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A divided New Jersey supreme court last Thursday did away with the common-law doctrine of “no work, no pay,” saying it was better suited to the time of Charles Dickens than today’s workplace. In a 4-2-1 decision, the court reinstated an arbitrator’s award of back pay to workers for overtime, which a trial judge had stricken under a 142-year-old doctrine that prohibits payment to government authorities for services they did not perform. The rule, which began in an 1859 dispute between Hoboken and one of its policemen, evolved to protect public entities from paying for services they did not receive and to prevent a windfall to the officer or employee who worked elsewhere during a period of suspension. But Justice James Zazzali, writing for the majority in Dept. of Corrections v. Int’l Federation of Professional and Technical Engineers, Local 195, A-20, called the rule an anachronism in modern-day labor jurisprudence. “Just as good labor management relations depend on collective negotiations agreements that contain effective arbitration provisions (in lieu of the right to strike), in turn the usefulness of the arbitration provisions depends on effective remedies when the contract is violated if the contract is to provide stability,” Zazzali wrote. “If we prohibit an arbitrator from awarding back pay, we eviscerate the contract,” he added. Justice Jaynee LaVecchia dissented, joined by Justice James Coleman Jr., saying that the majority wrongly interpreted Communications Workers of Am., Local 1087 v. Monmouth County Bd. of Social Services, 96 N.J. 442 (1984), a decision that invoked the rule to overturn an arbitrator’s back-pay award. “In its zest to abrogate the common-law doctrine of no work, no pay, the majority mischaracterizes this Court’s decision in Communications Workers,” LaVecchia wrote. “Thus, as in Communications Workers, our task in this case … is to determine whether the agreement envisioned that back pay was to be a permitted remedy for lost overtime opportunities, and whether that is a remedy ‘permitted by law,’” she said. LaVecchia found no statutory authority for a back-pay award — with or without the no-work, no-pay rule. Justice Peter Verniero agreed with LaVecchia’s analysis but concurred with the majority that the rule should go. In this case, a union local brought grievances against the state Department of Corrections for assigning a nonunion supervisor to three overtime shifts, in violation of a collective bargaining agreement that overtime be assigned to local members on a rotational basis. An arbitrator awarded $100 each in back pay to the three workers who should have been assigned to those shifts. The trial court reversed, finding that the arbitrator’s back-pay award exceeded his authority as defined by the 1984 Communications Workers case. The Appellate Division agreed, saying that the arbitrator’s authority was expressly circumscribed by the collective bargaining agreement, which denied him “power to add to, subtract from, or modify the … laws of the State, or any policy of the State” — in this case, the no-work, no-pay doctrine. Zazzali’s opinion was as unequivocal a break from that doctrine as could be articulated. “Stripped of the rule’s theoretical underpinnings, this case is simply about the employer’s unwillingness to honor a contractual obligation, a common problem in both the private and public sector,” he wrote. “There is no violation of public policy for a public employer to honor its moral and legal obligation to make whole employees when there are violations of a statute or contract. The sanctity of the contract and the rights of employees under that contract eclipse the financial concern that a public employer may have to pay twice.” The Communications Workers of America, AFL-CIO, appeared as amicus to seek abolition of the rule, which it says deprives public workers of a remedy enjoyed by employees in the private sector. Steven Weissman, whose Someset, New Jersey firm, Weissman & Mintz, represented the CWA, says the rule was a concern in cases of employees who are improperly laid off and later reinstated, because there is no statutory authority for arbitrators to award back pay in such cases. Still other labor-side lawyers say the rule doesn’t come up frequently enough to be missed. “My sense of it was not many employers invoked that doctrine, either before arbitration or in appeals of awards, says Sidney Lehmann, a partner at Szaferman, Lakind, Blumstein, Watter, Blader, Lehmann & Goldshore in Lawrenceville, New Jersey. “But what [the ruling] really does is remove any doubt that in fact the no-work, no-pay doctrine is not applicable.” The employees’ attorney, Arnold Shep Cohen, says that while the no-work, no-pay rule isn’t often invoked, it offers public employers a way to avoid complying with contractual rights. “The state of New Jersey was searching for a way to turn over this award,” says Cohen, of Newark, New Jersey’s Oxfeld Cohen. Lawyers representing management in labor and employment matters express concern that the ruling could lead to more no-show jobs and other wastes of public funds. “In my view, the holding could have been fashioned without compromising the common-law doctrine of no work, no pay,” says Angelo Genova of Livingston, New Jersey’s Genova, Burns & Vernoia. The state’s lawyer, Deputy Attorney General George Cohen, says he was disappointed by the ruling and agrees with LaVecchia’s analysis of the case. He adds that the three employees awarded back pay might not have accepted the overtime work if they had been offered it, but he will not raise that point at the remand.

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