DPA Case Number 03-D-0113, 03-F-0114, 03-R-0115, 03-B-0116, 03-L-0117, 03-P-0118, 03-R-0119, 03-T-0120, 03-Y-0121, 03-N-0124 - Appeal from Layoff

Final Non-Precedential Decision Adopted: May 13, 2004

By: Michael T. Navarro, Director

This matter was heard before Wesley M. Travis, Jr., Administrative Law Judge (ALJ), Department of Personnel Administration (DPA) at 9:00 a.m. on January 9, 2004, January 16, 2004, February 10, 2004, February 11, 2004 and March 10, 2004, at Sacramento, California.

Appellants were present and were represented by Kasey Christopher Clark, Interim Chief Counsel, California Union of Safety Employees (CAUSE).

Joan Branin, Labor Relations Counsel, represented the Department of Corporations (DOC), respondent.

Evidence having been received and duly considered, the ALJ makes the following findings of fact and Proposed Decision.

Appellants received formal notice dated September 30, 2003, stating that they were being laid off effective October 30, 2003. Kasey Christopher Clark, Interim Chief Counsel, CAUSE, filed a request (appeal) for a demotion in lieu of layoff on October 10, 2003. The Supervising Corporations Investigator, In Pro Per, filed a request (appeal) for a demotion in lieu of layoff on October 29, 2003. The appeal complies with the procedural requirements of Government Code section 19997.14.

In their appeal and at hearing, appellants claimed the noticed layoffs were not made in good faith and the required layoff procedure was not followed. Appellants specifically alleged as follows:

1. Respondent failed to follow the required procedure for conducting the layoff and the targeting of only the investigative classifications for layoff constituted bad faith.

2. Respondent's failure to survey all Department personnel to mitigate layoff constitutes improper procedure and the inconsistent explanations as to whether a survey was conducted demonstrates lack of good faith in the layoff process.

3. The layoff contravenes the provisions of the Department of Administration's layoff manual.

4. Respondent's claimed inability to fulfill its legislative mandate is a farce.

5. The posting of vacancies after declaring appellants surplus and the alleged "lock-out" in conjunction with the issuance of layoff notices is indicative of bad faith.

6. Respondent's posture in the meet and confer and its refusal to provide requested documents is indicative of bad faith.

7. Appellants' seniority computations were made more than 60 days prior to the effective date of layoff.

In July 2002, the Department of Finance (DOF) issued a Budget Letter to all departments requiring a 10 percent budget reduction. As a result, DOC lost thirty positions and $1.6 million in funding.

On April 1, 2003, DOF and DPA issued a notice that all departments would have to reduce their personnel services budget by at least 10 percent and ordered all departments to submit a layoff and reduction plan by April 22, 2003. The DOF instructed the departments to make the reductions, have no deficiencies, maintain all of their existing legislative mandates, and do nothing that required legislation.

In compliance with the DOF/DPA order, the DOC formed a team to develop its layoff plan. The team did a workload evaluation and an analysis of the DOC's mandates. It determined that the DOC had a backlog in exams and licensing, which were the two areas of their legislative mandates. The team concluded that their departmental mandates could not be met if they reduced the number of examiners and/or attorneys. The team determined further that these two revenue generating classifications were essential in handling licensing and regulatory exams and the civil and administrative duties of the DOC.

Much of the Investigator's (appellants') time and duties involved investigating and developing criminal cases for the cities and counties, which was not a legislated mandate for the DOC. The DOC has no authority to prosecute criminal cases, so their investigations were used to assist the state Attorney General and the county district attorneys in criminal prosecutions.' Although the appellants' activities generated some revenue, their time was not fully reimbursable by these agencies. In order to preserve existing DOC program mandates, the entire investigations unit within the DOC was slated for elimination. The elimination of the investigations unit created a savings to the DOC of approximately $900,000 to $1,000,000.

On April 18, 2003, the DOC submitted its layoff plan to the DPA and to the DOF. The DOC's layoff plan submitted to the DOF included a request for an exemption. The exemption request discussed the ability of the appellants to generate revenue and the overall impact of further staffing reductions to the DOC. The DOC placed all the appellants from the investigations unit on the surplus list and then on the State Restrictions on Appointment (SROA) list. This permitted the employees to transfer to other departments without hiring freeze exemptions. The DOF and the DPA instructed the DOC to move forward with its layoff in September 2003.

