June 17, 2010

Following an unsuccessful court challenge, a series of state laws have gone into effect requiring public employees, including municipal workers and teachers, to contribute portions of their salaries toward health care expenses.

Unions for the public employees have vowed to continue fighting.

Last month, a state Superior Court judge denied an attempt by several public employees’ unions to block a bill that would require police and firefighters to contribute at least 1.5 percent of their salaries for health care benefits. On May 20, 2010, Superior Court Judge Linda R. Feinberg rejected the motion by the plaintiffs, which included almost every police and firefighters union in the state. (See New Jersey State Firefighters Mutual Benevolent Association, et al. v. State of New Jersey et al., N.J. Super. Ct. Law Div., MER-L-1004-10).

Judge Feinberg rejected the unions’ argument that the health care contribution constituted a tax and held instead that it is “a medical contribution.” Following Judge Feinberg’s ruling, the laws at issue took effect on May 21.

As signed by Gov. Christie, the laws affect future hires, but also requires current police and firefighters to pay at least 1.5 percent of their salaries toward health care costs by the time the next union contract is signed (Chapter 1, P.L. 2010, Chapter 2, P.L. 2010 and Chapter 3, P.L. 2010 (also referred to as Senate Bill Nos. 2, 3, 4, respectively)). These laws, signed by Gov. Chris Christie and passed by the Democrat-controlled legislature with overwhelming support, are designed to help keep solvent the State’s pension benefit system that, as of last summer, was $46 billion short of fulfilling its obligations.

Though the public unions have vowed to continue their fight, the laws are in effect and municipal workers, including police officers and firefighters, now must begin making contributions toward their health care costs. Only exempt, non-affiliated public employees, or those employees who did not have a current collective bargaining agreement as of May 21, must begin making the payment. If a contract is in place, mandatory contributions begin at the end of the contract period.

Municipalities and other public entities should ensure their withholding procedures have been revised to comply with the new laws. In addition, public employers should communicate these new provisions with applicable employees to avoid unpleasant surprises when subsequent paychecks are received.

Hill Wallack LLP's Municipal Law Team

The Municipal Law Team of Hill Wallack LLP represents municipal, county and state-level governmental units, as well as school boards, housing authorities and quasi-governmental entities. Members of our team offer cross-disciplinary support in areas that include labor and employment law, administrative law, environmental law, municipal finance law and the tort defense of governmental entities.

Our attorneys are contributing authors to the blog, At Work: Solutions for Employers & Employees.

For more information, contact one of the attorneys who work in this area. Municipal & School Law: Rocky L. Peterson, Esq., Dana M. Lane, Esq., Kenneth M. Skroumbelos, Esq.; Administrative Law/Government Procurement: Patrick D. Kennedy, Esq., Maeve E. Cannon, Esq.; Regulatory & Government Affairs: Paul P. Josephson, Esq., James G. O'Donohue, Esq.; Government, Public Entity & Civil Rights Litigation: Jeffrey L. Shanaberger, Esq.

This article provides information of general interest and is not intended, and should not be used, as a substitute for consultation with legal counsel. Any questions regarding the specific issues raised in this article should be directed to the authors or to your contacts at Hill Wallack LLP.