Reductions in Force: Recent Developments and Statutory Guidance Impacting Public Employers

NJSBA School Leader – Fall 2021 Authored by David Disler

A board of education is vested with the statutory authority to enact layoffs, or a reduction in force, under certain circumstances. Boards can reduce staff, including teaching staff members, “for reasons of economy or because of reduction in the number of pupils or of change in the administrative or supervisory organization of the district or for other good cause…” However, there are a number of statutory requirements and new developments that boards must be aware of prior to implementing a RIF.

Traditionally, boards have had substantial discretion in making employment decisions concerning non-certificated employees. While secretaries can acquire tenure, there is no statutory seniority for secretaries (although there may be contractual seniority rights for secretaries). Janitors may earn tenure in certain circumstances, and would be subject to a RIF in preference to any other tenured janitor having a longer term of service. The dismissed janitors are placed on a preferred eligibility list in the order of years of service. However, for the most part, boards of education have had almost unfettered ability to terminate a nontenured, noncertificated staff member, either by way of a reduction-in-force, nonrenewal, or disciplinary action, so long as its decision was not arbitrary, capricious, or unreasonable.

This principle has drastically changed as the Legislature recently provided significant protections to non-certificated staff members.

In particular, two newly enacted laws allow non-certificated staff members the right to: (1) challenge before an arbitrator decisions that negatively impact their employment; and (2) make it far more difficult for the board to outsource these jobs. The practical impact of these laws is significant. Outsourcing has long been a means for boards that are struggling with immense economic constraints to achieve financial relief. This will result in boards having to resort to other means to meet their monetary obligations. Boards also will be spending substantially more resources to defend its decisions to take disciplinary action, including non-renewals and terminations, related to its non-certificated staff members.

Non-Certificated Staffs’ Right to Arbitration (P.L. 2020, c. 66) Signed into law by Gov. Murphy, P.L. 2020, c. 66 (“Chapter 66”), allows all nonteaching staff members in public schools to arbitrate any “disciplinary action.” The law is exceedingly broad in its application. It applies to all board employees who are “not a teaching staff member,” which the law defines as all non-certificated employees. As the bill’s sponsors noted, the purpose of the bill was to provide such employees as “drivers, custodians, cafeteria workers and many other staff members [who] make critical contributions to school functionality,” protections similar to those provided to teachers.

Chapter 66’s definition of “discipline” also is broad. It includes, without limitation, all “reprimands, withholding of increments, termination or nonrenewal of an employment contract, expiration or lapse of an employment contract or term, or lack of continuation of employment.” As a result, this definition includes actions that courts previously held to be non-disciplinary in nature, such as the nonrenewal of an employment contract.

The protections afforded to non-certificated staff are substantial. All non-certificated employees now have the right to submit to binding arbitration any of the aforementioned actions by the board. In the arbitration, the board has the burden to prove it had “just cause” in taking the disciplinary action. As the law’s sponsors noted, Chapter 66 allows these employees to challenge “whether any disciplinary action taken against them is fair and necessary” before an arbitrator.

The law is a substantial change to the longstanding legal principles and statutes that permitted school districts to effectively manage their workforce. For example, previously boards only were required to notify paraprofessionals whether or not they would be renewed for the upcoming academic year by May 15. The only ability to challenge this decision was for the employee to file a petition before the education commissioner. The employee had the burden to show the board’s decision was arbitrary, capricious, or unreasonable.

In sum, Chapter 66 allows all non-certificated board employees to submit all disciplinary actions to binding arbitration. The reason provided by the board — even if it is purely budgetary or economical (such as during a reduction in force) — will not prevent the matter from proceeding to arbitration and having an arbitrator decide whether the board had “just cause” in making its decision. Practically speaking, boards will be forced to exert considerable financial and administrative resources to defend decisions. This includes having administrators take time away from their educational responsibilities to prepare for the arbitration and testify on behalf of the board during the arbitration. The result is that many boards no longer will take actions they believe are in the best interest of their students as they will conclude it is not worth the time, cost and resources to defend the decision.

Restrictions on Outsourcing (P.L. 2020, c. 79) Traditionally, outsourcing certain noninstructional programs and services has been an avenue boards of education have chosen when necessary to meet budgetary restraints. Boards were provided substantial latitude in entering into subcontracting agreements with private companies in such areas as paraprofessional and custodial services. As these decisions almost always were financial (providing substantial cost savings to the board) or educational, courts determined that boards had the managerial prerogative to implement a reduction-in-force and outsource certain positions.

Prior to the newly-enacted legislation, there were limited requirements boards had to meet in to privatize a position. This included notifying its employees of the decision and allowing the impacted employees to revise their terms and conditions of employment in an attempt to convince the board not to outsource the position. This typically meant that boards would meet with union representatives and the union would submit a proposal that provided the board with cost savings or other benefits, such as by amending their salary, benefits, or working hours. The board had complete discretion to accept or reject this proposal. If the board followed these simple statutory requirements, the employees’ only recourse was to challenge the decision before the commissioner as arbitrary and capricious (typically claiming anti-union animus).

P.L. 2020, c. 79 drastically changed the flexibility provided to boards of education when outsourcing or subcontracting services. Traditionally, boards had the ability to outsource services at any time. This meant that if the board ran into a budgetary shortfall due to an unexpected issue during the middle of a school year, it reserved the right to privatize certain services to meet its financial needs. The new law drastically restricts when outsourcing can take place. The law prohibits boards from entering into a subcontracting agreement while an existing collective negotiations agreement is in effect. Most boards of education enter into agreements with their unions that last between three and five years. As a result, most boards would be prohibited from subcontracting for years at a time.

The law also creates a number of procedural hurdles boards must overcome prior to subcontracting. Most critically, boards must provide the union with three-month advance written notice before it can seek bids for the services. This requirement, when coupled with the limitation that subcontracting can only occur upon expiration of a collective negotiations agreement, greatly restricts the timing of when boards can subcontract for services. It further requires substantial preparation by the board.

Similar to the prior law, the new law requires that the board meet with the union to discuss the decision to subcontract and provide the union the opportunity to convince the board not to subcontract. However, the new law also adds the additional requirement that the board must “engage in negotiations over the impact of subcontracting.” This likely includes negotiations over whether severance will be paid by the board. Employees who are dismissed as a result of their services being subcontracted retain previously acquired seniority and are provided “recall rights” should the subcontracting agreement terminate.

Finally, the law makes a number of areas a mandatory subject of negotiations. This includes “all aspects or actions relating to or resulting from [the board’s] decision to subcontract.” Explicitly included in the law is that severance pay has become a mandatory subject of negotiations.

Boards that fail to follow these rigid procedures will face severe repercussions. Boards will be “deemed to have committed an unfair practice.” Employees impacted by improper subcontracting will be reinstated and provided with back pay and back benefits. The board will also be responsible for the employees’ attorney fees.

As always, it is recommended that you consult with your board attorney for questions on specific situations.