(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 February 13, 2001 -- Decided July 12, 2001
ZAZZALI, J., writing for a majority of the Court.
In this appeal, the Court addresses the appropriateness of the arbitrator's award and the continued vitality
of the “no work, no pay rule - a common-law rule established in 1859 that prohibits payment to individuals for
services they did not perform.
The collective negotiations agreement (Agreement or contract) between the New Jersey Department of
Corrections (DOC) and the International Federation of Professional and Technical Engineers, Local 195 (Local 195)
provides in pertinent part that employees covered under the contract can receive overtime compensation at a rate of
time and one-half for overtime hours accrued in excess of the normal hours of the established work week. In
addition, the Agreement provided that overtime shall be scheduled and distributed by seniority and on a rotational
basis by occupational classifications within each work unit.
On three occasions in 1997, the DOC assigned overtime to Ernie Guinta, a supervisor at a State
correctional facility. Although Guinta's name was on the overtime-rotation list, he should not have been included
because he was not a member of the Local 195 bargaining unit. Because Guinta worked on those three occasions,
the first member of the bargaining unit on the rotation list was not called for overtime. Local 195 filed a grievance
for each incident, alleging that the DOC breached the Agreement's overtime provisions.
The parties submitted the grievances to arbitration. They stipulated that the sole issue to be determined
was the appropriate contractual remedy under the Agreement for having a supervisor on the Local 195 rotation list
and for calling him to work overtime on three separate days.
The Agreement establishes the boundaries for an arbitrator's determination. It provides that an arbitrator
may impose an appropriate back pay remedy when he finds a violation of the contract, provided that remedy is
permitted by law and is consistent with the terms of the Agreement. The arbitrator found that the appropriate
remedy for the contractual violation was to award back pay to the Local 195 members at the top of the overtime
rotation list on the three dates in question. The arbitrator rejected the State's contention that the no work, no pay
rule precluded an award of back pay to remedy the violation. He concluded that Communication Workers, Local
1087 v. Monmouth County Board of Social Services did not compel that result because the Court in that case
reached its conclusion based on the absence of contractual authority for an award of back pay, and explicitly refused
to address whether the rule precluded such an award. The arbitrator reasoned that he had authority to make a back
pay award against the State.
The Law Division vacated the arbitrator's award, concluding that Communication Workers, although not
explicitly resting its holding on the no work, no pay rule, demonstrated that the rule still exists and, therefore,
prohibits a back pay award. On appeal, the Appellate Division affirmed that decision, finding that although the
back pay award was authorized by the Agreement, the no work, no pay rule precluded such an award.
The Supreme Court granted certification.
HELD: The “no work, no pay” rule is an anachronism in modern-day labor jurisprudence and, therefore, is
abolished.
1. The role of courts in reviewing arbitration awards is extremely limited and the award is not to be set aside
lightly. Generally, courts will accept an arbitrator's interpretation so long as the interpretation is reasonably
debatable. A court may vacate an arbitrator's award in cases of corruption, fraud, evident partiality, or where the
arbitrator exceeded or imperfectly executed his or her power. In addition, an award can be vacated if it is contrary
to existing law or public policy. (Pp. 7-10)
2. In Communication Workers, the Court used a three-tiered analysis. Based on the similarity of language in the
arbitration clause here and in the clause in Communication Workers, and based on the fact that the governing
principles are the same, reliance on that three-tiered analysis is appropriate here. Thus, the Court must consider
whether: 1) the parties intended to give the arbitrator the authority to award back pay for a violation of the
Agreement's overtime provisions; 2) whether such an award is permitted by law; and 3) whether, because this case
involves public employees, public policy precludes such an award. (Pp. 10-12)
3. The arbitrator found explicit authority for back pay in the Agreement as a remedy for a contractual violation.
The Court must defer to that interpretation because it is reasonably debatable. It is noted that, on the merits, the
Court agrees with the arbitrator's conclusion. Case-law precedent, federal labor jurisprudence, and the writings of
learned commentators make clear that the Agreement authorizes an award of back pay as a remedy. Moreover,
although the Court need not reach the question, the commentators suggest that the award may have been permissible
even without a contractual authorization. (Pp. 12-21)
4. The phrase “permitted by law” means that the award cannot be prohibited by law. It does not mean, as the
dissent has interpreted, that the award must be explicitly authorized by statute or regulation. At the very least, the
arbitrator's contractual interpretation of the phrase is reasonably debatable and is entitled to deference. There are
existing statutes that, at the very least, give implicit authority to the DOC to agree to an award of back pay as a
remedy for a violation of an overtime provision. More importantly, there is no need for specific statutory
authorization for every possible item to which the public employer and the bargaining unit may agree. (Pp. 21-28)
5. There are two policy justifications for the no work, no pay rule: 1) to protect the public entity from paying for
services it did not receive, so that it would not have to pay twice for the same services; and 2) to prevent a windfall
to the officer or employee who works elsewhere during a period of suspension, earning double compensation. The
New Jersey Legislature has recognized the unfairness inherent in the no work, no pay rule; specifically, that a
person could be illegally dismissed, win reinstatement, and not recover back pay. Accordingly, the Legislature
adopted several amendments chipping away at the no work, no pay rule. (Pp. 29-39)
6. Communication Workers merely recognized the existence of the no work, no pay rule _ it did not decide whether
the public policy underlying the doctrine precluded recovery of back pay. The contract in that case did not provide
for such recovery. (Pp. 39-40)
7. The Court has a responsibility to reevaluate common-law rules to determine if they still are in harmony with
society's needs. With that responsibility in mind, the Court concludes that the no work, no pay rule is an outdated
and outmoded anachronism in modern-day labor jurisprudence. The rule is largely irrelevant and is unworkable in
application. Legislative intent indicates a strong disapproval of the rule. Moreover, awards of back pay are
essential to stability in labor relations and the usefulness of arbitration provisions depends on effective remedies,
such as back pay, when the contract is violated. (Pp. 40-50)
Judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law Division
for reinstatement of the arbitration award.
