NJ Local Retirees "Off the Grid"

Few developments in New Jersey public sector labor law created more widespread confusion among administrators (and consternation among employees and unions) than Public Law 2011, Chapter 78 ("Chapter 78"). Chapter 78 is the source of the infamous four-year "grid" whereby public employees gradually contribute more and more toward their health insurance until, by the fourth year, most of their contributions exceed private sector insurance premium contribution averages.

Chapter 78 was Governor Christie's hallmark legislation to rein in public employee health care costs by mandating contributions by employees and retirees.

Whereas earlier permutations of the bill would have affected a broader swath of retirees, on the floor of the Legislature a compromise was reached wherein public employees with at least 20 years of service, as of "the effective date" of the legislation, would be "grandfathered", and hence, not have to pay the mandated contributions into their retirement.

One of New Jersey's largest unions, the New Jersey Firefighters' Mutual Benevolent Association ("FMBA"), obtained clarification recently from the Department of Community Affairs as to the grandfather issue for retirees. According to the clarification, the effective date for employees who are seeking to retire was tolled until a contract in place on the June 28, 2011 effective date of Chapter 78 expired. As such, an employee in a contract from January 1, 2011 until December 31, 2013, who had 19 years of service on July 1, 2011 would still benefit from the grandfather clause because the employee had more than 20 years of service when Chapter 78 became effective for THAT employee's unit after December 31, 2013 (notwithstanding that he/she had less than 20 years on June 28, 2011).

This result might seem unfair to non-unionized employees who will not be grandfathered unless they had 20 years on June 28, 2011. Stay tuned to this blog for further developments, keeping in mind that administrative clarification is not binding on New Jersey courts.