On April 23, 2003, the DOF and the DPA notified all departments that personal services funding had been reduced again, and informed the departments that the DOF would not approve any deficiency request related to employee compensation.

In April 2003, the investigators were informed that they were facing layoff and that they were being placed in surplus status. Officials from the DOC Human Resources Division (HR) met with the appellants on several occasions between April and September 2003, to advise them about the layoff process and to assist them in finding alternate work. The HR set up a special e-mail box for questions regarding the layoff. The HR placed information on the DOC Intranet regarding jobs within the DOC and at other state agencies.

In April 2003, seniority scores for the appellants were obtained from the DPA. The DPA delegated the DOC to recertify the seniority scores. The DOC recertified the seniority scores in mid-September 2003, about two weeks prior to the date layoff notices were given to appellants.

The management team and the HR officials considered the survey options that had been outlined in the April layoff plan. They concluded that they did not want to create any more vacancies through retirement, job-sharing, reducing time bases, or leave of absence because it would result in less work productivity and create more backlogs in exams and licensing. None of the appellants volunteered to vacate their positions through retirement, job sharing, reduced time base or leaves of absence.

On June 30, 2003, the DOF took 25 positions from the DOC in a statewide sweep of all vacant positions and implemented a hiring freeze.

On July 25, 2003, the DOF explained in a budget letter that the swept positions were taken in addition to the positions that were to be cut in the 10 percent reduction. In a budget letter of August 1, 2003, the DOF increased the percentage of savings needed from 10 percent to 12 percent.

The appellants received their layoff notices on or about September 30, 2003. Their layoffs were effective on October 31, 2003. After receiving their layoff notices, the appellants were informed that they should not return to their offices and were instructed to work out of their homes until receiving further direction from their supervisor. Appellants were directed to contact their supervisor and obtain permission if they wanted to come into their respective offices.

The HR assisted the appellants in finding alternative positions with the Board of Prison Terms (BPT), the Department of Health Services (DHS), and others. Prior to the effective date of the layoff, eight of the nine rank and file appellants found other positions in state service. There was only one appellant laid off. Two appellant's took demotions in lieu of layoff and are still with the DOC. The remaining appellants are employed by state agencies in Peace Officer positions. The Supervising Investigator also found another position in state service. The DOC paid the salary of several of the appellants while they attended training with the BPT at the end of October 2003.

On May 16, 2003, the DPA notified the California Union of Safety Employees (CAUSE) and the excluded employee's organizations that they could meet and confer over the impact of the layoffs. On October 2, 2003, CAUSE, the DOC and the DPA met to discuss possible ways to mitigate the impact of the layoffs. The DOC agreed it would not oppose any unemployment insurance claims by the appellants and agreed to assist the appellants in finding other positions in state service. At the meet and confer session, CAUSE requested documents pertaining to DOC's layoff decision. Said documents were later provided pursuant to CAUSE's request for discovery in preparation for its appeal.

On October 10, 2003, CAUSE filed its appeal with the DPA on behalf of appellants. Excluded appellant Noonan filed an appeal with the DPA on October 29, 2003.

As indicated above, the DOC was ordered to reduce its budget by 12 percent and maintain all of its legislative mandates. The DOC had a backlog in exams and licensing, which were the two areas of their legislative mandates. The DOC determined that these legislative mandates could not be met if it reduced the number of examiners and attorneys, and that these two classifications were essential in handling licensing and regulatory exams and the civil and administrative duties of the DOC. The DOC determined that its entire Investigative Unit could be eliminated without jeopardizing the DOC's legislative mandates and that the Investigators' duties regarding administrative and civil matters could be adequately absorbed by the DOC's examiners and attorneys.

A majority of appellant's time and duties were spent investigating and developing criminal cases for the Attorney General and county district attorney's offices. Criminal prosecution is not a DOC legislative mandate.

Appellants argued that they could also work on civil and administrative matters, and they could do it cheaper and better than the lawyers and examiners. However, appellants presented no persuasive evidence in support of their contention.