JUSTICE VERNIERO, concurring in part and dissenting in part, joins in the Court's elimination of
the no work, no pay rule from our common law. However, Justice Verniero agrees with Justice LaVecchia's
analysis in respect of the meaning of “permitted by law” as the phrase is used in the Agreement. Under our
tripartite system, executive agencies may act only by virtue of an expressed or implied grant of authority from a
legislative enactment or constitutional provision, or a judicial directive interpreting either of those sources. Unlike
the majority, Justice Verniero does not find an expressed or implied grant of authority to permit a back-pay award in
this setting.
JUSTICE LAVECCHIA, dissenting, in which JUSTICE COLEMAN joins, disagrees with the
majority's conclusion that the no work, no pay rule lacks continuing vitality. In her view, the rule rests on solid
analytical foundation, serves important governmental interests, and should continue to be respected. The rule
provides an important protection for public funds that should not be cast aside lightly. In addition, Justice
LaVecchia does not believe that it was necessary for the majority to reach its decision to abrogate the rule. In its
zest to do so, the majority mischaracterizes Communication Workers. The issues in this case, when properly
analyzed in light of Communication Workers, can lead to only one conclusion: the arbitrator's award of back pay
exceeded his authority under the Agreement.
CHIEF JUSTICE PORITZ and JUSTICES STEIN, and LONG join in JUSTICE ZAZZALI's
opinion. JUSTICE VERNIERO has filed a separate opinion concurring in part and dissenting in part.
JUSTICE LaVECCHIA has filed a separate dissenting opinion in which JUSTICE COLEMAN joins.
SUPREME COURT OF NEW JERSEY
A-
20 September Term 2000
STATE OF NEW JERSEY,
DEPARTMENT OF CORRECTIONS,
Plaintiff-Respondent,
v.
INTERNATIONAL FEDERATION OF
PROFESSIONAL AND TECHNICAL
ENGINEERS, LOCAL 195,
Defendant-Appellant.
Argued February 13, 2001 -- Decided July 12, 2001
On certification to the Superior Court,
Appellate Division.
Arnold Shep Cohen argued the cause for
appellant (Oxfeld Cohen, attorneys).
George N. Cohen, Deputy Attorney General,
argued the cause for respondent (John J.
Farmer, Jr., Attorney General of New Jersey,
attorney; Mary C. Jacobson, Former Assistant
Attorney General, of counsel).
Judiann Chartier argued the cause for amicus
curiae, Communications Workers of America,
AFL-CIO (Weissman & Mintz, attorneys).
The opinion of the Court was delivered by
ZAZZALI, J.
In this matter an arbitrator awarded back pay to public-
sector employees who were improperly denied overtime in violation
of a collective negotiations agreement. The Appellate Division
held that although the back pay award was explicitly authorized
by the agreement, the award nevertheless violated the “no work,
no pay” rule, a common law rule established in 1859, which
prohibits payment to individuals for services they did not
perform.
This appeal poses the “provocative question[] . . . whether
the 'no work, no pay' rule retains its vitality.” Heath v. Bd.
of Managers,
92 N.J. 1, 6-7 (1983). We conclude that the “no
work, no pay” rule is an anachronism in modern-day labor
jurisprudence. We therefore abrogate that rule and reinstate the
arbitration award in this case.
The collective negotiations agreement (Agreement) between the New Jersey Department of Corrections (DOC) and the International Federation Of Professional and Technical Engineers, Local 195 (Local 195 or Union), provides in pertinent part:
A. 1. Employees covered by this Contract will
be compensated at the rate of time and one-
half for overtime hours accrued in excess of
the normal hours of the established work
week. These compensation credits shall be
taken in compensatory time or in cash.
. . . .
B. 1. Overtime shall be scheduled and
distributed by seniority on a rotational
basis by occupational classifications within
each functional work unit without
discrimination provided it does not impair
operations. Employees within their
functional work unit who are qualified and
capable of performing the work without
additional training shall be called upon to
perform such overtime work. To the extent
that it is practical and reasonable to
foresee, the State shall give the employee
as much advance notice as possible relative
to the scheduling of overtime work.
2. A list showing the rotational order and
the overtime call status of each employee
shall be maintained in the work unit. Such
records shall be made available for
inspection on request to Union Officers,
Stewards and employees concerned.
On three occasions in 1997, the DOC assigned overtime to
Ernie Guinta, a supervisor at a State correctional facility.
Although Guinta's name appeared on the overtime rotation list, he
should not have been included because he was not a member of the
Local 195 bargaining unit. Because Guinta worked on those three
occasions, the first member of the bargaining unit on the
rotational list was not called for overtime. Local 195 filed a
grievance for each incident, alleging that the DOC breached the
Agreement's overtime provisions.
The parties submitted the grievances to arbitration. They
stipulated that the sole issue was: “What is the contractual
remedy in Article XII, Sections A, B, and C, [for] having a
supervisor on the IFPTE, Local 195 overtime rotational list and .
. . call[ing him] from that list on March 28, 1997, May 4, 1997
and May 25, 1997?” Article VII, Section F, Subsection 5 of the
Agreement establishes the boundaries for an arbitrator's
determination. It provides in pertinent part:
c. The arbitrator shall not have the power to
add to, subtract from, or modify the
provisions of this Contract or laws of the
State, or any policy of the State or
subdivision thereof or to determine any
dispute involving the exercise of a
management function which is within the
authority of the State as set forth in
Article II, Management Rights, and shall
confine his [or her] decision solely to the
interpretation and application of this
Contract. . . . The arbitrator may prescribe
an appropriate back pay remedy when he finds
a violation of this Contract, provided such
remedy is permitted by law and is consistent
with the terms of this Contract. If the
arbitrator renders a back pay award, then in
accordance with State policy, appropriate
benefits will be restored to the employee for
the period of time covered by the back pay
award.
