 N.J.P.E.R. ¶ 24218.
The balance of PERC's opinion addressed intra-unit conflicts
of interest among supervisors. Such conflicts were addressed by
this Court in Board of Education v. Wilton, which held that where
"substantial actual or potential conflict of interest exists
among supervisors with respect to their duties and obligations to
the employer in relation to each other, the requisite community
of interest among them is lacking," thereby making a single unit
impermissible.
57 N.J. 404, 427 (1971). Relying on Wilton, PERC
concluded that "it would be inappropriate for the proposed unit
to include supervisors who supervise and evaluate other
supervisors" and excluded twenty employees. 19 N.J.P.E.R. ¶
24218.
PERC's decision concluded by listing both those employees
excluded from joining the proposed unit and those eligible for
unit membership. PERC ordered an election among the eligible
employees to determine if a majority of those employees wished to
be represented by AFSCME for the purpose of collective
negotiations. Ibid.
AFSCME won that election. On October 21, 1993, PERC
certified AFSCME Local 3914 as the majority representative for a
supervisory unit. On September 15, 1993, AFSCME Local 3913 had
filed a petition seeking to represent a negotiating unit
consisting primarily of the non-supervisor professionals excluded
from the Local 3914 unit. That same day, AFSCME Local 3912 had
filed a petition seeking to represent a negotiating unit composed
predominantly of the supervisors excluded from the Local 3914
unit because of supervisory conflicts. On June 28, 1994, PERC's
Director of Representation directed elections for those two
negotiating units. D.R. No. 94-29, 20 N.J.P.E.R. ¶ 25149 (1994).
Local 3912 and Local 3913 won the respective elections. On
August 25, 1994, AFSCME Local 3913 was certified as the majority
representative for a unit of professional employees. On August
29, 1994, AFSCME Local 3912 was certified as the majority
representative for a second supervisory unit.
The Authority appealed those certifications to the Appellate
Division, which consolidated the three appeals. 289 N.J. Super.
at 25. The State of New Jersey was granted leave to participate
as amicus curiae.
While acknowledging that courts ordinarily defer to an
agency's interpretation of a statute enforced by that agency, the
Appellate Division noted that no deference is required when the
agency interpretation "`flout[s] the statutory language and
undermine[s] the intent of the Legislature.'" Id. at 26 (quoting
GE Solid State, Inc. v. Director, Div. of Taxation,
132 N.J. 298,
306-07 (1993)). The court asserted that PERC misconstrued and
misapplied the "managerial executive" and "confidential employee"
definitions promulgated by the Legislature. Ibid.
The court's analysis began by recognizing that Article I,
Paragraph 19 of the New Jersey Constitution grants public
employees the right to organize and present their grievances
through representatives of their own choosing, a right codified
in the Act. Id. at 27. The court noted, however, that the right
of public sector employees to collectively negotiate is narrower
than that afforded private sector employees. Ibid. The court
further noted that an overriding concern of labor law "`[has
been] to assure the employer of a loyal and efficient cadre of
supervisors and managers independent from the rank and file,,"
id. at 27-28 (quoting State Management Ass'n of Connecticut, Inc.
v. O'Neill,
529 A.2d 1276, 1280 (Conn. 1987)).
Turning to the managerial executive exception, the court
traced the history of the Act. Id. at 29-31. The 1968 Act,
commonly known as Chapter 303, prohibited "any managerial
executive" from joining a collective negotiating unit. Id. at
29. The term "managerial executive" was undefined by Chapter
303. Ibid. Chapter 303 did, however, provide "supervisors" with
the right to collectively negotiate. Ibid. The statute referred
to supervisors as those "having the power to hire, discharge,
discipline, or to effectively recommend the same." Ibid. The
Appellate Division concluded that "[s]uch supervisors, we think,
refer to those persons commonly understood as on-line
supervisors." Ibid.
The court noted that, in 1972, the Legislature enacted
Assembly Bill 520 in an attempt to amend Chapter 303 to include
provisions for unfair labor practice. Ibid. Governor Cahill
vetoed the bill. Ibid. In his veto statement, the Governor
recommended that the term "supervisors" be broadly defined, and
that supervisors be denied collective negotiation rights. Id. at
29-30. In 1974, the Legislature succeeded in amending Chapter
303. Id. at 31. It did not, however, accept the Governor's
recommendation that supervisors be excluded. Ibid. Nor did the
Legislature more broadly define the term "supervisor," leading
the panel to conclude that "supervisor" still means "on-line
supervisor." Ibid.
