Last week, the New Jersey Appellate Division upheld an arbitrator’s finding that a district could not make withholdings for dental contributions unless specifically allowed by its collective negotiations agreement with the teachers’ union. The district could not assume that it could make withholdings at the same level as employees’ healthcare contributions absent explicit language authorizing such a withholding.

In Atlantic City Board of Education v. Atlantic City Education Association, the teachers’ union circulated a PowerPoint prior to ratifying the then-proposed contract that showed deductions for dental insurance. However, the final contract signed by both parties did not specifically include language that addressed dental insurance contributions, and the PowerPoint was not included as an attachment to the contract.

The board argued, among other things, that because the union’s vote to approve the proposed contract was based on information presented about the proposed agreement, and this information included the PowerPoint, the membership approved the contract with the dental contributions. In opposition, the union argued that inclusion of the dental contributions in the PowerPoint was a mistake that was later corrected in the final contract. No witness testimony or evidence of an oral agreement was presented.

Under the agreement at issue (covering 2016-2019), employees contributed to the costs of healthcare at the Chapter 78 full phase-in level. Chapter 78 was a landmark health benefits law passed in 2011 that provided cost containment measures for employee healthcare contributions. Notably, Chapter 78 required employees to pay a portion of health insurance premiums.

Though the Chapter 78-required contributions have since expired, approximately two-thirds of New Jersey school districts still followed the Chapter 78 contribution requirements in their contracts until a new healthcare bill, Chapter 44, was passed this summer to replace Chapter 78. Significantly, Chapter 78’s definition of “cost of coverage,” to which employees were required to contribute, excluded dental insurance. Chapter 44 similarly does not include dental insurance in its definition of “cost of coverage.”

Following binding arbitration proceedings, an arbitrator found that the contract did not require contributions towards dental insurance and therefore the board violated the agreement when it deducted such contributions from members. Accordingly, the trial court overturned the arbitrator’s determination. In an unpublished decision, the Appellate Division reversed the trial court and upheld the arbitrator’s decision, further finding that not only was there no agreement about dental insurance contributions, but there was no past practice of employees contributing to the cost of dental insurance.

In sum, the Appellate Division held: “If an agreement as to contribution to dental benefits was reached, it was incumbent on the Board to include those terms in the CNA through express language or appendices.” Among other issues, the decision left open the question of whether the outcome of this case would have changed had there been evidence presented of an oral agreement, or if the board had argued a mistake had been made and/or that the agreement should be modified. Even in view of those issues, however, school boards may wish to review with their board attorney how the outcome of this case could impact negotiations in their district.

For more information about this case as well as recent changes to healthcare brought about by Chapter 44, board members should consult with their board attorney or call the New Jersey School Boards Association Legal and Labor Relations Department at (609) 278-5254.