DPA Case Number 04-L-0014 - Appeal from Layoff

The DOF issued additional budget reduction directives to departments in July and August 2003. On July 10, 2003, the DOF advised departments the April personal services 10% budget reduction was being implemented. It also advised departments that all positions vacant on June 30, 2003 were being abolished. The DOF further advised departments that Section 4.10 of the proposed 2003 Budget Act allowed the DOF to realign department spending plans and reallocate funds between departments and programs. The DOF instructed departments to work with the DOF to reconcile their budgets and address their proposed personnel reduction plans.

Section 4.10 was adopted by the Legislature as part of the 2003 Budget Act (Chapter 157, Statutes of 2003). In addition to giving the DOF authority to reallocate funds between departments and programs, it provided the following directive and authority in relevant part:

(c) Notwithstanding any other provision of law, the Director of Finance shall, in order to ensure that $1,066,000,000 of savings is achieved through reduced employee compensation costs, abolish at least 16,000 permanent positions from departments including all boards, commissions, departments, agencies, or other employment authorities of the state, as determined by the Director of Finance, A position that is abolished by the State Controller pursuant to Section 12439 of the Government Code or pursuant to Executive Order D-71-03 issued by the Governor on July 1, 2003, may also be included in the positions to be abolished pursuant to this section and may be counted by the Director of Finance toward the position reduction required by this section. The Department of Finance shall have the authority to reestablish any position eliminated as a result of this section if reductions in employee compensation of an equal or greater amount are implemented pursuant to new contracts or contract amendments ratified by the Legislature or otherwise implemented by the Department of Personnel Administration. Any adjustments made pursuant to this subdivision shall not be subject to the provisions of subdivision (g).

(d) The Director of Finance may reduce the total number of positions to be abolished pursuant to subdivision (c) by a number of positions that the Director of Finance determines no longer must be abolished to achieve the purposes of this section due to revisions to collective bargaining agreements or the way departments provide employee services.

The DOF issued another budget letter on July 25, 2003. This directive clarified that the 10% personal services budget reductions mandated in April 2003 had to include a 10% reduction from each of a department's funding sources. It also reiterated the DPA's July 1, 2003 instruction requiring all departments to issue surplus notices to employees with 30 months or less State service. The DOF further notified departments that once it approved a department's reduction plans, appropriate changes could be made to the surplus list. It cautioned departments to carefully select their personnel reductions and that they should be prepared to defend why they selected particular positions and the expected programmatic impact.

On August 1, 2003, the DOF notified departments that the 2003 Budget Act required additional employee compensation reductions and that it anticipated a corresponding elimination of 16,000 permanent positions. The Legislature assumed State departments would achieve a $855 million savings related to employee compensation. Departments were directed to provide the DOF with revised reduction plans equaling 16% of a department's general fund. Non-general fund personnel services allocations also had to be reduced by 12%.

On August 22, 2004, the DOF required departments to issue surplus notices to all employees who might be affected by the updated reduction plan in effect at that time.

In addition to reducing personnel costs through the elimination of funds and positions in the budget, the Governor and the DOF placed other personnel transaction restrictions on the appointing authorities.

State entities had been subject to various hiring freezes since at least October 2001. These hiring freezes generally prohibited filling vacancies that would constitute a new hire to State Government with some specified exceptions which included Career Executive Assignment (CEA) positions.

Two Executive Orders addressing hiring freezes were issued in 2003. The first, Executive Order D-70-03, was issued by then-Governor Gray Davis on July 1, 2003. This order extended the general hiring prohibition to June 30, 2005.

Governor Arnold Schwarzenegger issued Executive Order S-3-03 on November 19, 2003. In addition to prohibiting filling vacancies that would constitute new hires to State Government, it prohibited filling vacancies through promotions unless the promotion involved a CEA position. It also encouraged departments to move personnel from the State Restriction of Appointments ​(SROA) lists to non-General Fund positions and to "otherwise speed the necessary reduction in General Fund personnel services costs." The DOF was given authority to direct the implementation of the Executive Order, grant exemptions, issue management memos and provide other instruction as necessary. By this time the Legislature had enacted the 2003 Budget Act including Section 4.10.