The court considered extrajurisdictional caselaw defining
"managerial employees," the term used in both private sector
labor law and in other states' public sector labor laws. Id. at
31-32 & n.3. Those cases indicated that courts in Illinois,
Pennsylvania, and Massachusetts do not restrict "managerial
employees" to those in the highest management echelon. Id. at
31-32. The court contrasted those judicial interpretations with
those of PERC, which had developed a body of administrative
caselaw indicating that managerial executives are those "who have
the final responsibility to formulate, determine, and effectuate
policy that is essential." Id. at 32-33. The court also
contrasted PERC's interpretation with the actual language of
N.J.S.A. 23:13A-3(f) and decided that the statutory definition
did not limit "managerial executive" to high level managers. Id.
at 33-34.
The court observed that the definition proposed by Governor
Cahill in his 1973 veto message was broader than that employed by
PERC. Id. at 33. The Governor's definition encompassed those
"who formulate management policies and practices, and those who
are charged with the responsibility of effectuating and making
operative such management policies and practices." Ibid.
(quoting Governor's Veto Statement to Assembly Bill No. 520, at 6
(Feb. 22, 1973) (Governor's Veto Statement)). The court noted
that final responsibility was not crucial. Ibid. Furthermore,
the Governor's definition, unlike PERC's interpretation, was
disjunctive: managerial executives were those who either
formulate policies and practices or were responsible for
effectuating and making operative policies and practices. Ibid.
An employee need not do both to be considered a managerial
executive. Ibid.
Although recognizing that the 1974 amendments to Chapter 303
did not adopt verbatim Governor Cahill's proposed definition, the
court determined that the Legislature, for all practical
purposes, accepted the Governor's proposal. Id. at 34.
Referring to those responsible for management policies and
procedures, the Governor's proposal used the phrase "effectuating
and making operative" instead of the Legislature's phrase
"directing the effectuation of," but the court saw "no
discernable difference" between the two. Ibid. The court found
that "[d]irecting the effectuation of a policy or practice is, to
us, the same as making the policy or practice operative." Ibid.
Because Governor Cahill did not intend to narrow the definition
of managerial executive, and because the Legislature had
functionally adopted the Governor's proposed definition, the
Appellate Division inferred that the Legislature adopted a stance
similar to Governor Cahill's concerning managerial executives.
Ibid.
The court did not disagree with PERC's contention in Borough
of Montvale, supra, that
a person formulates policies when he develops
a particular set of objectives designed to
further the mission of the government unit
and when he selects a course of action from
among available alternatives. A person
directs the effectuation of policy when he is
charged with developing the methods, means,
and extent of reaching a policy objective and
thus oversees or coordinates policy
implementation by line supervisors.
The court, based on the statutory language, "add[ed] a reference to practices as well as policies." Ibid.
The court also agreed generally with the criteria considered by PERC in determining whether an employee is a managerial executive. Ibid. The court disagreed, however, with PERC's assertion that a managerial executive "must possess and exercise a level of authority and independent judgment sufficient to affect broadly the organization's purposes or its means of effectuation of these purposes." Id. at 34-35 (quoting Borough of Montvale, supra). Additionally, the court held that managerial executives need not both formulate policies and practices and be responsible for directing the effectuation thereof. Id. at 36. The court further observed that "formulate" was not the equivalent of "adopt" and that, therefore, one could be considered a managerial executive based on responsibility for recommending policies and practices, especially if those recommendations are substantially accepted. Id. at 36. The court concluded that PERC's interpretation of "managerial executive" was both inconsistent with, and narrower than, the statutory definition. Ibid. For illustrative purposes, the court critically analyzed PERC's determination that four specifically identified employees were not managerial executives. Id. at 36-39.
