The General Assembly Giveth and the Courts Taketh Away: Procedural Due Process Rights of North Carolina Career State Employees Facing a Reduction in Force and what Practitioners Need to Know

Abstract

Deficits and spending cuts have been a reality for the North Carolina General Assembly regarding the State’s budget for the better part of the 21st Century. The governor’s budget proposal for fiscal year 2010-2011 calls for state agencies to cut their spending between five and seven percent in the face of a projected deficit of $788 million. One common budget-reducing method an agency may choose is the elimination of employee positions, a process commonly referred to as a reduction in force (“RIF”). The North Carolina General Assembly has provided statutory protection against adverse employment actions for its career State employees. Section 126-35(a) of the North Carolina General Statutes (“section 126-35(a)”) prohibits a State agency from discharging, suspending, or demoting a career state employee “for disciplinary reasons, except for just cause.” Just cause for disciplinary action is defined as unsatisfactory job performance, unacceptable personal conduct, or a combination of the two. Prior to taking disciplinary action against a career State employee, section 126-35(a) specifies the procedure an agency must follow. The agency must provide the employee with written notice of the disciplinary action to be taken and the underlying reasons, followed by an opportunity to appeal to the head of the agency for an inter-agency review. If the inter-agency review does not achieve a satisfactory result, an appeal to the State Personnel Commission is permitted. Appeals to the State Personnel Commission are conducted in the Office of Administrative Hearings (“OAH”) by filing a petition for a contested case as provided in Article 3 of the North Carolina Administrative Procedures Act (“APA”) codified as Chapter 150B of the North Carolina General Statutes. Subject matter jurisdiction over contested case hearings is conferred upon OAH in section 126-34.1 of the North Carolina General Statutes (“section 126-34.1”).Section 126-35(c) of the North Carolina General Statutes (“section 126-35(c)”) requires agencies to treat RIFs in the same manner as disciplinary actions. The plain language of the statute provides “[f]or the purpose of contested case hearings under Chapter 150B, an involuntary separation (such as a separation due to a reduction in force) shall be treated in the same fashion as if it were a disciplinary action.” By implication, RIFs are to be supported by just cause in the same manner as disciplinary actions and are subject to the same procedural protections set forth in section 126-35(a). In University of North Carolina v. Feinstein, the North Carolina Court of Appeals held that section 126-34.1 did not confer OAH with jurisdiction over appeals from RIF terminations based on alleged lack of just cause and procedural violations. The holding of Feinstein was reaffirmed and applied in Jailall v. North Carolina Department of Public Instruction. The practical effect of Feinstein and Jailall is a significant reduction of the procedural due process rights of by denying career State employees the right to a hearing in the OAH, a fundamental step in the process of appealing a RIF to the State Personnel Commission. After Feinstein and Jailall, the only process due to career State employees is written notice and inter-agency review.This Comment explores the procedural due process rights of North Carolina’s career State employees facing an involuntary separation from employment due to a RIF. This will be accomplished by a thorough analysis of (1) the statutory framework of protection enacted by the General Assembly for career State employees; (2) identifying the constitutional rights and protections conferred upon career State employees under the constitutions of the United States and North Carolina; and (3) an in-depth exposition of the holdings and rationale of Feinstein and Jailall. Analysis of these sources supports the ultimate conclusion of this Comment – North Carolina’s career State employees subject to Chapter 126 of the North Carolina General Statutes are entitled to a hearing in the OAH. Because career State employees are entitled to a hearing, this Comment provides practitioners representing career State employees facing a RIF with recommendations about how to pursue a contested case hearing in the OAH, followed by recommendations for judicial and appellate review.