Pursuant to the Governor's direction and its Legislative authority, the DOF issued a Budget Letter on November 26, 2003. This Budget Letter provided more specific instructions regarding Executive Order S-3-03. Departments were instructed to cease making new commitments for future expenditures. Departments were also notified they could implement the following actions without approval of a request for a hiring freeze exemption:

"2. Filling a position exempt from civil service pursuant to Article VII, Section 4 of the California Constitution;

3. Filling vacancies that arise in any position presently designated by the State Personnel Board as a Career Executive Assignment (CEA);

4. Filling positions for which a hiring freeze exemption has been previously approved but the position has not been filled;

5. Mandatory Reinstatement;

6. Required reassignments (e.g., transfers, demotions) resulting from an approved layoff plan;

7. A prior commitment if a legal obligation exists; and

8. Intradepartmental transfers provided that the position being filled does not increase General Fund costs or the costs of a fund that is either transferable to the General Fund or is not solvent."

DOF reiterated that any request for an exemption to the hiring freeze had to be submitted to and approved by the DOF. Testimony at hearing indicated exemptions involving the placement of employees on the SROA and SSROA lists were usually granted.

The CBDA planned to meet the April 2003 10% personnel services reduction by abolishing seven vacant positions. Therefore, it did not submit a layoff plan to the DPA in April 2003. In response to the July 1, 2003 directive, the CBDA notified the DPA on or about July 7, that the classes of Information System Technician; Engineer, Water Resources; and Business Service Officer II (Supervisor) each had one employee with less than 30 months of State service. Appellant was the Engineer, Water Resources, who had less than 30 months of State service. Respondent placed appellant and the other identified employees on the SSROA or SROA lists on or about July 7, 2003. The CBDA subsequently learned the Business Service Officer II (Supervisor) had more than 30 months of State service. This employee and classification were removed from surplus status and the SROA list.

Throughout the summer of 2003, the CBDA worked with the DOF to establish its budget and reconcile its required personnel reductions and funding sources. It reviewed its positions to determine which employees performed the least critical work. CBDA Staff Services Manager and Deputy Director, CBDA's Water Supply and Reliability Regional Coordinator, discussed the critical nature of the work performed by various CBDA employees including appellant. It was determined that eliminating appellant's position would have the least impact on the water program because the work she performed had become less critical than that of other positions. Appellant provided technical support. She generally performed technical tasks rather than the managerial oversight work that supported the CBDA's oversight responsibilities.

At some point during its negotiations with the DOF and its evaluation of its mission and supporting positions, the CBDA determined that it needed to hire an Associate Governmental Program Analyst (AGPA) to process proposals being submitted in connection with a $75 million watershed program grant and an Assistant Information Technician (AIT) to provide systems information technology and server support. To meet these operational needs within its authorized number of positions, the CBDA proposed filling an existing, unfilled AGPA position and reclassifying an unfilled Environment Scientist position to an AIT position. Both the AGPA and AIT positions were funded with Proposition 50 money. The CBDA also determined that it needed a retired annuitant to provide analytical and administrative support to the 23 State and Federal members of the CBDA. The retired annuitant was a General Fund position. CBDA required the DOF's approval to fill these positions. It submitted "Request for Hiring Freeze Exemptions" to the DOF in October, 2003 and received approval for filling these positions the same month. The CBDA also hired three "Resources Agency Staff." The funding sources for these positions is unknown. It is also unclear if a hiring freeze exemption was required

Throughout the summer and fall of 2003, DPA's Associate Personnel Analyst worked with CBDA's Staff Services Manager to attempt to mitigate any CBDA layoff, and to approve the CBDA's proposed layoff plan. The Associate Personnel Analyst asked the CBDA to review the work being done by retired annuitants and intermittent employees to see if these employees could be eliminated. She also asked the CBDA to review the critical nature of the work being performed by the employees who had been identified for potential layoff.