The Appellate Division then turned to PERC's interpretation of "confidential employee." Id. at 40. The court generally
agreed with PERC's approach as outlined in State of New Jersey,
supra:
We scrutinize the facts of each case to find
for whom each employee works, what he does,
and what he knows about collective
negotiations issues. Finally, we determine
whether the responsibilities or knowledge of
each employee would compromise the employer's
right to confidentiality concerning the
collective negotiations process if the
employee was included in a negotiating unit.
However, the court called into question PERC's determination that "confidential employee" is to be narrowly interpreted, and that mere "access to confidential personnel files or information concerning the administrative operations of a public employer" is insufficient to render a person a confidential employee. Ibid. Of particular concern to the court was PERC's conclusion that those who assimilate, evaluate, analyze and provide information to superiors for use in the labor negotiations process are not necessarily confidential employees. Id. at 41. The court found that such employees could not be excluded from the definition of "confidential employee" merely because they had no knowledge of the ultimate position taken by the Authority in negotiations. Id. at 41-42. The court noted that "[a] member of the management team need not know the exact positions to be taken in order to make his or her union membership incompatible with his or her managerial duties." Id. at 42.
Finally, the court reiterated that the statutory language mentions knowledge or responsibility "in connection with the
issues involved in the collective negotiations process." Ibid.
The court construed the terms "issues" and "process" to
incorporate more than the actual positions taken by the Authority
in negotiations. Ibid. Neither the language of the definition
nor the legislative history suggested to the court that PERC's
narrow interpretation was correct. Ibid.
The court remanded the matter to PERC for further
consideration consistent with its opinion. Id. at 43. PERC and
AFSCME petitioned for certification; this Court granted both
petitions.
147 N.J. 261 (1996). The New Jersey State AFL-CIO,
the International Association of Fire Fighters AFL-CIO, the New
Jersey Deputy Fire Chiefs, and the New Jersey League of
Municipalities were granted leave to participate as amicus
curiae.
Article I, Paragraph 19 of the New Jersey Constitution reads
in its entirety:
Persons in private employment shall have
the right to organize and bargain
collectively. Persons in public employment
shall have the right to organize, present to
and make known to the State, or any of its
political subdivisions or agencies, their
grievances and proposals through
representatives of their own choosing.
Early judicial interpretations of the paragraph merely required
that public employers meet and discuss labor disputes with
employees; there was no clear obligation to permit or engage in
collective negotiations. See New Jersey Turnpike Auth. v.
AFSCME,
83 N.J. Super. 389, 395-99 (Ch. Div. 1964) (holding that
employees could not strike, but management had to meet with all
employee representatives to discuss grievances and proposals in
good faith). Early decisions also declared strikes by public
employees unlawful. Donevero v. Jersey City Incinerator Auth.,
75 N.J. Super. 217, 222 (Law. Div. 1962), rev'd sub nom. on other
grounds, McAleer v. Jersey City Incinerator Auth.,
79 N.J. Super. 142, 146 (App. Div. 1963). Public employees were also forbidden
from engaging in sickouts, mass resignations, and similar
actions. See Board of Educ. v. New Jersey Educ. Ass'n,
96 N.J.
Super. 371, 380-82 (Ch. Div. 1967), aff'd,
53 N.J. 29, 37-40
(1968). Over time, public employees lobbied the Legislature for
enhanced collective negotiation rights. See Charles J. Coleman &
Nancy Gulick, The New Jersey Courts and the Decline of the
Collective Negotiation System,
14 Rutgers L.J. 809, 810 (1983).
In 1966, the Legislature established the Public and School
Employees' Grievance Procedure Study Commission "to study the
need for a procedure to be established for the presentation of
grievances by public and school employees [and] to provide for
reports and recommendations by said commission to the Governor
and the Legislature . . . ." L. 1966, c. 170.
That commission's report was submitted in January 1968. See
Final Report of the Public and School Employees' Grievance
Procedure Study Commission (1968). In September 1968, the
Legislature, relying in large part on that report, enacted the
New Jersey Employer-Employee Relations Act, known as "Chapter
303." See L. 1968, c. 303. Chapter 303 applied to public
employees "except elected officials, heads and deputy heads of
departments and agencies, and members of boards and commissions .
. . ." L. 1968, c. 303, § 4 (codified as amended at N.J.S.A.
