Workers' Compensation Commission v. Driver

ELDRIDGE, Judge. The issues in these two cases concern the applicability of the statutory provisions governing the layoff of state employees and the reinstatement rights of laid-off employees. I. At the time when the events leading to the present appeals occurred, Maryland Code (1957, 1988 Repl.Vol., 1991 Cum. Supp.), Art. 64A, § 35, provided in subsection (b) as follows: “§ 35.

Laying off employees. íJí }■« s¡« “(b) In general.—Employees who are in positions that are to be abolished, discontinued, or vacated, because of a change in departmental organization or a stoppage or lack of work, shall be laid off.” $ ^ ^ ^ $ Subsection (c) of § 35 required the Secretary of Personnel to promulgate rules and regulations establishing procedures for ¹⁰⁸ the layoff of state employees and the reinstatement of laid-off employees to comparable occupational positions. 1 Subsection (d) specified various requirements for the Secretary’s rules and regulations, including a provision that a laid-off employee may displace another employee with less seniority in the same job classification in the same department. 2 Section 35(e) stated that the Secretary of Personnel “shall adopt rules and regulations for reinstatement of unclassified employees that are similar to the rules and regulations for reinstatement of classified employees.” 3 The provisions of Art. 64A, § 35, originated with Ch. 41 of the Acts of 1920. Subsection (b) has remained almost unchanged since 1920, and the subsection (c) requirement of administrative rules for reinstatement has similarly been in the statute from the beginning. Thus, Code (Bagby, 1924), Art. 64A, § 16, provided as follows: ¹⁰⁹ “16. An employee in a position that is to be abolished, discontinued, or vacated, because of change in departmental organization, or through stoppage or lack of work, shall be laid off and his name placed, in the order provided in the rules of the [State Employment] Commissioner, on the eligible list for the class of the position from which he was laid off.” In Hopper v. Jones, 178 Md. 429 , 13 A.2d 621 (1940), this Court construed Art. 64A, § 16, holding that the statute does not apply when the enacted budget bill deleted the appropriation for a specific position.

The facts of Hopper were as follows. For the fiscal year ending September 30, 1939, the claim staff of the State Accident Fund consisted of five investigators with the following annual salaries: $2,200, $2,200, $2,000, $1,800, and $1,500. The plaintiff Hopper was employed as one of the five investigators, being paid the $1,500 annual salary. The investigator in charge testified that the “ ‘duties that the investigators perform are all different, one from another.’ ” 178 Md. at 432 , 13 A.2d at 622 .

The budget bill for the fiscal year 1940, as enacted by the General Assembly in 1939, contained appropriations for only four investigators with annual salaries of $2,200, $2,200, $2,000, $1,800. See Ch. 284 of the Acts of 1939, at 540-541. 4 5 At the beginning of the new fiscal year, the State Employment Commissioner issued an order “laying off’ Hopper because the Legislature made no appropriation for his salary. Hopper then filed in the Baltimore City Court a petition for a writ of mandamus against the Commissioner, seeking rescission of the lay-off order and reinstatement to one of the investigator positions. 5. ¹¹⁰ Hopper contended that the Commissioner’s action was inconsistent with Art. 64A, § 16, and with the Commissioner’s rules and regulations adopted pursuant to § 16. According to Hopper, his position as an investigator had been “abolished ... because of change in departmental organization, or through stoppage or lack of work” within the meaning of Art. 64A, § 16, and therefore he was entitled to the protection of the merit system rules promulgated by the Commissioner.

Under those rules, when positions were abolished, the appoint-' ing authority was required to lay off those employees having the lowest “service ratings.” The investigator among , the five who had the lowest service rating was investigator Griebel who occupied the $1,800 per year position. Hopper argued that investigator Griebel should be laid off and that Hopper should be reinstated to the $1,800 position. The trial court dismissed Hopper’s mandamus petition, and the Court of Appeals affirmed. This Court indicated that, if the purpose of the enacted budget were simply to abolish any one of the five positions, rather than a specific position, and if the choice of which position to abolish were for the agency, then Art. 64A, § 16, and the rules pursuant to that section, would have been applicable and Hopper would prevail. 178 Md. at 431 , 13 A.2d at 622 .

In the Court’s view, however, the purpose of the enacted budget was to abolish the specific position held by Hopper, because of the different salaries and the designation of the $1,500 position for deletion. 178 Md. at 431-432 , 13 A.2d at 622 . The Court held that Hopper’s position was abolished “by operation of law,” and that such action was not within Art. 64A, § 16. The Court stated ( 178 Md. at 433 , 13 A.2d at 623 ): “Our conclusion is that since the Legislature has discontinued the appropriation for an annual salary of $1500 for an industrial accident investigator, and the appellant was the only investigator receiving that salary, he lost his position by operation of law.” The administrative rules and regulations adopted pursuant to the statute have changed somewhat since the decision in the Hopper case. Nevertheless, as previously discussed, the stat ¹¹¹ utory provision construed in Hopper remained virtually unchanged.

