On appeal from Merit System Board.
Before Judges Skillman, Eichen and Bilder.
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 "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 or who do not receive approval to join the shall have the right to reinstatement to the career service to a level directly under the ." 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 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. *fn1
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 "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" ...