The decision to layoff is a managerial prerogative and is exempt from the negotiation process. (Newark Unified School District, (1982), PERB Dec. No. 225 [6 PERC sec. 13164].) Government Code section 19997.1 provides that the duties performed by an employee who was laid off may be reassigned to any other employee. Given the directives of the DOF and the DPA to reduce its budget, the DOC's decision to layoff appellants to accomplish the mandated fiscal reduction without jeopardizing its legislative mandates was reasonable and proper under the circumstances.

Government Code section 19997.2 (a) provides that with the approval of DPA, a department may consider for layoff only the employees of a designated geographical, organizational or functional subdivision of a state agency. (See also, Glasner v. Department of Public Health, 253 Cal.App.2d 727.) The Investigations Unit was an organizational or functional subdivision of the DOC. The DPA approved the DOC layoff of the entire Investigations Unit. Thus, respondent's layoff of one of its subdivisions and the DPA's approval thereof complied with Government Code section 19997.2.

Appellants also site Section 700 of the California Civil Service Manual as persuasive authority on the issue of organizational or functional subdivision layoffs. However, Section 700 does not prohibit functional layoffs. It merely states that functional layoffs are "very rare" and are "appropriate" if the subdivision is a function or project that is clearly distinct from other department operations.

A designee from DPA's Classification and Compensation Division (CCD) credibly testified that though layoffs are often "across the board," it is not done in every case. She testified that in small departments such as DOC, one classification is often identified for layoff and subsequently approved by the DPA. She testified further that it is the responsibility of departmental management to decide how best to meet its legislative mandates and that the DPA as a reviewing body cannot second guess a department's decision.

Appellants' claim that DOC's Investigation Unit is not an organizational or functional subdivision of the DOC is without merit. In addition, appellants have presented no persuasive evidence in support of their contention that DOC's failure to institute an "across the board" layoff instead of an organizational or functional subdivision layoff is evidence of bad faith in regard to the layoff process.

Appellants claimed that seniority computations for the Investigations Unit were made more than 60 days prior to the effective date of layoff. However, undisputed testimony at hearing established that DOC had recertified the Seniority Scores a few days before sending out layoff notices. Furthermore, there is no statutory or regulatory authority requiring state wide calculation of Seniority Scores when, as in this case, an organizational or functional subdivision of a department has been abolished.

In interpreting the good faith criteria necessary in a layoff, the courts have held that "the layoff action will be upheld if taken in good faith, but invalidated if it is a subterfuge for the piecemeal dissolution of the civil service system [citation] or a sham method of ousting an unwanted employee [Citations]. Reorganization of governmental offices promulgated in good faith and for reasons of efficiency or economy does not 'nullify the basic principle' of civil service even though it results in abolition of one or several civil service positions." (Placer County Employees Association v. Board of Supervisors (1965) 233 Cal.App.2d 555, 559.)

Appellants' numerous allegations of bad faith and respondent's failure to follow required procedure regarding its decision to layoff appellants and its subsequent conduct following the Notice of Layoff are unsupported by the evidence.

On September 29, 2003, appellants were given instructions to take files with them and work from home. Appellants contend that this directive amounted to a "lock out." A "lock out" occurs when an employer makes it physically impossible for its employees to work (Acuff v. Unemp. Ins. App. Bd. (1989) 208 C.A.3d 1038, 1049) or when an employer withholds work from its employees in order to gain concessions from them (Smith v. Michigan Employment Sec. Commission 410 Mich. 231).

Appellants argued that they were having trouble gaining computer access from home which impacted their ability to close out files. Appellants assigned to the Sacramento and San Francisco offices contend that they called to complain and respondent failed to return their calls. However, appellants presented no corroborating evidence that working at home had a negative impact on their work or that respondent made it physically impossible for appellants to complete their work or gain access to the office's main computer, nor did appellants present evidence that respondent withheld work from appellants to gain concessions from them. Further, appellants presented no corroborating evidence that they called respondent to complain or that alleged complaints, if any, were not properly addressed. Consequently, appellant presented no evidence to support a finding that respondent acted in bad faith by instructing appellants to work from home.