II

As this opinion resolves two separate cases, we shall separately set forth the facts of each case. A. No. 79, Workers’ Compensation Commission v. Driver and Parker Prior to July 1, 1991, Norman Driver held the position of Chief of the Hearing Division for the Workers’ Compensation Commission. Also prior to July 1, 1991, Joan Parker held the position of Administrator III with the Commission, at the annual salary of $44,350. She was the only Administrator III at that salary.

The budget bill for fiscal year 1992, beginning July 1, 1991, as submitted by the Governor to the General Assembly, retained the positions of both Mr. Driver and Ms. Parker. During the 1991 legislative session, the House Appropriations Committee’s staff indicated to the Workers’ Compensation Commission that the staff intended to recommend the deletion of five “lower level” positions from the portion of the budget applicable to the Commission. The Chairman of the Commission responded by opposing the deletion of any positions. Alternatively, the Chairman urged that if Commission positions were to be eliminated by the General Assembly, the Commission would recommend the deletion of Mr. Driver’s and Ms. Parker’s positions rather than the five lower level positions suggested by the Committee’s staff.

Subsequently, the House Appropriations Committee and the Senate Budget and Taxation Committee recommended to the entire General Assembly the deletion of Mr. Driver’s and Ms. Parker’s positions. The General Assembly passed the budget bill for the fiscal year beginning July 1, 1991, with Mr. Driver’s and Ms. Parker’s positions abolished. Both Mr. Driver and Ms. Parker were denied layoff and reinstatement rights pursuant to Art. 64A, § 35, and the ¹¹² administrative rules promulgated under the statute. The two employees filed grievances and pursued their cases through the State Employees’ Grievance Procedure, culminating in hearings before Administrative Law Judges.

In both cases, the Administrative Law Judges issued opinions holding that Hopper v. Jones, supra, was dispositive. Because each position was specifically eliminated by the budget enacted by the General Assembly, the Administrative Law Judges held that Mr. Driver and Ms. Parker had no layoff and reinstatement rights under Article 64A, § 35. Both grievances were “denied and dismissed.” The two employees filed in the Circuit Court for Baltimore County an action for judicial review, and the cases were consolidated for purposes of hearing and decision. Thereafter the circuit court rendered an opinion and order which reversed the administrative decisions and remanded the cases for further proceedings.

The circuit court found a critical factual distinction between the present cases and Hopper v. Jones, supra, saying: “This Court finds an important distinction between the instant case and Hopper. Hopper involves the application of a lay off statute analogous to Article 64, Section 35. The lay off provisions provided for benefits based upon performance evaluation. In Hopper , the legislature was the sole basis for the abolition of the subject employee’s position, which was identified by salary, and did not receive appropriation for the budget year.

The employee was deemed to be laid off by ‘an act of law and denied lay off benefits'.’ In Hopper , there were no facts indicating that the department had any input into the legislature’s act---- Under the instant facts, the Workers’ Compensation Commission, through its Chairman, Charles Krysiak, recommended that if positions were to be abolished (which the department opposed in general), that not the legislative selection but the department’s choice should be followed. The legislative act was not the sole basis for abolition of positions. Hopper is therefore distinguishable on significant facts.” ¹¹³ “Our facts involve the implementation by the legislature of the department’s choice of which positions to abolish for reasons that Chairman Krysiak explained and are noted several times in the record. The act of the legislature and the department combine to form the basis of the abolition of the loss of the appellants’ positions and this is well documented.” # :•« sfs sfc % % “This Court cannot conclude that the legislature acted independently of the agency which, ‘in substance,’ performed a departmental reorganizing in advance of the Budget Act which ‘in form’ eliminated the positions.

This Court prefers substance over form as this Court is certain the legislature would have intended. The legislature cannot be allowed to perform an ‘end run’ around the statute which it enacted to confer benefits on senior employees which the legislature has expressed its intention to support.” The circuit court went on to hold that, if Art. 64A, § 35, were interpreted as inapplicable in this situation, such interpretation would result “in denying similarly situated groups of employees the equal protection of the law without a rational basis in contravention of Article 24 of the Maryland [Declaration of Rights] and the 14th Amendment of the United States Constitution.... ” The circuit court concluded that, because of the Commission’s recommendation to the House Appropriations Committee, “the positions of appellants were abolished by department organization, and the appellants are entitled to be laid off under Art. 64A, § 35.” The Commission took an appeal to the Court of Special Appeals. Prior to any further proceedings in the intermediate appellate court, the parties filed in this Court a joint petition for a writ of certiorari which we granted. In this Court, the thrust of the two employees’ argument is that Hopper v. Jones, supra, is not controlling because today, under Art. 64A, § 35(d), and the administrative rules and regulations, the layoff and reinstatement rights of employees are different than they were when Hopper was decided.