34:13A-3(d)). Chapter 303 also excluded "managerial executives,"
a term undefined by the Chapter except in relation to school
districts, where "managerial executive" meant "the superintendent
of schools or his equivalent." L. 1968, c. 303, § 7 (codified as
amended at N.J.S.A. 34:13A-5.3). The statute did not refer to
"confidential employees."
Chapter 303 provided public employees with the right,
"freely and without fear of penalty or reprisal, to form, join
and assist any employee organization or to refrain from any such
activity." L. 1968, c. 303, § 7 (codified as amended at N.J.S.A.
34A:13A-5.3). "Negotiating units" formed pursuant to Chapter 303
were to be defined "with due regard for the community of interest
among the employees concerned . . . ." Ibid. Supervisors
"having the power to hire, discharge, discipline, or to
effectively recommend the same" could generally organize so long
as supervisory units did not admit nonsupervisory personnel.
Ibid.
Chapter 303 also created PERC. See L. 1968, c. 303, § 6(a)
(codified as amended at N.J.S.A. 34:13A-5.2(a)). The Legislature
charged PERC with making policy and establishing "rules and
regulations concerning employer-employee relations in public
employment relating to dispute settlement, grievance procedures
and administration including enforcement of statutory provisions
concerning representative elections and related matters." Ibid.
PERC was also authorized to intervene "in matters of recognition
and unit definition" in the event of a dispute. L. 1968, c. 303,
§ 7 (codified as amended at N.J.S.A. 34:13A-5.3).
PERC encountered some difficulty in interpreting Chapter
303. In City of Elizabeth, P.E.R.C. No. 36, N.J.P.E.R. Supp. 36
(1970), PERC noted that Chapter 303 did not define "managerial
executive." In the absence of a statutory definition, PERC
relied on the "general meaning of the term." PERC found that
"[t]he essential characteristics of the term denote one who
determines and executes policy through subordinates in order to
achieve the goals of the administrative unit for which he is
responsible or for which he shares responsibility." Relying on
that definition, PERC determined that the police chief and deputy
chiefs of the Elizabeth Police Department were not managerial
executives. The department director, not the chief and deputies,
was responsible for hiring and firing. Additionally, although
the chief and deputy chiefs assisted in the budgetary and
policymaking process of the department, final responsibility
rested with the department director. PERC found that "[i]t is
this final responsibility to formulate, determine and effectuate
policy and not the initial preparation of a budget or of policy
proposals that distinguishes the managerial executive from other
staff or line positions."
Later that year, in County of Union, P.E.R.C. No. 48,
N.J.P.E.R. Supp. 48 (1970), PERC again attempted to ascertain the
definition of "managerial executive" that had been omitted from
Chapter 303. After noting that "the indicia of such status have
not been exhaustively treated in the available precedents of the
Commission," PERC distilled four characteristics consistently
associated by the National Labor Relations Board with employees
who are "executive":
(1) a person identified with management
interest;
(2) one who formulates and effectuates
management policies by expressing and making
operative the decisions of the employer;
(3) one who exercises discretion in the
performance of his job; and
(4) one who has the ability to make purchases
and pledge the credit of the Employer.
PERC also relied on Regulation 4 of the New Jersey Department of
Labor and Industry, which defined an executive as
[a]ny employee (a) whose primary duty
consists of the management of the enterprise
in which he is employee or of a customarily
recognized department or subdivision thereof;
and (b) who customarily and regularly directs
the work of two or more other employees
therein; and (c) who has the authority to
hire or fire other employees or whose
suggestions and recommendations as to hiring
and firing and as to advancement and
promotion or any other change of status of
any other employee will be given particular
weight and (d) who customarily and regularly
exercises discretionary powers.
After considering those definitions, PERC determined that a
deputy county treasurer was a managerial executive. The deputy
treasurer had hired employees, invested large sums, participated
in the preparation and consideration of the department budget,
and recommended promotions and job title changes. PERC
determined that "it would be safe to conclude" that the deputy
treasurer was properly excludible from a collective negotiating
unit.
In 1972, the Legislature attempted to amend Chapter 303 by
enacting Assembly Bill No. 520, in part to define PERC's
authority to decide unfair labor practice questions. Governor
Cahill conditionally vetoed the bill. The Governor's veto
message included several proposed definitions intended to broaden
the exclusions to the Act to make those exclusions more
consistent with private sector labor law. The Legislature
finally amended Chapter 303 in 1974 by passing Senate Bill No.
