APPELLATE DIVISION FINDS THAT ABSENT CONTRACTUAL LANGUAGE OR PAST PRACTICE...
Updated: Oct 13
APPELLATE DIVISION FINDS THAT ABSENT CONTRACTUAL LANGUAGE OR PAST PRACTICE, BOARDS OF EDUCATION MAY NOT DEDUCT EMPLOYEE PAYMENTS TOWARD DENTAL AND VISION PREMIUMS FROM SALARIES.
On September 14, 2020, the Appellate Division of the Superior Court of New Jersey rendered a decision concerning the deduction of employee payments towards dental insurance from employees’ salaries. The decision emphasizes the importance of specific language regarding employee payments toward dental and vision insurance in a Collective Bargaining Agreement (“CBA”).
The matter arose after the Atlantic City Education Association (“ACEA”) filed a grievance against the Atlantic City Board of Education (“ACBOE”) for deducting employee payments toward dental insurance from employee salaries after ratification of a new CBA and enrollment in the School Employees’ Health Benefits Plan (“SEHBP”).
During the prior negotiations, the ACBOE and ACEA had reached a Memorandum of Agreement, but that Memorandum of Agreement did not contain language regarding health insurance or employee payments toward dental insurance.
At arbitration, the ACBOE instead presented evidence that it provided the ACEA with a PowerPoint presentation in order to assist the ACEA’s ratification of the successor CBA and provide more information regarding the new SEHBP. The PowerPoint presentation outlined the rates at which employees would make payments toward health insurance, including dental insurance. After receiving and reviewing that Powerpoint, the ACEA ratified the CBA. The ACBOE argued that the subsequent ACEA ratification after reviewing the PowerPoint constituted an agreement that employee payments toward dental insurance would be included in the new CBA.
The arbitrator disagreed and instead focused on the language of the CBA. Such CBA provided the following language, in relevant part:
In accordance with applicable law, all employees, with the exception of those who “opt out,” shall pay at least the legislated contribution requirements provided by P.L. 2011, c. 78 towards their health insurance premiums which equates to Step 4 on the existing scale where it shall remain unless renegotiated at a later time.
The arbitrator noted that the relevant CBA language did not explicitly reference employee payments toward dental premiums, and the Memorandum of Agreement did not add any such language. Instead, the applicable CBA language required that all employee payments are made in accordance with Chapter 78. Thus, the arbitrator found that the language of Chapter 78 would apply.
The relevant text of Chapter 78 provides
As used in this section, ‘cost of coverage’ means the premium or periodic charges for medical and prescription drug plan coverage, but not for dental, vision, or other health care, provided under the State Health Benefits Program or the School Employees’ Health Benefits Plan.
Based on the fact that the language of Chapter 78 specifically excluded dental and vision insurance from its definition, the arbitrator found that the current CBA language did not apply to dental insurance.
Thus, as neither CBA language nor past practice regarding deductions toward dental insurance existed, the arbitrator sustained the ACEA’s grievance, ordered the ACBOE to cease the deductions, and required the ACBOE to reimburse the previous deductions.
On appeal to New Jersey Superior Court, the trial court vacated the arbitration award on the grounds that the award was “contrary to public policy” and “not reasonably debatable given the ‘undisputed facts’.” The key for the Superior Court was that the board had presented information in its PowerPoint presentation that included dental premium payments and the ACEA ratified the CBA after receiving that information.
In its recent decision, the Appellate Division reversed the Superior Court and reinstated the arbitrator’s award. The Appellate Division noted that “Chapter 78 does not mandate employees to contribute to dental insurance premiums.” Rather, such employee payments are “subject to negotiation and agreement.” In this case, no such agreement existed in the parties’ CBA. The PowerPoint presentation and subsequent CBA ratification was insufficient to constitute an agreement. The ACBOE was thereby directed to cease dental deductions and reimburse the prior deductions.
This case demonstrates that negotiated language specifically requiring such employee payments toward dental and vision insurance cannot be deducted from salary. It is imperative that the Board negotiate this topic with the Association and explicitly include language in the CBA memorializing that agreement. Language referencing “deductions in accordance with Chapter 78” will be insufficient to permit dental and vision employee payments at least if health benefits are provided through the SEHBP.
We recommend that the Board review its CBAs to determine whether explicit language exists regarding the deduction of employee payments toward dental and vision insurance. If such language does not exist, we strongly recommend that the Board include a proposal regarding the addition of same during future negotiations.
This Alert provides information about the current developments in New Jersey education law. It is necessarily general and not intended as legal advice or a substitute for legal advice. Questions about individual issues should be addressed to the attorney of your choice. Contact Jaclyn M. Morgese or Anthony P. Sciarrillo of Sciarrillo Cornell at firstname.lastname@example.org.