Mr. ¹¹⁴ Driver and Ms. Parker also argue that, to deny them layoff and reinstatement rights under Art. 64A, § 85, while granting such rights to employees whose jobs are abolished by departmental reorganizations, would violate constitutional equal protection principles. B. No. 76, Adams et al. v. Department of Public Safety and Correctional Services, et al. Code (1985, 1988 RepLVol.), § 7-213 of the State Finance and Procurement Article authorizes the Governor, with the approval of the Board of Public Works, to reduce, by not more than 25%, any appropriation that the Governor deems unnecessary. 5 For a discussion of the history and purpose of this statute, see Judy v. Schaefer, 331 Md. 239 , 627 A.2d 1039 (1993). On October 23, 1991, because of a shortfall in state government revenues and to avoid a deficit, the Governor, with the approval of the Board of Public Works, signed orders pursuant to § 7-213 to reduce appropriations. Included among the reductions was the total abolition of more than 1500 employee positions in several state departments and agencies.

Each position abolished was individually identified by PIN number (personal identification number). ¹¹⁵ The selection of the positions to be abolished had been based on the recommendations of the departments and agencies involved. Thus, when the Governor reached the conclusion that the abolition of state employment positions was necessary because of the fiscal emergency, the Secretary of Budget and Fiscal Planning, acting upon the Governor’s direction, requested various state departments and agencies to submit recommendations of specific positions to be abolished, listed by PIN number, class code and position title. The Governor’s order abolished the positions recommended by the departments and agencies. Michael Adams and 32 other persons involved in this case had been employed in various state departments and agencies.

Their positions had been specifically abolished by the Governor’s order of October 23, 1991, and they were denied layoff and reinstatement rights pursuant to Art. 64A, § 35. They filed grievances, took the appropriate actions under the State Employees’ Grievance Procedures, and finally had a hearing, extending over several days, before an Administrative Law Judge. Before the Administrative Law Judge, the grievants were “basically not contesting the Governor’s action or the approval of the Board of Public Works.” Their position was essentially that, once the Governor decided upon the abolition of the positions, the provisions of Art. 64A, § 35, and the administrative rules pursuant thereto, should determine which employees actually lost their jobs. The various state departments and agencies, represented by the Attorney General, argued that Hopper v. Jones, supra, was controlling.

The Administrative Law Judge, in an extensive opinion, decided that the “[gjrievants are entitled to rights afforded under the layoff statute, Md.Ann.Code, Art. 64A, § 35.” Like the circuit court in the Driver and Parker cases, the Administrative Law Judge in Adams placed much weight on the fact that the recommendations of the agencies were accepted, stating: “The State, on the other hand, contends that it was the appropriation reduction pursuant to § 7-213 which mandated the abolition of jobs. The State’s position is that Section ¹¹⁶ 7-213 is not a personnel rule, regulation or policy over which ‘management’ had control. While it is true that the appropriation reduction was predicated on § 7-213, it is equally apparent that the various agencies, upon request, submitted the information to the Governor identifying which jobs had been selected for abolition. It was this submission of information which dictated which jobs were abolished.

The Governor and the Board of Public Works did not randomly select Position Identification Numbers (PINs) but were supplied that information from the agencies. Since it was that information and that information alone which dictated which positions were abolished, it must be concluded that management exercised control over that decision. Management may not have had control over the fact that such reductions were necessary but they certainly maintained total control over selecting which positions were ultimately abolished. “In light of the above, the response to the question “Who did wrong?” must be “The various appointing authorities.” As stated earlier, the Grievants’ cause of complaint is aimed directly at the actions of the appointing authorities, not that of the Governor or Board of Public Works.” The Administrative Law Judge distinguished Hopper v. Jones, supra, as follows: “Thus, § 7-213, as did its predecessor, authorizes the Governor to reduce appropriations after the enactment of the budget bill. Such action by the Governor with the Board of Public Works’ approval is not comparable to what occurred in Hopper .

In Hopper , the Governor’s action or inaction eventually became law. In the instant grievances, the reduction in appropriation did not create or change any laws. Neither is the action an amendment to the budget as defined in § 7-209. The Governor with the approval of the Board of Public Works administered a law, Section 7-213.

The result was a reduction in appropriations which limited the spending of specified agencies. Such action was a ministerial function, not a legislative act. ¹¹⁷ “Thus, by examining the function being performed by the Governor and Board of Public Works as it relates to § 7-213, it is clear that such action is executive, not legislative. Accordingly, any results from exercising that function, such as job abolishment, are not legislative in nature. If the results are not legislative, then it cannot be concluded that the job abolitions were by operation of law.” The various state departments and agencies filed an action for judicial review in the Circuit Court for Anne Arundel County.

The circuit court reversed, holding that the positions were abolished by operation of law, that Hopper v. Jones was controlling, and that, therefore, the employees were not entitled to layoff and reinstatement rights under Art. 64A, § 35. The employees noted an appeal to the Court of Special Appeals. Prior to the filing of briefs