SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-4036-95T3
IN THE MATTER OF
MARYANN BAYKAL,
DEPARTMENT OF LABOR
_________________________________
Argued November 3, 1997 - Decided March 9,
1998
Before Judges Skillman, Eichen and Bilder.
On appeal from Merit System Board.
Mark K. Smith argued the cause for appellant
Maryann Baykal (Pellettieri, Rabstein &
Altman, attorneys; Mel Narol and Mr. Smith,
of counsel and on the brief).
Donald E. Catinello, Deputy Attorney General,
argued the cause for respondent Merit System
Board (Peter Verniero, Attorney General,
attorney; Mary C. Jacobson, Assistant
Attorney General, of counsel; Elizabeth M.
Laufer, Deputy Attorney General, on the
brief).
The opinion of the court was delivered by
SKILLMAN, J.A.D.
This appeal involves the interpretation of provisions of the
Civil Service Act of 1986 (L. 1986, c. 112) which authorize the
creation of a senior executive service (SES) in the state civil
service and of administrative regulations which govern this class
of employee. Although this legislation was enacted more than a
decade ago, the provisions relating to the SES have not been
considered in any reported opinion.
The 1986 Civil Service Act established three classes of
State civil service employees: career, N.J.S.A. 11A:3-2, SES,
N.J.S.A. 11A:3-3, and unclassified, N.J.S.A. 11A:3-4. N.J.S.A.
11A:3-3 provides that the SES shall be comprised of not more than
1,200 employees who occupy "positions having substantial
managerial, policy influencing or policy executing
responsibilities." The SES may include both career and noncareer
employees but "[t]he number of noncareer employees shall not
exceed 15" of the entire senior executive service work force."
Ibid. An employee who holds permanent career status in a
position allocated to the SES may be appointed to that position,
but only "with appointing authority approval." Ibid. "Permanent
career service employees who opt not to join the [SES] or who do
not receive approval to join the [SES] shall have the right to
reinstatement to the career service to a level directly under the
[SES]." Ibid.
The Legislature delegated authority to the Merit System
Board (the Board) to determine which positions qualify for
inclusion in the SES, N.J.S.A. 11A:3-1, and to "adopt rules
providing for the selection, placement, transfer, development,
compensation, separation and performance appraisal of [SES]
employees." N.J.S.A. 11A:3-3. Pursuant to this authority, the
Board has adopted rules which govern the assignment of positions
to the SES, appointments to those positions, and the terms of
employment within the SES. N.J.A.C. 4A:3-2.1 to 2.9.
Appellant Maryann Baykal formerly occupied the career
position of Director of the Division of Disability Determinations
in the Department of Labor. In this position, appellant had more
than 400 employees under her supervision and was responsible for
administering an annual budget of approximately $34,000,000.
Appellant's responsibilities included the management and
coordination of the Division with respect to the adjudication of
claims for disability payments filed pursuant to Titles II and
XVI of the Social Security Act; the direction of management
personnel in the establishment of policies, systems and standards
to protect the solvency and integrity of the Social Security
system; the formulation of Division policy with regard to the
interpretation and implementation of State and Federal laws and
policies; and the representation of the Department of Labor in
its dealings with the Social Security Administration.
On February 7, 1995, the Commissioner of Labor sent a letter
to the Commissioner of Personnel formally requesting the
reallocation to the SES of the position of Director of the
Division of Disability Determinations and three other positions
under the Director. On February 21, 1995, the Merit System Board
approved the reallocation to the SES of the positions of
Director, Division of Disability Determinations, and Assistant
Director, Disability Insurance.See footnote 1
Appellant was given oral notification of the reallocation of
her position to the SES. Shortly thereafter, appellant accepted
a temporary assignment to work in the Division of Temporary
Disability Insurance, and Arthur Spenser was appointed to serve
as Acting Director of the Division of Disability Determinations.
On June 9, 1995, the Department of Labor posted a Notice of
Job Vacancy for the position of Director, Division of Disability
Determinations, in the SES. Appellant did not apply for this
position or express any objection to the posting of the Notice of
Job Vacancy.
On July 10, 1995, the Department of Labor requested the
Department of Personnel to approve the appointment of Spenser to
the position of Director, Division of Disability Determinations.
On July 17, 1995, the Commissioner of Personnel approved the
appointment, effective July 22, 1995.