On the other hand, respondent presented evidence that it had valid reasons in having appellants work from home. First, there was evidence that confidential information had been leaked by one of the investigators, and respondent did not want to risk another security breach; and, second, in allowing appellants to work from home, it permitted appellants more time to pursue other employment.

Appellants' reliance on Government Code section 19997.14 as authority requiring respondent to conduct a survey during the layoff process is misplaced. There is no mandatory requirement that respondent conduct a formal survey or that failing to do so would be evidence of bad faith.

The DPA's Layoff Manual is merely a procedural guideline and does not have the full force and weight of the law. Part of respondent's layoff plan represented it would attempt to mitigate layoff by surveying all employees to determine interest in voluntary reduction in time base, job sharing, leave of absence, and retirement and/or partial service retirement to determine if there was sufficient interest that could result in additional vacant positions. The DOC was required to meet all of its legislative mandates, and it had already suffered significant losses of positions essential to that endeavor. A DOC designee credibly testified that a survey would have been counterproductive in that it would have encouraged more vacancies in crucial positions that it could ill-afford. Respondent's failure to conduct a comprehensive survey or any misunderstanding appellants may have had regarding the survey is neither evidence of bad faith nor a failure to follow proper layoff procedure.

Appellants argue that respondent's posture in the meet and confer on October 2, 2003 and its subsequent refusal to provide documents requested at the meeting was indicative of bad faith. Appellants' argument is without merit.

The purpose of the meet and confer was to address ways to mitigate the impact of the layoff. Appellants' attempt to use the meet and confer as a forum to discuss or contest the DOC's decision for the layoff was inappropriate. The decision to layoff is a managerial prerogative and is exempt from the negotiation process. (Newark Unified School District, (1982), PERB Dec. No. 225 [6 PERC sec. 13164].) Appellant requested documents pertaining to respondent's layoff decision. Thus, these documents were irrelevant to issues of mitigating the impact of the layoff. Moreover, any discussion at the meet and confer with designees who were not on the management team that selected the Investigating Unit for layoff would have been improper. Appellants presented no persuasive evidence that respondent's conduct at the meet and confer supports their allegations of bad faith.

Appellants claimed that because respondent was contemplating hiring and promoting in other classifications while separating long-term employees in the investigator classifications is demonstrative of bad faith.

The court has upheld a layoff even though at the same time the department was laying off employees, it employed others in new positions. (Peradotto v. State Personnel Board (1972) 25 Cal.App.3d, 30.)

A DOC designee credibly testified that, although the DOC was facing deficits and had to layoff employees, it still needed to create an employment list that could be used some time in the future when the economy improved. Although four Office Assistants were hired during the layoff process, appellants showed no interest in applying for these positions. There were also twelve promotions in place during the same time period, equating to nearly $15,000 per year. Appellants failed to prove the twelve promotions in place would not have occurred in the normal course of events or that the promotions were designed to circumvent the layoff process. Appellants also failed to show that disallowing the promotions or hiring the Office Assistants would have impacted respondent's decision to layoff appellants. In addition, appellants presented no persuasive evidence that respondent's personnel actions in this regard were evidence of bad faith or otherwise improper.

 

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Government Code section 19997 (a) states that whenever it is necessary because of lack of work or funds, or whenever it is advisable in the interest of economy, to reduce staff of any State agency, the appointing power may lay off employees pursuant to this article and department rules.

Government Code section 19997.2 (a) allows a department to conduct an organizational or functional subdivision layoff with the approval of DPA.

Government Code section 19997.14 allows employees to appeal a layoff on the grounds the required procedure has not been complied with the layoff has not been made in good faith or was otherwise improper.

Considering the totality of the circumstances, the evidence supports respondent's reasonable belief that laying-off the entire staff of its Investigations Unit was the most efficient means to achieve its required funding and position reductions, and the most effective manner in which to ensure that its legislative mandates could be met.' Respondent did not act improperly in its decision to proceed with an organizational or functional subdivision layoff or its implementation. The DPA approved respondent's decision. Thus, respondent complied with the required procedure, the layoff was not done in bad faith and it was not otherwise improper.

 

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that the appeals from layoff effective October 30, 2003, are denied.