## Facts

- Hillsdale PBA Local 207 represented police officers employed by the Borough of Hillsdale, New Jersey.
- The parties failed to reach a 1991–1993 collective negotiations agreement on economic issues, including salary increases and the amount of compensatory time that could be “banked” beyond a calendar year.
- The union invoked compulsory interest arbitration under the Compulsory Interest Arbitration Act, and PERC appointed an arbitrator pursuant to N.J.S.A. 34:13A-16.
- Under the statute’s final-offer format, the arbitrator was required to select one of the parties’ final offers as the more reasonable.
- The Borough’s final offer proposed annual salary increases and banking up to 80 hours of compensatory time.
- The union’s final offer proposed semiannual salary increases and banking up to 100 hours of compensatory time.
- The arbitrator selected the union’s final offer and issued a written opinion stating that the statutory factors in N.J.S.A. 34:13A-16(g) were applied.
- The Chancery Division confirmed the award.
- The Appellate Division vacated the award and remanded for a new hearing before a new arbitrator, reasoning that the arbitrator had not developed or considered evidence on each statutory factor and that the award lacked support in credible evidence.
- The New Jersey Supreme Court granted review.

## Issues

1. What standard governs judicial review of compulsory interest-arbitration awards under N.J.S.A. 34:13A-16?
2. Must an interest arbitrator take evidence on and expressly analyze all eight statutory factors in N.J.S.A. 34:13A-16(g), and must each factor be treated as presumptively dispositive?
3. Did the arbitrator sufficiently address statutory wage comparisons (including private-sector and non-police public employees) and the Borough’s financial condition and taxpayer impact when choosing the union’s final offer?
4. If the award is inadequately explained, should the remedy be reassignment to a new arbitrator or remand to the same arbitrator for further proceedings?

## Decision

- The Supreme Court held that courts may not replace an arbitrator’s economic judgments but must ensure statutory compliance and record support.
- The Court ruled that the arbitrator must meaningfully consider the N.J.S.A. 34:13A-16(g) factors and that the award must be supported by substantial credible evidence.
- The Court agreed the award was deficient because the written decision and record did not adequately demonstrate consideration of key statutory factors, including broader wage comparisons and the Borough’s financial condition and tax impact.
- The Court vacated the award and remanded for further arbitration proceedings.
- The Court reversed the portion of the Appellate Division’s judgment requiring a new arbitrator and directed that the remand occur before the same arbitrator.

## Legal Principles

- Compulsory interest-arbitration awards are reviewed with substantial deference on the merits of economic choices, but deference depends on compliance with the governing statute.
- An arbitrator must consider all eight factors listed in N.J.S.A. 34:13A-16(g); however, the factors need not receive equal weight, and the statute does not require a mechanical, identical evidentiary showing on every factor in every case.
- The arbitrator’s written determination must demonstrate a reasoned application of the statutory factors and be supported by substantial credible evidence in the record.
- Statutory “comparison” requires attention not only to comparable police forces but also to comparisons the statute expressly identifies, including other public employees and private-sector employees in similar communities.
- The arbitrator must address the municipality’s lawful authority and financial impact on the governing unit and residents, including budgetary and taxpayer consequences.
- When an award is inadequately explained or the record is insufficient to show meaningful consideration of the statutory factors, the appropriate remedy is vacatur and remand for further proceedings; reassignment to a new arbitrator is not required absent a showing such as bias or incapacity.

## Conclusion

The New Jersey Supreme Court vacated a final-offer interest-arbitration award for insufficient demonstrated consideration of the mandatory statutory factors, while rejecting reassignment to a new arbitrator and remanding to the original arbitrator to develop the record as needed and issue a revised, reasoned decision applying N.J.S.A. 34:13A-16(g).


Hillsdale PBA Loc. 207 v. Borough of Hillsdale, 137 N.J. 71, 644 A.2d 564 (1994)