On July 19, July 24, and August 1, 1995, officials of the
Department of Labor met with appellant to discuss her employment
rights as the non-appointed incumbent in the former career
service position of Director, Division of Disability
Determinations. When appellant failed to select any of the
career service positions offered to her, the Department of Labor
appointed her, effective August 4, 1995, to the position of
Assistant Director, Unemployment Benefit Payments. In this new
position, appellant continued to receive the same salary of
$83,120.73 she had formerly received in the position of Director,
Division of Disability Determinations.
On August 4, 1995, appellant sent a letter to the Department
of Personnel requesting "interim relief" with respect to the
reallocation from the career service to the SES of the position
of Director, Division of Disability Determinations, and the
appointment of Spenser to that position. On August 24, 1995,
appellant sent another letter to the Department which she
characterized as "a good faith appeal regarding my demotion
resulting from the allocation of my permanent career position to
SES." On August 29, 1995, appellant sent a third letter to the
Department which argued that the reallocation of her position to
the SES and the appointment of Spenser to the position
constituted a "demotion" within the intent of N.J.A.C. 4A:2-2.2(a) and consequently that she was entitled to a Preliminary
Notice of Disciplinary Action and a hearing. The Department of
Personnel treated these three letters as an appeal from the
personnel actions of the Department of Labor affecting appellant.
On November 21, 1995, the Merit System Board issued a final
decision with respect to appellant's appeal. The Board concluded
that in view of the size, functions, and budget of the Division
of Disability Determinations and the scope of the Director's
responsibilities, the position had been correctly allocated to
the SES. The Board found that "[f]or reasons unclear from this
record, and although provided the opportunity to do so, appellant
did not respond to the SES posting for the Director, Disability
Determinations position." In addition, the Board concluded that
appellant's claim that the Department of Labor had acted in bad
faith in reallocating the position of Director, Disability
Determinations, to the SES, and in not appointing her to that
position or the proposed position of Director, Temporary
Disability Insurance, should be rejected because it was not
supported by any form of documentation or other evidence.
Finally, the Board concluded that even though N.J.S.A. 11A:3-3
does not require "layoff procedures" to be followed "to effect
the placement of a non-appointed incumbent in the career
service," the position of Assistant Director, Unemployment
Benefits Payments, was "the highest level layoff option available
to the title Director, Disability Determinations."
On December 10, 1995, appellant submitted a request for
reconsideration which sought "an administrative hearing to allow
the production of witnesses who would demonstrate that the
Department of Labor's use of the [SES] is pretextual and that
[appellant] has been demoted without substantive or procedural
due process." On February 27, 1996, the Board issued a
supplemental decision denying appellant's request for
reconsideration and reaffirming its prior conclusion that
appellant had not demonstrated the existence of any material
issue of fact which required an evidentiary hearing.
After appellant filed a notice of appeal, we granted the
Board's motion to supplement the record with documentary material
which shows that the Board approved the Department of Labor's
reallocation from the career service to the SES of eight
additional positions on November 21, 1995, and fourteen more
positions on April 16, 1996. Appellant accepted an appointment
to one of these positions on July 6, 1996, and thus is currently
a member of the SES.
On appeal, appellant argues that the Department of Labor's
personnel actions affecting her were made in bad faith and
consequently that her former position of Director, Division of
Disability Determinations, must be returned to the career
service. In the alternative, appellant argues that she is
entitled to a hearing concerning her claims. Appellant also
argues that even if her former position was properly reallocated
to the SES, the Board erred in rejecting her claim to
reinstatement rights to a higher position than Assistant
Director, Unemployment Benefit Payments. We reject all of
appellant's arguments and affirm the Board's final decision.
Appellant "does not dispute that there exists sufficient facts on the record to support the Merit System Board's decision allocating the title of [Director, Division of Disability Determinations] to the SES." Appellant also does not dispute Spenser's qualifications for this position, thus conceding that
the Board's approval of his appointment was not arbitrary or
capricious. However, appellant argues that the Department of
Labor's request to reallocate the position to the SES and its
subsequent personnel actions affecting her were made in bad
faith. Appellant claims that the Department of Labor requested
the reallocation of the position of Director, Division of
Disability Determinations, from the career service to the SES as
a means of removing her for "performance related reasons" without
complying with the procedures governing disciplinary proceedings
set forth in N.J.S.A. 11A:2-13 and N.J.A.C. 4A:2-2.
In support of this claim, appellant relies upon her letter
of August 29, 1995 to the Department of Personnel which alleged
that:
[O]n August 9, 1995, Commissioner Calderone
told five managers of the Department of Labor
at a focus group meeting, which was convened
to discuss the concerns of managers about the
nature of the Department's implementation of
SES, that he had removed her for being
uncooperative and for poor performance. He
indicated he was under federal watch, and
pressure from the union and a member of the
legislature, and that he had no time to use
the PAR system because of the length of time
involved.