[Emphasis added.]
The arbitrator found that the appropriate remedy for the
contractual violation was to award back pay to the Local 195
members at the top of the overtime rotational list on the three
dates in question. The arbitrator concluded:
Absent any limitations on my authority,
I would direct the State to compensate the
senior person who was on the occupational
overtime list on the three dates at the
overtime rate for the number of hours worked
by Mr. Guinta. That would be the only way to
make these employees whole for the
contractual violation . . . . Here, because
the overtime was worked by a person who was
not in the bargaining unit, that work was
lost by the bargaining unit. The three
employees who should have been called cannot
get back what they should have gotten by
working other overtime because that overtime
would have to come at the expense of other
employees who were entitled to work it and
therefore this would violate their
contractual right to the overtime. Only by
directing that the three be compensated for
the overtime worked by Mr. Guinta can the
contractual breach be remedied.
The arbitrator rejected the State's contention that the no work,
no pay rule precluded an award of back pay to remedy the
violation. He concluded that Communications Workers, Local 1087
v. Monmouth County Board of Social Services,
96 N.J. 442 (1984),
did not compel that result because the Court in that case reached
its conclusion based on the absence of contractual authority for
an award of back pay, and explicitly refused to address whether
the rule precluded such an award. The arbitrator reasoned that
he had the authority to make a back pay award against the State:
In my view, given the overall purpose of the
New Jersey Employer-Employee Relations Act in
the prevention and prompt settlement of
disputes, given the general negotiability of
terms and conditions of employment including
overtime, given the absence of statutory or
regulatory constraints on the State regarding
payment for overtime, given the fact that
these parties have specifically agreed in
their negotiated agreement that an arbitrator
can award back pay for a contractual
violation, and given the fact that such an
award is the standard remedy in such cases,
there is no public policy prohibition against
an award of back pay in this case.
The Law Division vacated the arbitrator's award. The court
concluded that Communications Workers, although not explicitly
resting its holding on the no work, no pay rule, demonstrated
that the rule still exists, and that the rule therefore
prohibited the arbitrator's back pay award. The Appellate
Division affirmed the judgment of the Law Division, reiterating
that the no work, no pay rule controlled the case. The court
noted that “[a]ccording to the agreement, a back pay remedy may
only be awarded 'provided such remedy is permitted by law,'” and
that “[t]he arbitrator's authority was expressly circumscribed by
the agreement by denying to the arbitrator the 'power to add to,
subtract from, or modify the . . . laws of the State, or any
policy of the State.'” The panel stated that “[i]n
Communications Workers, the court made it clear, even though the
agreement did not provide for the remedy of back pay under the
facts there presented, 'that the public policy of not paying
individuals for services they did not perform (the 'no work-no
pay' rule) is to be respected.'” (quoting Communications
Workers, supra, 96 N.J. at 455). We granted certification,
165 N.J. 604 (2000).
“Arbitration is 'a substitution, by consent of the parties, of another tribunal for the tribunal provided by the ordinary processes of law.'” Barcon Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 187 (1981) (quoting E. Eng'g Co. v. Ocean City, 11 N.J. Misc. 508, 510-11 (Sup. Ct. 1933)). The object of arbitration is “the final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between the parties.” Ibid. (quoting E. Eng'g Co., supra, 11 N.J. Misc. at 511). Because this Court views favorably the settlement of labor-management disputes through arbitration, County Coll. of Morris Staff Ass'n v. County Coll. of Morris, 100 N.J. 383, 390 (1985), the role of the courts in reviewing arbitration awards is extremely limited and an arbitrator's award is not to be set aside lightly. Kearny PBA Local # 21 v. Town of Kearny, 81 N.J. 208, 221 (1979). Generally, courts will accept an arbitrator's interpretation so long as the interpretation is “reasonably debatable.” Old Bridge Bd. of Educ. v. Old Bridge Educ. Ass'n. (In re Old Bridge Bd. of Educ.), 98 N.J. 523, 527 (1985) (quoting Kearny, supra, 81 N.J. at 224). Federal labor jurisprudence, which we look to for guidance, Galloway Township Bd. of Educ. v. Galloway Township Ass'n of Educ. Secretaries, 78 N.J. 1, 10 (1978), explains the justification for that substantial deference:
Under well-established standards for the review of labor arbitration awards, a federal court may not overrule an arbitrator's decision simply because the court believes its own interpretation of the contract would be the better one. When the parties include an arbitration clause in their collective- bargaining agreement, they choose to have disputes concerning constructions of the contract resolved by an arbitrator. Unless the arbitral decision does not “dra[w] its essence from the collective bargaining agreement,” a court is bound to enforce the award and is not entitled to review the merits of the contract dispute. This remains so even when the basis for the arbitrator's decision may be ambiguous.
[W.R. Grace & Co. v. Local Union 759, Int'l Union of the United Rubber, Cork, Linoleum and Plastic Workers, 461 U.S. 757, 764, 103 S. Ct. 2177, 2182, 76 L. Ed.2d 298, 306 (1983) (quoting United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S. Ct. 1358, 1361, 4 L. Ed.2d 1424, 1428 (1960)) (citations omitted).]
“Regardless of what [a court's] view might be of the correctness of [the arbitrator's] contractual interpretation, the Company and the Union bargained for that interpretation. A . . . court may not second-guess it.” Id. at 765, 103 S. Ct. at 2183, 76 L. Ed. 2d at 306. Thus, if the arbitrator's contractual interpretation is “reasonably debatable,” we must defer to that interpretation.
A court, however, may vacate an arbitration award in cases of corruption, fraud, “evident partiality,” and “[w]here the arbitrators exceeded or so imperfectly executed their powers that a mutual, final and definite award upon the subject matter submitted was not made.” N.J.S.A. 2A:24-8. A court also may vacate an award if it is contrary to existing law or public policy. State, Office of Employee Relations v. Communications Workers, 154 N.J. 98, 112 (1998); South Plainfield Bd. of Educ. v. South Plainfield Educ. Ass'n ex rel. English, 320 N.J. Super. 281, 288 (App. Div.), certif. denied, 161 N.J. 332 (1999).