1087. See L. 1974, c. 123. Those amendments, popularly known as
Chapter 123, either rejected or modified Governor Cahill's
proposed definitions.
The Governor had proposed that supervisors, whom he
recommended not be permitted to organize, be defined as follows:
The term "supervisor" means any individual
having authority, in the interest of the
public employer, to hire, transfer, suspend,
lay off, recall, evaluate, promote,
discharge, assign, reward, or discipline
other employees, or responsibly to direct
them, or to adjust their grievances or
effectively to recommend such action, if in
connection with the foregoing the exercise of
such authority is not of a merely routine or
clerical nature, but requires the use of
independent judgment.
[Governor's Veto Statement, supra, at 6.]
The Legislature rejected that proposal, retained the
following clause from Chapter 303, and continued to permit
supervisors to organize so long as supervisory and non-supervisory employees were not in the same unit:
[A] supervisor [has] the power to hire,
discharge, discipline, or to effectively
recommend the same . . .
[L. 1974, c. 123, § 4 (codified at N.J.S.A.
34:13A-5.3).]
Concerning managerial executives, Governor Cahill had
proposed that:
The term "managerial executive" refers
to persons who formulate management policies
and practices, and to those who are charged
with the responsibility of effectuating and
making operative such management policies and
practices.
[Governor's Veto Statement, supra, at 6.]
The Legislature enacted the following definition:
"Managerial executives" of a public
employer means persons who formulate
management policies and practices, and
persons who are charged with the
responsibility of directing the effectuation
of such management policies and practices,
except that in any school district this term
shall include only the superintendent or
other chief administrator, and the assistant
superintendent of the district.
[L. 1974, c. 123, § 2 (codified at N.J.S.A.
34:13A-3(f)).]
Regarding confidential employees, Governor Cahill had
proposed that:
The term "confidential employee" means
one whose access to confidential personnel
files or information concerning the
administrative operations of a public
employer and functional responsibilities or
knowledge in connection with the issues
involved in the collective negotiations
process would make membership in any
appropriate negotiating unit incompatible
with his official duties.
[Governor's Veto Statement, supra, at 6.]
The Legislature enacted the following definition:
"Confidential employees" of a public
employer means employees whose functional
responsibilities or knowledge in connection
with the issues involved in the collective
negotiations process would make their
membership in any appropriate negotiating
unit incompatible with their official duties.
[L. 1974, c. 123, § 2 (codified at N.J.S.A.
34:13A-3(g)).]
Finally, Chapter 303 had provided that the term "employee"
included "[any] public employee . . . except elected officials,
heads and deputy heads of departments and agencies, and members
of boards and commissions . . . ." L. 1968, c. 303, § 4
(emphasis added). In enacting Chapter 123, the Legislature
interpreted "employee" to exclude "elected officials, members of
boards and commissions, managerial executives and confidential
employees." L. 1984, c. 123, § 2 (codified at N.J.S.A. 34:13A-3(d)).
Borough of Montvale, supra, remains PERC's seminal case
concerning the managerial executive exception. See, e.g.,
Borough of Bloomingdale, D.R. No. 95-13, 21 N.J.P.E.R. ¶ 26018
(1994); Township of Willingboro, D.R. No. 92-16, 18 N.J.P.E.R. ¶
23057 (1992); State of New Jersey, D.R. No. 90-8, 15 N.J.P.E.R. ¶
20269 (1989). PERC continues to require that "managerial
executives[s] must possess and exercise a level of authority and
independent judgment sufficient to affect broadly the
organization's purposes or its means of effectuation of these
purposes," Borough of Montvale, supra, and continues to construe
the managerial executive exception narrowly. See, e.g., Township
of Easthampton, D.R. No. 94-1, 19 N.J.P.E.R. ¶ 24178 (1993)
(reiterating that "[t]he Commission narrowly construes the term
`managerial executive'").
With the exception of the opinion below, no published
judicial decision has interpreted the managerial executive
exception to the Act. Cf. Department of Community Affairs v.