Appellant argues that because of these alleged bad faith reasons
for the Department of Labor's request for the reallocation of her
former position to the SES, the position should now be
reclassified back to the career service and she should be
reinstated. In the alternative, appellant seeks a remand to the
Board for an evidentiary hearing.
We agree with the Merit System Board's conclusion that
appellant's allegations do not provide a basis for the return of
the position of Director, Division of Disability Determinations,
to the career service or for an evidentiary hearing. Initially,
we note that appellant's allegations as to what Commissioner
Calderone said at the August 9, 1995 meeting are hearsay.
Appellant does not allege that she attended the meeting or even
that she received information concerning what was said at the
meeting from someone who was there. Thus, there is no indication
appellant could produce any competent evidence to support her
allegations.
More fundamentally, even if Commissioner Calderone had made
the comments which appellant attributes to him, it would not
warrant invalidation of the transfer of the position of Director,
Division of Disability Determinations, to the SES. The record
clearly demonstrates that the position of Director of Disability
Determinations involves "substantial managerial, policy influence
or policy executing responsibilities," N.J.S.A. 11A:3-3, and that
its reallocation to the SES was consistent with the objectives of
the Civil Service Act creating this new class of civil service
employees. In addition, the record indicates that within a
little over a year after the reallocation of appellant's
position, the Department obtained the Board's approval for the
reallocation to the SES of twenty-two other high level positions
which were formerly within the career service. Thus, even if
appellant's allegations regarding the Commissioner's motivations
could be substantiated, this would show, at most, that the
Commissioner selected appellant's former position as well as
other high level positions in the Division of Disability
Determinations as the first phase of a Department-wide plan to
reallocate positions to the SES, because of his concerns about
the performance of that Division and its Director. Although a
decision whether to reallocate a position to the SES should be
made on the basis of the responsibilities of the position rather
than the performance of the incumbent career service employee, an
objectively reasonable decision to reallocate a position is not
subject to challenge on the ground that the incumbent's perceived
deficiencies caused the department head to consider whether the
position belongs in the SES. Moreover, the kinds of concerns
about a high level managerial employee's performance which may
focus attention on whether that employee's position belongs in
the SES may fall far short of the performance deficiencies which
would warrant disciplinary action.See footnote 2 Therefore, appellant failed
to show any basis for disturbing the Department of Labor's
comprehensive plan for the reallocation of high-level positions
to the SES by ordering the return to the career service of solely
the position of Director of Disability Determinations.
Appellant also argues that even if her former position was properly reallocated to the SES, the Board erred in rejecting her claim to reinstatement rights to a higher position than Assistant Director, Unemployment Benefit Payments.
N.J.S.A. 11A:3-3 provides that career service employees who opt not to join the SES or who do not receive approval to join the SES "shall have the right to reinstatement to the career service to a level directly under the [SES]." The Board implemented this statutory directive by adopting rules which prescribe standards for placement of the non-appointed incumbent in a position reallocated to the SES in a career position. N.J.A.C. 4A:3-2.3(b). When appellant's former position was reallocated to the SES, this rule provided:
A permanent employee holding a position allocated to the SES who is not selected to join the SES or chooses not to join the SES (referred to as a "non-appointed incumbent"), shall be placed in a career service position in the same department for which he or she is qualified.
1. The position shall be in the same
salary level as the incumbent's permanent
career service title, or, if no career
service position remains in the department at
that level, then, the next lower level at
which there are career service positions in
that department for which the non-appointed
incumbent is qualified.
2. In the event of movement to a position with a lower salary level, the non-appointed incumbent shall be placed at the closest lower step. The department head may, in his or her discretion, recommend to the Commissioner placement of a non-appointed
incumbent at a salary higher than this
minimum standard.
[
20 N.J.R. 850 (April 18, 1988).]
Appellant argues that by construing this rule to require
only positions which are vacant or held by provisional employees
to be made available to non-appointed incumbents, the Board
created a "potential risk that a non-appointed incumbent could be
placed in a title significantly lower than that which he would
have been placed if displacement rights were afforded." However,
the Board specifically addressed this issue during the pendency
of this appeal by amending N.J.A.C. 4A:3-2.3(b) to permit a non-appointed incumbent to exercise layoff rights to the extent
required to preserve his or her "right to reinstatement to the
career service to a level directly under the [SES]." N.J.S.A.