New Jersey courts have emphasized the importance of arbitration to public sector employees. See, e.g., Neptune City Bd. of Educ. v. Neptune City Educ. Ass'n, 153 N.J. Super. 406, 409 (App. Div. 1977). In Neptune, the court noted that arbitration
is clearly a matter of special imperative in labor disputes involving public employees from whom the right to strike has been withheld and for whom, accordingly, negotiation and arbitration constitute their primary recourse for the settlement of their disputes with management.
[Neptune, supra, 135 N.J. Super. at 409.]
In Communications Workers, the Court applied a three-tiered analysis. The first question was whether the contract gave the arbitrator the authority to award the back-pay differential for failure to promote that the union sought in that case, in light of the principle that the arbitrator's authority to provide a particular remedy stems solely from the contract and the arbitrator cannot exceed that authority. Communications Workers, supra, 96 N.J. at 448. The second question, according to the Court, was whether the arbitrator's action conformed with applicable law. Id. at 450. The Court addressed that question in part because the contract explicitly provided that the arbitrator's remedy must be “permitted by law.” Id. at 451. Finally, in the case of a public sector dispute, the Court noted that the arbitrator's action must conform with principles of public policy. Id. at 450.
The arbitration clause in this case is substantively identical to the clause in Communications Workers. The clause provides, like the clause in Communications Workers, that “[t]he arbitrator shall not have the power to add to, subtract from, or modify the provisions of this Contract or laws of the State, or any policy of the State or sub-division thereof.” The clause also provides, as in Communications Workers, that “[t]he arbitrator may prescribe an appropriate back pay remedy when he [or she] finds a violation of this Contract, provided such remedy is permitted by law and is consistent with the terms of this Contract.” Based on the similarities of that language and the fact that the governing principles are the same, the three-tiered analysis the Court used in Communications Workers is appropriate in this case. We must consider, then,(1) whether the parties intended to give the arbitrator the authority to award back pay for a violation of the agreement's overtime provisions; (2) whether such an award is “permitted by law;” and (3) whether, because this case involves public employees, public policy precludes such an award.
In his decision, the arbitrator noted that the contract explicitly provides that the “arbitrator may prescribe an appropriate back pay remedy when he [or she] finds a violation of this contract.” He also noted that the DOC “essentially conceded” that it violated the contract. Based on that explicit authorization, the arbitrator concluded that he had the contractual authority to award back pay in this matter. We must defer to that interpretation because it is, without a doubt, “reasonably debatable.” Even if we could construct an alternate interpretation of the contractual language, we are without authority to do so. The parties bargained for the arbitrator's contractual interpretation, and we cannot upset that legitimate interpretation based on our own interpretation. Although we defer to the arbitrator's conclusion, we also note that, on the merits, we agree with his conclusion and find that the contract authorized an award of back pay as a remedy for a contract violation.
The dissent contends that Communications Workers demonstrates that the arbitrator incorrectly interpreted the contract. However, as we have discussed, we must defer to the arbitrator's contractual interpretation, but even in the absence of that deference, we would agree with that interpretation. Moreover, in Communications Workers, the contract did not allow for an award of back pay; as we have discussed, the contract here has no such infirmity.
In Communications Workers, the employees sought a back pay differential for the period between the date they were improperly removed from a promotional list and the date they actually received the promotions. The agreement provided that “[a]ny employee who is promoted . . . to another title with a higher salary range shall have his [or her] . . . salary adjusted so that it provides an increase in pay of one increment of the present salary range plus the amount (if necessary) to adjust and equalize the employee's salary to the proper step of the new salary range.” Id. at 451-52. The agreement also provided that “[t]he arbitrator shall not have the power to add to, subtract from, or modify the provisions of this Agreement,” id. at 449, and
that the arbitrator may “prescribe an appropriate back pay remedy” only when there is a violation of the agreement, and “provided such remedy is permitted by law and is consistent with the terms of [the] Agreement, except that [he or she] may not make an award which exceeds the Welfare Board's authority.”
[Id. at 451.]
The Court concluded that “[t]he terms of the negotiated agreement [did] not expressly provide for back pay for failure to promote.” Id. at 451. Because the agreement stated that “[a]ny employee who is promoted” was entitled to a salary increase, the agreement there “provide[d] by its terms for an increase in salary only from the date that an employee is actually promoted.” Id. at 451-52 (emphasis added). Thus, the plain language of the contract precluded an award of a back-pay differential for the period prior to the date of actual promotion. Because the award was contrary to that language, and because “there was no evidence that when the contract was made, the parties intended that back pay should be awarded for . . . failure to promote,” the Court concluded that “the arbitrator had no authority under the negotiated agreement to award back pay under th[o]se circumstances.” Id. at 452. The award to that effect was therefore an improper expansion of the agreement, contrary to the provision that denied the arbitrator that authority. Although there is some equivocal language in Communications Workers, a fair reading of that opinion reveals that the interdiction against back pay flowed not from the absence of a specific statement of remedy available for each and every breach, but from a contract provision that specifically prohibited back pay in the circumstances presented.