Cook,
282 N.J. Super. 207, 211 (App. Div. 1995) (determining that
member of board of trustees of municipal public library was
managerial executive required to make personal financial
disclosures under Local Government Ethics Law).
Concerning the confidential employee exception, PERC
continues to rely on the framework set forth in State of New
Jersey, supra, 11 N.J.P.E.R. ¶ 16179, to determine if an employee
is confidential. See, e.g., Woodbridge Township Hous. Auth.,
D.R. No. 96-5, 21 N.J.P.E.R. ¶ 26212 (1995); Greenwich Township
Bd. of Educ., P.E.R.C. No. 93-27, 18 N.J.P.E.R. ¶ 23224 (1992);
Lakewood Hous. Auth., D.R. No. 89-25, 15 N.J.P.E.R. ¶ 20087
(1989). Like the term "managerial executive," the term
"confidential employee" continues to be narrowly construed by
PERC. See, e.g., Summit Bd. of Educ., D.R. No. 95-27, 21
N.J.P.E.R. ¶ 26106 (1995) ("Confidential employees are excluded
from the Act's definition of `employee' and do not enjoy the
Act's protections. Consequently, the Commission has narrowly
construed the term confidential employee." (citation omitted)).
Consonant with that narrow construction, PERC's decisions have
suggested that mere access to confidential labor relations
information is insufficient to render an employee confidential.
Monmouth Reg'l Bd. of Educ., D.R. No. 94-10, 20 N.J.P.E.R. ¶
25009 (1993) ("Although access to confidential information is a
relevant factor in the determination of confidential status
within the meaning of the Act, by itself it is not enough to make
an employee confidential."); see also Little Ferry Bd. of Educ.,
D.R. No. 80-19, 6 N.J.P.E.R. ¶ 11033 (1980) (holding that
secretary's mere access to locked files that contained
confidential labor relations notes and other materials was not,
absent additional factors, sufficient to render secretary
confidential employee).
PERC's decisions are somewhat in tension with the sole
published judicial opinion addressing the confidential employee
exception. In Township of Wayne v. AFSCME,
220 N.J. Super. 340
(1987), the Appellate Division considered whether a municipal
deputy clerk certified to a negotiating unit by PERC was, in
fact, an excludible confidential employee. The hearing officer's
report on which PERC based its decision stated that the deputy
clerk had "access and exposure to the collective negotiations
process." Id. at 345. The deputy clerk also had access to
confidential labor relations material such as tape recordings of
closed town council sessions. Ibid. Furthermore, the deputy
clerk assumed the clerk's "full authority" in the clerk's
absence. Ibid. However, because the deputy clerk had never been
privy to actual council discussions concerning labor relations,
the hearing officer concluded that the deputy clerk was "lacking
the element of knowledge or exposure required so as to find her
to be a confidential employee." Ibid. The hearing officer
declared that "[a] finding that an employee may have some
potential involvement in the labor relations process is not
sufficient to designate such an employee as confidential." Ibid.
Reversing PERC's holding validating the conclusions of the
hearing officer, the Appellate Division held that it had "no
doubt that the Deputy Clerk's functional responsibilities and
knowledge touching upon collective negotiations issues" made her
a confidential employee. Id. at 345-46. The court could not
ignore the temptations that might cause the deputy clerk to
transmit confidential data to her negotiating unit. Id. at 346.
The fact that the deputy had never exploited her position was
immaterial. Ibid. Rather, because "the access to highly
confidential labor relations information" creates intolerably
conflicting loyalties, the court held that the deputy clerk's
membership in a negotiating unit could not be permitted. Ibid.
We have consistently accorded "substantial deference to the
interpretation of the agency charged with enforcing an act."
Merin v. Maglaki,
126 N.J. 430, 436-37 (1992). An agency's
interpretation prevails unless "plainly unreasonable." Ibid.