11A:3-3. N.J.A.C. 4A:3-2.3(b)(5) now provides that if there is
no position available to a non-appointed incumbent which is
vacant or occupied by a provisional employee, and the agency and
employee are unable to agree upon any of the optional
appointments set forth in N.J.A.C. 4A:3-2.3(b)(4), the "[l]ayoff
procedures [set forth in N.J.A.C. 4A:8] shall be utilized."See footnote 3
Although the amendment to N.J.A.C. 4:3-2.3(b) was not adopted until after appellant was assigned to the position of Assistant Director, Unemployment Benefit Payments, the Merit System Board concluded that this position was "the highest level layoff option available to the title Director, Disability
Determinations." This conclusion must be accepted unless it
"lacked fair support in the evidence, or ... violated legislative
policies expressed or implicit in the civil service act."
Campbell v. Department of Civil Serv.,
39 N.J. 556, 562 (1963).
Appellant has not cited any administrative regulation or other
authority to support her contention that layoff rights under
N.J.A.C. 4A:8 would include a right of appointment to a position
such as Director, Workplace Standards, or Director, Office of
Policy and Planning, which was encumbered by a career incumbent
who was serving in a higher level unclassified position pursuant
to a leave of absence. In any event, shortly after appellant's
former position was reallocated to the SES, these positions also
were reallocated to the SES, and appellant has failed to show
that she would have received a higher salary or any other
additional benefits if she had been temporarily assigned to one
of those positions during the interim period between her
appointment as Assistant Director, Unemployment Benefit Payments,
and the reallocation of those positions. Therefore, even if the
current version of N.J.A.C. 4A:3-2.3(b) had been in effect when
appellant's former position was reallocated to the SES, she would
not have been entitled to appointment to a higher level position.
Finally, appellant's argument that the Department of Labor
violated her rights by failing to undertake steps to create the
position of Director, Temporary Disability Insurance, and to
appoint her to that position, is clearly without merit. Whatever
appellant's superiors may have said to her about their future
plans for creation of such a position would not constitute an
enforceable promise. Cf. Walsh v. State, Dept. of Public
Advocate,
147 N.J. 595 (1997), rev'g on dissent,
290 N.J. Super. 1, 13-17 (App. Div. 1996). Moreover, the creation of this new
position would have been subject to the approval of the
Department of Personnel. N.J.S.A. 11A:3-1; N.J.A.C. 4A:3-3.3(b).
In any event, even if this position eventually had been created,
it undoubtedly would have been allocated to the SES in conformity
with the Department's current policy to assign all high ranking
managerial and policy positions to the SES. Appellant's further
contention that the purpose of her temporary assignment to the
Division of Temporary Disability Insurance was to induce her not
to participate in the SES selection process for the position of
Director of Disability Determinations was not presented to the
Merit System Board and hence is not properly before us. See
Nieder v. Royal Indem. Ins. Co.,
62 N.J. 229, 234 (1973). In
addition, there is no evidence which would support such a
finding.
Affirmed.
Footnote: 1 The record does not indicate what action, if any, the
Board took with respect to the two other positions which the
Commissioner of Labor requested to be reallocated to the SES.
Footnote: 2 We note that appellant was evaluated as performing
"significantly above standards" in a June 16, 1994 performance
evaluation and that she was not advised at any time of any
dissatisfaction with her work performance.
Footnote: 3 The pertinent subsections of the current N.J.A.C. 4:3-2.3(b) provide:
3. The appointing authority shall use
the following procedures to effect the
placement of the non-appointed incumbent:
i. Reassign the employee to a vacant
position;
ii. Separate a provisional employee without underlying career status and reassign
the non-appointed incumbent to the position;
or
iii. Return an employee, serving
provisionally in the highest permanent title
held by the non-appointed incumbent, and
reassign the non-appointed incumbent to the
permanent title vacated by the provisional
employee.
4. The organizational unit and the non-appointed incumbent may agree to use the
following optional procedures:
i. The non-appointed incumbent may
accept an appointment to another title at the
same or lower class code, in the same or
different title series for which the employee
is qualified in the same or another
organizational unit.
ii. The career status and compensation
rights of the non-appointed incumbent shall
be determined in accordance with the rules
governing voluntary demotion. See N.J.A.C.
4A:4-7.8.
iii. If the organizational unit offers
the non-appointed incumbent options under
either (b)3 or 4 above, the employee may
accept either option.
iv. If the organizational unit offers
only the option under (b)3 above, the non-appointed incumbent shall accept that option.
5. Layoff procedures shall be utilized when the organizational unit cannot effect the placement of a non-appointed incumbent under (b)3 or 4 above. See N.J.A.C. 4A:8.