As we have noted, the arbitration clause in this case is substantively identical to the clause in Communications Workers. With regard to overtime, however, section A.1. of Article XII, entitled “OVERTIME,” provides that “[e]mployees covered by this Contract will be compensated at the rate of time and one-half for overtime hours accrued in excess of the normal hours of the established work week. These compensation credits shall be taken in compensatory time or in cash.” The contract thus provides that employees are entitled to “credits” for overtime hours “accrued.” Unlike the agreement in Communications Workers, the agreement in this case contemplates an award of back pay as a remedy for a violation of the contractual provision regarding overtime. In Communications Workers, the explicit language of the agreement provided for payment of increased salary after a promotion starting from the date of actual promotion. An award of back pay for the period before the actual promotion was not contemplated by the parties. However, in this case, the agreement provides that employees will be compensated for “overtime hours accrued.” “Accrue” means “to increase; to augment; to come to by way of increase; to be added as an increase . . . . Acquired; . . . received . . . .” Black's Law Dictionary 20 (6th ed. 1990); Webster's Third New International Dictionary 13 (1971) (defining “accrue” to mean “to come by way of increase or addition . . . to be periodically accumulated in the process of time . . . . Gather, collect, accumulate.”). “Accrue” does not necessarily mean that the time must be “worked.” Instead, “accrue” only speaks to the fact that the hours are collected, not to the manner in which the employee becomes entitled to those hours. That understanding is further supported by the fact that the agreement refers to the “overtime hours accrued” as “compensation credits.” Simply put, the agreement provides that “[e]mployees . . . will be compensated at the rate of time and one-half for overtime hours accrued in excess of the normal hours of the established work week;” it does not provide that “[e]mployees . . . will be compensated at the rate of time and one-half for overtime hours worked in excess of the normal hours of the established work week.” Had the parties intended to use the term “worked,” they certainly could have, as they did three subsections below when referring to “[h]ours worked on a holiday.” That choice of language demonstrates that the parties did not intend to preclude back pay awards for overtime violations by imposing a prerequisite of actual work under the overtime provisions. As a result, the arbitrator's back pay award was entirely “consistent with the terms of th[e] Contract” in this case, as the contract requires.
The dissent states that the contracting parties must “tie the provision of back pay as a remedy to a particular violation.” Ante at __ (slip op. at 8-9). The dissent's approach, however, does violence to the deference we must show to the arbitrator's contractual interpretation. If that interpretation is “reasonably debatable,” as it is, we cannot brush it aside and substitute our own interpretation as the dissent would. The award is entitled to deference.
In any event, the dissent's proposed interpretation of the agreement is flawed. The agreement here specifically provides that the arbitrator “may prescribe an appropriate back pay remedy” for a contract violation. Presumably, then, the dissent would require the parties to enumerate, in the agreement, all of the possible contractual violations that may occur and whether those violations can be compensated by an award of back pay. The dissent points to no precedent that supports that requirement. Certainly, there is no legal prohibition on contracting parties agreeing that a back pay remedy is available for any and all contractual violations, and, conversely, no requirement that parties specify every possible contract violation and state that each of them may entitle an aggrieved party to an award of back pay. The dissent's requirement that the power to award back pay be conditioned on an itemization of the contract violations subject to back pay is simply unrealistic. It would be virtually impossible to list every possible violation that is arguably subject to a back pay remedy. Yet that is what the dissent suggests. It is said that, because the contract does not provide for back pay as a remedy for lost overtime opportunity, the arbitrator has no power to award such back pay since there is “nothing to indicate that that is what the parties intended.” Ante at __ (slip op. at 8). That is precisely what the parties intended when they agreed that the arbitrator “may prescribe an appropriate back pay remedy when he [or she] finds a violation of this Contract.” That is more than sufficient.
As noted, federal labor jurisprudence provides valuable guidance for our own labor jurisprudence. Galloway, supra, 78 N.J. at 10. With that in mind, we note that the United States Supreme Court has addressed the need for a flexible approach to an arbitrator's authority with regard to remedies:
When an arbitrator is commissioned to interpret and apply the collective bargaining agreement, he is to bring his informed judgment to bear in order to reach a fair solution of a problem. This is especially true when it comes to formulating remedies. There the need is for flexibility in meeting a wide variety of situations. The draftsmen may never have thought of what specific remedy should be awarded to meet a particular contingency.
[Steelworkers, supra, 363 U.S. at 597, 80 S. Ct. at 1361, 4 L. Ed. 2d at 1428 (emphasis added).]
Communications Workers, supra, 96 N.J. at 449, cites one of the classic texts on arbitration, Elkouri & Elkouri, How Arbitration Works (Marlin M. Volz & Edward P. Goggin eds., 5th ed. 1985), also relevant here. Under the section entitled “Principles of Damages,” Elkouri also states:
In empowering the arbitrator to resolve their dispute, the parties generally are considered to have given authority to grant adequate monetary relief where the arbitrator finds that the grievance has merit. Arbitrators are considered to have the authority to award monetary damages for contract violations even though the contract does not specifically provide such remedy, since the parties have empowered the arbitrator to resolve their dispute. In this regard, Arbitrator [and former United States Secretary of Labor] W. Willard Wirtz emphasized that arbitrators have authority to award money damages for contract violations even though the contract does not specifically provide such remedy. To restrict arbitrators to remedies specifically set forth in the contract would negate arbitration as a method of dispute settlement or would result in cluttering contracts with numerous liquidated damages provisions that would invite more trouble than they could prevent.
[Id. at 579-80 (footnotes omitted) (emphasis
added).]
Another recognized treatise, Fairweather's Practice and
Procedure in Labor Arbitration (Ray J. Schoonhoven ed., 4th ed.
1999), opens the discussion on “Back-Pay Awards” with the
observation that “[e]ven in the absence of specific contractual
authority, arbitrators have the power to decide whether back pay
should be awarded to remedy the wrong.” Id. at 458. Former
Solicitor General Archibald Cox, when serving as a labor
arbitrator, succinctly set forth the philosophy undergirding back
pay:
When the employer causes the loss, however
innocently, it is more just that he should
bear the cost of making the employee whole
than that the employee should be forced to
suffer a denial of contract rights without a
remedy.
[Electric Storage Battery Co., AAA Case No.
19_22 (1960) (Cox, Arb.).]
The dissent correctly notes that the arbitrator's authority
to resolve a dispute depends on whether the parties have
delegated that power to him or her. Ante at __ (slip op. at 4).