The CBDA submitted and DPA approved the CBDA's formal layoff plan on September 10, 2003. The plan called for the layoff of appellant and one other employee in a different classification with less than 30 months of State service. Eleven vacant General Fund positions were also eliminated. At the time the Associate Personnel Analyst endorsed the CBDA's layoff plan, she did not know the CBDA was negotiating the DOF's approval to hire two full-time employees and one retired annuitant in classifications different from that occupied by appellant.

DPA became aware of the CBDA's intention to fill the AGPA and AIT positions and to hire a retired annuitant sometime after September 10, 2003. DPA discussed with the CBDA the critical nature of the positions being filled compared to the critical nature of appellant's position. DPA required the CBDA to submit written justification explaining why the two unfilled positions could not be eliminated instead of laying off the appellant. On October 20, 2003, the CBDA submitted a memorandum to DPA justifying its intention. The DPA called the DOF to ensure that the CBDA and the DOF had assessed the critical nature of the positions being eliminated compared to those being filled. After review of the CBDA's operational assessment and consideration that the positions being filled were not in the same classification as those of the employees being laid off, the DPA concluded the CBDA's actions were consistent with the State's past layoff procedures.

The DOF approved the CBDA's reduction plan on or about September 18, 2003. On or about September 25, 2003, the DOF notified the CBDA that its 2003 Budget Act appropriation was being reduced by approximately $1.88 million pursuant to Section 4.10 of the 2003 Budget Act. The CBDA implemented its layoff plan effective March 1, 2004.

The ARB began implementing a plan to reduce its positions and employees prior to May, 2003. It originally planned to eliminate positions by not filling them and allowing them to be eliminated automatically pursuant to Government Code section 12439. Section 12439 states in relevant part:

"The Controller shall abolish, effective July 1, any state position which was vacant continuously during the period between October 1 and June 30 of the preceding fiscal year. Those positions which were vacant for the last nine months of a fiscal year because of a hiring freeze in effect during part or all of the none-month period shall also be abolished unless the need for continuing these positions is provided in written notice to, and approval is granted by, the Director of Finance...."

The ARB simultaneously instituted an internal hiring freeze whereby it planned to reduce the number of its employees by not hiring any personnel from outside the ARB.

The ARB's self-imposed plan to systematically reduce positions and personnel was accelerated by the 2003 Budget crisis and subsequent DOF and DPA Budget Letters and personnel mandates. As a result of these directives, the ARB identified approximately 100 positions for reduction. All of its unfilled positions were eliminated as of July 1, 2003. After eliminating unfilled positions, the ARB determined it would have to lay off approximately 52 employees. It submitted a layoff plan to DPA in April or May 2003. The layoff plan included employees in BU 9. The ARB ultimately did not lay off any BU 9 employees.

On June 30, 2003, the DOT lost "hundreds" of vacant positions as a result of the DOF's decision to abolish all unfilled positions pursuant to Government Code section 12439.

In response to the DPA's July 1, 2003 directive to place all employees with 30 months or less of State service on surplus status, the DOT identified approximately ten BU 9 engineering classes and the allotted number of corresponding employees were put on the SSROA list on or about July 10, 2003.

On July 14, 2003, the DOT implemented an internal hiring freeze. It notified its managers not to submit requests to fill positions. It further informed the managers it would only fill positions where a commitment had been made prior to July 1, 2003.

Between January 2003 and April 2004, the DOT continued to discuss and negotiate budget and corresponding position reductions with the DOF. The number of employees affected by or facing layoff was in a state of flux. As the revenue estimates decreased and collective bargaining labor savings remained elusive, the potential number of layoffs increased. When the 2003 Budget Act passed in August or September 2003, the DOT determined it had approximately 600 more employees than budgeted positions. It determined the Transportation Engineering (Civil) (TEC) class was going to be subject to a statewide layoff. However, before it could formally identify employees potentially affected by and/or facing layoff, the DOT had to realign its existing workforce. Some employees occupied positions that were no longer being funded while other funded positions in critical work areas remained unfilled. The majority of unfilled positions had been eliminated. The DOT feared that the DOF would again implement Section 12439. This would further exacerbate the need for layoffs because unfilled positions and the corresponding funding for such positions would be eliminated thus requiring further layoffs.