(citing Metromedia, Inc. v. Director, Div. of Taxation,
97 N.J. 313, 327 (1984)); cf. Greenwood v. State Police Training Center,
127 N.J. 500, 513 (1992) (reiterating that agencies "have no
superior ability to resolve purely legal questions," and that
courts are not bound by agency's resolution of legal issue). Our
caselaw establishes, however, that if an agency's statutory
interpretation is contrary to the statutory language, or if the
agency's interpretation undermines the Legislature's intent, no
deference is required. See GE Solid State, Inc. v. Director,
Div. of Taxation,
132 N.J. 298, 306-07 (1993); In re Adoption of
N.J.A.C. 7:26B,
128 N.J. 442, 450 (1992). Clear legislative
intent cannot be trumped by countervailing administrative
practices. Airwork Serv. Div. v. Director, Div. of Taxation,
97 N.J. 290, 296 (1984), cert. denied,
471 U.S. 1127,
105 S. Ct. 2662,
86 L. Ed.2d 278 (1985). Furthermore, an administrative
agency may not interpret a statute to give it greater effect than
its statutory language permits. See Kingsley v. Hawthorne
Fabrics, Inc.,
41 N.J. 521, 528 (1964); see also Service Armament
Co. v. Hyland,
70 N.J. 550, 563 (1976) ("[A]n administrative
interpretation which attempts to add to a statute something which
is not there can furnish no sustenance to the enactment.").
PERC's interpretation of the Act is entitled to substantial
deference. See Merin, supra, 126 N.J. at 436-37. Thus, this
Court will yield to PERC unless its interpretations are plainly
unreasonable, ibid., contrary to the language of the Act, or
subversive of the Legislature's intent, see GE Solid State, Inc.,
supra, 132 N.J. at 306-07. However, to the extent that PERC has
exceeded the bounds of the Act and has engrafted standards not
found in the statutory language, a correction is warranted. See
Airwork Serv. Div., supra, 97 N.J. at 296; Service Armament Co.,
supra, 70 N.J. at 563; Kingsley, supra, 41 N.J. at 528.
Although we recognize, as did the Appellate Division, that a
public employer is entitled to a loyal management team, the
concerns facing a public employer differ somewhat from those
facing a private employer. A private employer's interest focuses
primarily on the maximization of profit; the employees' interests
emphasize the enhancement of their compensation and benefits. To
the extent that private employers can reduce wages, the profits
available to business owners increase. A private sector employer
must have the undivided loyalty of a relatively large group of
employees, including supervisors. The size of that management
group becomes particularly important if private non-supervisory
workers exercise their legal right to strike; an employer should
have a workforce sufficient to sustain at least a minimal level
of operation. For those reasons, federal private sector labor
law specifically excludes supervisors from its definition of
"employee" and does not permit supervisors to unionize. See
29 U.S.C.A.
§152(3), (11).
A somewhat different labor relations dynamic prevails in the
public sector. Although public sector labor negotiations over
compensation and other terms and conditions of employment
frequently are protracted and adversarial, the elimination of the
right to strike exerts a restraining influence on the negotiation
process. Moreover, in comparison to the private sector, our
impression is that public employers and public employees
generally share a stronger common interest in the mission of the
organization. In affording supervisors organizational rights
under the Act, we infer that the Legislature appropriately took
into account the differences between private and public sector
labor negotiations.
The Legislature also recognized several other distinctions
between private and public sector labor law. As noted, public
employees may not strike, see Donevero, supra, 75 N.J. Super. at
222. Furthermore, the scope of negotiations in the public sector
is narrower than that in the private sector. See N.J.S.A.
34:13A-5.3 (referring to public employees' negotiating rights
concerning "rules governing working conditions . . . grievances,
disciplinary disputes, and other terms and conditions of
employment."). In Township of West Windsor v. PERC, this Court
held that
employee proposals seeking to influence the
actions of a public employer when it acts in
a governmental capacity -- rather than as an
employer -- are most appropriately presented
through the political process and not through
the labor relations process.
[T]he preferred access for public employees
resulting from the statutory requirement of
mandatory good faith negotiation and
compulsory grievance presentation, with its
consequent enhancement of the effectiveness
of their voice in governmental decision-making, is inappropriate with respect to
matters which do not affect the terms and
conditions of public employment. Only when
government acts in the capacity of an
employer, as opposed to discharging
governmental policy-making functions, is such
preferred access necessary to protect the
legitimate interests of public employees in
the determination of the terms and conditions
of their employment.