Clearly, in this case they have. The contract says that the
arbitrator “may prescribe an appropriate back pay remedy when he
[or she] finds a violation of this Contract.” In sum, our
precedent, federal labor jurisprudence, and the works of learned
commentators make clear that the agreement in this case
authorizes an award of back pay in this appeal. Moreover,
although we need not reach the question, the commentators suggest
that the award may have been permissible even without that
contractual authorization.
Because the arbitrator's interpretation was reasonably
debatable, we therefore must proceed to the second tier of the
Communications Workers analysis, and determine whether the
arbitrator reasonably concluded that the back pay award in this
case is “permitted by law.” The dissent concludes that an award
of back pay for a specific contract violation is only “permitted
by law” if there is a statute or regulation that specifically
provides for a back pay award in that particular situation.
Because there is no statute or regulation specifically
authorizing an arbitrator to award back pay as a remedy for a
contractual violation of an overtime provision, the dissent
concludes that such an award is not “permitted by law.” The
dissent errs for two reasons.
First, the phrase “permitted by law” means that the award
cannot be prohibited by law. If there was a statute or
regulation that prohibited a back pay award against the
Department of Corrections for the DOC's violation of an overtime
provision, the parties did not intend the arbitrator to have the
authority to make such an award because it is not “permitted by
law.” That phrase does not mean, as the dissent would interpret
it, that the award must be explicitly authorized by statute or
regulation. That interpretation is not faithful to the parties'
intent, which is best evidenced by the language of the contract.
Had the parties intended that result to obtain, they would have
used the phrase “authorized by law.” At the very least, that
contractual interpretation of the phrase “permitted by law,”
implicitly reached by the arbitrator, is “reasonably debatable”
and is therefore entitled to deference.
In Communications Workers, we addressed a substantively
identical “permitted by law” provision. That provision made
“clear that the terms of the negotiated agreement and the
dictates of the law set specific boundaries on the arbitrator's
substantive authority to make back-pay awards.” Communications
Workers, supra, 96 N.J. at 451. That description demonstrates
that the language “permitted by law” does not require, contrary
to the dissent's suggestion, explicit statutory or regulatory
authorization for particular remedies. Instead, that language
merely “set[s] specific boundaries” on the arbitrator's
contractually-based authority to make back pay awards.
Second, even if “permitted by law” required that the DOC
have statutory or regulatory authorization to agree to a back pay
award, there is such authorization. The Commissioner of the
Department of Corrections has the authority to “[a]ppoint and
remove officers and other personnel employed within the
department, subject to the provisions of [the Civil Service
Act].” N.J.S.A. 30:1B-6b. Public employees, such as those
employed by the Department of Corrections, have a constitutional
right to organize and bargain collectively. N.J. Const. art. I,
¶ 19; Council of New Jersey State College Locals v. State Bd. of
Higher Educ.,
91 N.J. 18, 25 (1982). Thus, the State
Constitution compels the conclusion that implicit in the
statutory grant of authority to the Commissioner of the DOC is
the authority to engage in collective negotiations and enter into
a collective negotiations agreement with DOC employees. Any
other conclusion would violate DOC employees' constitutional
right to bargain collectively. Subsumed within that statutory
grant is the authority to agree to contractual terms and
conditions as the DOC sees fit, including, if desired, back pay
as a remedy for a contract violation.
Further, N.J.S.A. 34:13A-5.3 explicitly provides that
“[p]ublic employers shall negotiate written policies setting
forth grievance and disciplinary review procedures.” Those
grievance procedures “shall” be included in the collective
agreement. Ibid. Indeed, those procedures “may provide for
binding arbitration as a means for resolving disputes.” Ibid.
The natural corollary of all of those rights is that there must
be remedies. Just as the legislation specifically authorized the
above explicit procedures, it follows that the Legislature must
have intended remedies for violations of those rights. Any other
interpretation is blatantly contrary to that intent. Stated
differently, implicit in that statutory requirement is that
public employers, such as the DOC, have the grant of authority to
negotiate those procedures. It is unrealistic and contrary to
the legislative intent to require more than that, i.e., that
there must be a specific statute or regulation authorizing every
circumstance in which the State may choose to agree to back pay
awards. Those statutes, at the very least, give implicit
authority to the DOC to agree to an award of back pay as a remedy
for a violation of an overtime provision.
In that regard, City of Camden v. Dicks,
135 N.J. Super. 559
(Law Div. 1975), is instructive. In that case, Camden entered
into a collective bargaining agreement with the negotiations
representative for a group of city employees. Id. at 560. One
of the terms of that agreement was that “[u]pon retirement from
service to the City of Camden . . . the employee shall receive
fifty percent (50%) of his accumulated sick time as additional
severance pay said payment not to exceed $12,000.00” Ibid.
After the defendant retired, the City paid her $4,614.52,
representing 50% of her accumulated sick time. Ibid. The City
later filed suit against the defendant to recover the money.
Ibid.
Before the trial court, Camden contended that its agreement
to that particular provision was outside of its authority, and
that it was therefore void. Ibid. The court first noted that
neither the Faulkner Act nor the Civil Service Act prohibited
Camden from agreeing to such a term. Id. at 561. Camden
nonetheless contended “that since there is no express authority
in either of the statutes to compensate retiring employees by way
of percentage of unused accumulated sick leave time, that to
contract as it did constituted an ultra vires act.” Id. at 561-
62. The court determined that the Faulkner Act and the Civil
Service Act provided sufficient statutory authority for a
municipality to pay for unused sick leave as additional
compensation upon retirement. Id. at 562. The court concluded:
The Legislature in no place has
withdrawn from a municipality the power to
pay for unused sick leave. In the absence of
express restriction against bargaining for
that term of an employment contract between
an employer and its employees, the authority
to provide for such payment resides in the
municipality under the broad powers and
duties delegated by the statutes. Were it
otherwise a municipality would not be able to
bargain collectively and to make agreements
concerning terms of employment with its
employees unless specific statutory authority
for each provision of the agreement existed.
Such a narrow and inflexible construction
would virtually destroy the bargaining powers
which public policy has installed in the
field of public employment and throttle the
ability of a municipality to meet the
changing needs of employer-employee
relations. Such a construction would
undermine the laudable purposes of New Jersey
Employer-Employee Relations Act.
[Id. at 562-63 (citations omitted).]
Those principles apply with equal force to this case. In
the absence of a statute or regulation precluding a public
employer from agreeing to a particular type of provision, the
employer's general grant of authority, by statute, provides the
authority to agree to those provisions. Any other “narrow and
inflexible construction would virtually destroy the bargaining
powers which public policy has installed in the field of public
employment and throttle the ability of a municipality to meet the
changing needs of employer-employee relations,” as well as
“undermine the laudable purposes of New Jersey Employer-Employee
Relations Act.” Ibid.
We cannot expect the legislative and executive branches to
specifically authorize every possible provision that the State
and a collective representative may consider agreeing to in a
collective negotiations agreement. The agreement in this case is
fifty-one single-spaced pages, containing dozens of provisions.
Requiring the Legislature or Executive to specifically authorize
each and every one of those provisions in order for an arbitrator
to give force to those provisions would pose a virtually
insurmountable burden on those branches of government. We know
of no prior decision, and the dissent points to none, in which we
have analyzed a collective negotiations agreement to determine
whether the provision sought to be enforced was specifically
authorized, in particular detail, by the Legislature or
Executive. Cf. In re Hunterdon County Bd. of Chosen Freeholders,
116 N.J. 322, 330 (1989) (noting, during preemption analysis,
that “[t]he issue, however, is not whether [three statutes]
authorize the County to adopt a safety-incentive program, but
whether they exempt the County from negotiating with the Union
over any of its provisions”). Therefore, we conclude that there
is no need for specific statutory authorization for every
possible item to which the public employer and the bargaining
unit may agree.
The above analysis of the contract language would normally
be for the arbitrator, not for the court. This appeal, and those
issues in particular, provides a hornbook example of the need for
courts to exercise restraint in reviewing arbitration awards. We
should beware of the “hazard of going further into the merits.”
Steelworkers, supra, 363 U.S. at 572, 80 S. Ct. at 1365, 4 L. Ed.
2d at 1434 (Brennan, J., concurring). We engage in this
discussion, which is a traditional arbitral function, only
because the dissent raises the issue and we should put it to
rest. It is one thing for the Court to make reasonably certain
that the State's legitimate intents are protected; it is
something else again to micro-manage a contract.
As a result of that conclusion, we now turn to the core
question in this appeal: the continuing validity of the no work,
no pay rule.
[W]hether . . . the appointment of an officer of a municipal corporation, with a fixed salary for a definite term of office, operates as a contract between the public and the individual, whereby they are bound to pay that salary during the term for which he is appointed, or so long as he continues de jure in office.
[Id. at 275.]
The court noted that in a private contract both parties must agree to be bound, neither can unilaterally alter the terms of the contract, and each is liable to the other for breach of the contract. Id. at 277. In the context of an appointment, however, the appointee to public office does not have to agree voluntarily to the appointment and either the appointee or the government entity can alter or terminate the appointment at any time without penalty. Id. at 277-78. Based on those distinctions, the court concluded that the plaintiff's appointment as a police officer did not give him an enforceable contract right that would allow him to collect the salary for the full term. Id. at 278. Because there was no contract, the plaintiff did not have a property interest in the office for purposes of the constitutional prohibition against impairing an obligation of contract. Ibid. In that context, the court referenced a New York decision that held:
[T]he prospective salary or other emoluments of a public officer are not the property of the officer nor the property of the state. They are not property at all. They are like daily wages unearned, and which may never be earned. The incumbent may die or resign, and his place be filled and the wages earned by another. The right to the compensation grows out of the rendition of the services, and not out of any contract between the government and the officer that the services shall be rendered by him.
[Id. at 279 (citing Conner v. Mayor of New
York,
5 N.Y. 285,
1 Selden 285 (1851)).]
The court also observed that principles of public policy
prohibited the action because the public entity would have been
forced to pay for the services twice, once to the appointed
officer and once to the officer who actually performed the
services. Id. at 280. Moreover, that recovery “would supply an
ingenious device by which both candidates, if they could not
enjoy the honor, might at least reap the emoluments of the
office.” Ibid. Thus, City of Hoboken stood for three
propositions: (1) a governmental entity's appointment of a
“public officer” does not create a contract-type right
enforceable by the officer against the entity; (2) because the
contract does not exist, the officer has no property interest in
the position; and (3) there is a policy against the State paying
for services it does not receive.
The Court of Errors and Appeals adopted City of Hoboken's
rationale in Stuhr v. Curran,
44 N.J.L. 181 (E. & A. 1882). In
that case, the plaintiff and the defendant were opposing
candidates for Freeholder in Hudson County. The board of
canvassers declared that the defendant won the election, and he
performed the duties of the office for six months. He was
subsequently ousted from office by the plaintiff, the rightfully-
elected candidate, in a quo warranto action. The plaintiff then
instituted an action against the defendant to recover the salary
received by the defendant while he was in possession of the
office. The court noted:
In this country [public offices] are not
held by grant or contract, nor has any
individual a property or vested right in them
beyond the constitutional tenure and
compensation. . . . The right to the fees or
compensation does not grow out of any
contract between the government and the
officer, but arises from the rendition of the
services.
[Id. at 188-89.]