Similarly, in Ridgefield Park Education Association v. Ridgefield Park Board of Education, we held that "there are but two categories of subjects in public employment negotiation - mandatorily negotiable terms and conditions of employment and non-negotiable matters of governmental policy." 78 N.J. 144, 162 (1978). Therefore, public employees are afforded negotiations rights concerning only a limited range of subjects that intimately and directly affect their work and welfare, a factor that may tend further to differentiate private sector labor negotiations from those in the public sector.
The Appellate Division notes that, under Chapter 303, supervisors, defined as those "having the power to hire, discharge, discipline, or effectively recommend the same," were permitted to organize. 289 N.J. Super. at 29. The court
concluded that "[s]uch supervisors, we think, refer to those
persons commonly understood as on-line supervisors." Ibid. The
court acknowledged that the Legislature had rejected Governor
Cahill's broad definition of "supervisors" together with his
recommendation that supervisors be excluded from membership in
negotiating units. Id. at 29-31. The court found it
significant, however, that the Legislature, when it enacted
Chapter 123, did not alter its definition of supervisors beyond
that found in Chapter 303. Id. at 31. Based on that analysis,
the Appellate Division apparently found that only "on-line
supervisors," a term that presumably includes only first-level
supervisors, may join a negotiating unit. Ibid. We find that
conclusion to be inconsistent with the statutory scheme. Higher-level supervisors who are not elected officials or members or
boards or commissions and who do not fall within the "managerial
executive" or "confidential employee" exclusions may organize; in
the event that "an actual or potential substantial conflict of
interest" exists between different levels of supervisors,
separate supervisory units should be formed. See Wilton, supra,
57 N.J. at 425.
The statutory definition of "managerial executives" reads:
"Managerial executives" of a public employer
means persons who formulate management
policies and practices, and persons who are
charged with the responsibility of directing
the effectuation of such management policies
and practices, except that in any school
district the term shall include only the
superintendent or other chief administrator,
and the assistant superintendent of the
district.
That definition differs from that proposed by Governor Cahill in two respects. First, the Legislature defined "managerial executives" in terms of school employees as being "the superintendent or other chief administrator, and the assistant superintendent of the district." Ibid. Second, although the Governor had recommended exempting persons effectuating and making operative such management policies and practices, Governor's Veto Statement, supra, at 6, the Legislature's definition excludes persons directing the effectuation of such management policies and practices, N.J.S.A. 34:13A-3(f). We disagree with the Appellate Division's observation that "[d]irecting the effectuation of a policy or practice is, to us, the same as making the policy or practice operative." 289 N.J. Super. at 34. The statutory definition is clearly narrower than that proposed by Governor Cahill in his veto message; "directing the effectuation" connotes a higher level of authority than does "effectuating and making operative."
PERC narrowed the scope of the managerial executive exception beyond the statutory definition by requiring that managerial executives "possess and exercise a level of authority and independent judgment sufficient to affect broadly the organization's purposes or its means of effectuation of these purposes." Borough of Montvale, supra. At oral argument before this Court, the Senior Deputy Attorney General appearing for the State noted that the State had desired to challenge and seek
clarification of the Borough of Montvale standard since its
pronouncement in 1980. However, because no appropriate case had
presented itself, the issue had evaded review. Therefore,
although the passage of more than a decade between the Borough of
Montvale decision and the State's participation in this
proceeding would suggest a tacit acceptance of Borough of
Montvale by the State, that is evidently not the case. Moreover,
we note the acknowledgement by PERC's counsel at oral argument
that managerial executives need not necessarily possess and
exercise authority beyond the departmental level to qualify for
the statutory exception.
We view the requirement that managerial executives "possess
and exercise a level of authority and independent judgment
sufficient to affect broadly the organization's purposes or its
means of effectuation of these purposes" as unduly restrictive,
particularly as applied to large organizations such as the
Authority in which managers may have significant power,
discretion and influence within their own departments and yet not
"affect broadly the organization's purposes or its means of
effectuation of these purposes." The requirement that a
managerial employee be one who broadly affects the agency's
mission should not be a condition of exclusion, but merely an
example of a manager who should be excluded.
Excised of the requirement that an employee must exercise
organization-wide power in order to fit within the managerial
executive exception, the pertinent test adopted by Borough of
Montvale reads:
A person formulates policies when he develops
a particular set of objectives designed to
further the mission of [a segment of] the
governmental u