Thus, the Court adopted City of Hoboken's conclusion that a
public officer had no property or contractual right to an
appointment, and therefore was entitled only to compensation for
work performed. That rule became well entrenched in the common
law of New Jersey throughout the thirty years following City of
Hoboken. See, e.g., Bennett v. City of Orange,
69 N.J.L. 176,
177-78 (Sup. Ct.), aff'd,
69 N.J.L. 675 (E. & A. 1903); Uffert v.
Vogt,
65 N.J.L. 377, 381 (Sup. Ct. 1900), aff'd,
65 N.J.L. 621
(E. & A. 1901); State ex rel. Kenny v. Hudspeth,
59 N.J.L. 320,
322 (Sup. Ct. 1896), aff'd,
59 N.J.L. 504 (E. & A. 1897); State
ex rel. Bumsted v. Govern,
47 N.J.L. 368, 375 (Sup. Ct. 1885),
aff'd,
48 N.J.L. 612 (E. & A. 1886); Meehan v. Bd. of Chosen
Freeholders,
46 N.J.L. 276, 280 (Sup. Ct. 1884); Greene v. Bd. of
Chosen Freeholders,
44 N.J.L. 388, 391 (Sup. Ct. 1882);
Burlington v. Estlow,
43 N.J.L. 13, 14-15 (Sup. Ct. 1881); State
ex rel. Rutgers v. Mayor of New Brunswick,
42 N.J.L. 51, 52-53
(Sup. Ct. 1880); Love v. Mayor of Jersey City,
40 N.J.L. 456, 459
(Sup. Ct. 1878); Butcher v. City of Camden,
29 N.J. Eq. 478, 481
(Ch. 1878).
The Court of Errors and Appeals described the distinction
between public officers and public employees in Ross v. Board of
Chosen Freeholders,
90 N.J.L. 522 (E. & A. 1917). In Ross, the
sheriff of Hudson County appointed the plaintiff as a guard in
the Hudson County Jail. Id. at 526. The sheriff dismissed him
illegally, and the plaintiff appealed to the state civil service
commission, which ordered him reinstated. Id. at 522. The
plaintiff reported to work regularly for over one year, but the
sheriff prevented him from rendering any services. Id. at 523.
The lower court concluded that the plaintiff held a “position,”
and therefore could not recover under City of Hoboken and Stuhr.
Id. at 524-25.
The Court of Errors and Appeals observed:
Every person engaged in the civil service is
either part of a governmental system or . . .
is employed to forward the work of such
system; if the former, he [or she] is an
officer to whom the doctrine of [City of
Hoboken] applies; if the latter, he [or she]
is an employe to whom such doctrine does not
apply.
[Id. at 525.]
According to the court, one of the “fundamental differences”
between those two categories was that to an officer, “all idea of
a contract is excluded, whereas an employment . . . connotes in
some form the contractual relation of master and servant.” Id.
at 526. The test to determine to which class a person belongs
“is whether the relation of the parties is in legal contemplation
that of master and servant; if it is, the doctrine peculiar to
offices cannot be applied to it.” Ibid. The court reviewed
prior decisions that held that the relationship between a guard
and a county jail is one of master and servant, and concluded
that the plaintiff was an employee. As such, he had a
contractual right to the employment and City of Hoboken did not
preclude his recovery of back pay. Ibid.
A year after Ross, World War I came to a close. Its end was
the harbinger of the return of the nation to domestic concerns.
Reform was the byword in legislative halls, particularly in
respect of the Civil Service and the fundamental rights of
workers. In New Jersey, our Legislature recognized the
unfairness inherent in the no work, no pay rule, namely, that a
person could be illegally dismissed, win reinstatement, and still
not recover back pay. See Mason v. Civil Serv. Comm'n,
51 N.J. 115, 122-24 (1968) (describing legislative reaction to the no
work, no pay rule). Accordingly, in response, the Legislature
enacted L. 1918, c. 139, which read:
Whenever any municipal officer or employee
shall have been illegally dismissed from such
office or employment and the said dismissal
shall have been set aside as illegal by a
court of competent jurisdiction, such officer
or employee shall be entitled to recover the
salary of such office or employment for the
period covered by such illegal dismissal.
The legislative history of that bill signaled an intent to
mitigate the harshness of the no work, no pay rule:
This is a bill to protect the employees and
officers of municipalities who may be
illegally dismissed from their employment.
It is now possible under the law to illegally
dismiss a man, and when the dismissal is set
aside as illegal, it may happen in many
instances that the individual cannot recover
the salary that is rightfully his because of
the law and the decision of this State. In a
word, the Civil Service Law does not give the
protection that it ought to give. This Bill
would remedy that evil and would protect the
individual.
[Mason, supra, 51 N.J. at 122-23 (quoting
Statement to Assembly Bill No. 231 (1918))
(emphasis added).]
That ameliorative principle, after several legislative revisions,
Mason, supra, 51 N.J. at 120-24, was enacted in three separate
statutes: N.J.S.A. 40A:9-172; N.J.S.A. 40A:14-23; and N.J.S.A.
40A:14-151. The first of those statutes provides that a
municipal officer or employee is entitled to backpay if he or she
is illegally “suspended or dismissed.” N.J.S.A. 40A:9-172. The
other two statutes provide essentially the same entitlement, but
to firefighters and police officers, respectively. N.J.S.A.
40A:14-23 (firefighters); N.J.S.A. 40A:14-151 (police officers).
“[T]he legislative purpose sought to be achieved by these
enactments was to change the harsh rule of the common law which
had denied recovery to blameless municipal officials who had been
improperly suspended or dismissed from office.” Township of
Springfield v. Pedersen,
73 N.J. 1, 7 (1977) (emphasis added);
accord Note, The Right of New Jersey's Governmental Officers and
Employees to Recover for Back Pay When Illegally Dismissed or
Suspended,
15 Rutgers L. Rev. 516 (1961) [hereinafter
Governmental Officers]. Despite that broad indication of our
Legislature's disapproval of the common law rule, courts followed
the maxim that statutes in derogation of the common law must be
strictly construed. See, e.g., Hart v. Borough of Hawtho