In mid-November 2003, the DOT lifted its internal hiring restrictions and allowed managers to fill funded, unfilled positions by reassigning existing DOT staff. The Division of Engineering Services which was headquartered in Sacramento had a large number of the funded but unfilled positions that were potentially susceptible to elimination pursuant to Section 12439. Therefore, the DOT transferred some of its TEC's into these positions as well as into other positions in counties adjoining Sacramento County.

The DPA approved the DOT's layoff plan in mid-December 2003. By that time, the number of employees the DOT anticipated would be receiving surplus notices had risen to 800.

By April 2004, the DOT was no longer in layoff mode. All DOT employees were removed from surplus, SROA, and SSROA status. The DOT ultimately did not lay off any employees from BU 9.

Appellant argued there was no lack of funds requiring her to be laid off because (1) the CBDA's 2003/2004 and 2004/2005 Budgets remained the same or increased and included appellant's position; (2) respondent hired employees after it placed appellant on the surplus and SSROA list, thus increasing rather than decreasing its personnel costs; and (3) appellant's layoff would increase the CBDA's overall expenses because her work would have to be done by contracted employees.

1. Budget and Position Reductions

Appellant's argument that the CBDA's 2003/2004 and 2004/2005 budgeted funds and positions remained the same and included appellant's position is misleading, misstates the evidence, and is without merit.

The CBDA's 2003/2004 General Fund appropriation was reduced from its 2003 budgeted level by approximately $1.88 million through the authority vested in the DOF by Section 4.10 of the 2003 Budget Act. A corresponding 13 positions had to be eliminated from CBDA's previously authorized staffing level as a result of the reduction in funds.

Although appellant alleges the CBDA's 2004/2005 budget showed an increase in personnel funds, the CBDA's 2004/2005 final budget was not introduced. Furthermore, the Governor's proposed 2004/2005 budget indicated that all the positions eliminated through Section 4.10 in 2003 remained unfilled. The mere listing of these unfilled positions in the Governor's proposed 2004/2005 budget does not indicate the positions were not eliminated or that they were to be filled.

Appellant was laid off because CBDA's personnel funds and corresponding positions were reduced. There was no violation of the MOU or Government Code.

2. Hiring of Employees

Appellant argues that because respondent had adequate funds to hire employees in other classifications, there was no lack of funds that required her to be laid off.

This argument ignores management's prerogative to identify the specific positions that will be subject to reduction. (California Department of Forestry and fire Protection (1993) PERB Order No. 999-S [17 PERC ¶ 24111].) CBDA had to reduce its total number of positions because of reduced funds. It determined that appellant's position should be eliminated in order to meet the reduced funding level. There was no evidence that absent these hirings, appellant would not have been laid off.

Furthermore, appellant's layoff, even though employees in other classifications were being hired, is consistent with DPA's past practice and policy that a layoff can be approved if the employees being hired are in classifications other than those of the employee being laid off (see DPA's Layoff Manual and DPA Rule 599.854.1).

There was no evidence respondent attempted subterfuge or a dismantling of the civil service system (See Placer County Employees Assn. v. Board of Supervisors (1965) 233 Cal.App. 2d 555, 559). Management simply exercised its prerogative to decide which positions were most essential to its mission and its discretion to determine how to allocate its reduced funds.

Respondent did not violate MOU Section 13.1 (a) or the Government Code by hiring employees in other classifications while laying off appellant.

3. Contract Work and Expense

Appellant argued the support work she provided for two contracted Engineering firms was ongoing and would be absorbed by the contractors, thus increasing expense to the State. There was simply no evidence to support this allegation. Appellant testified one of her State co-workers, not contract employees, assumed some of her duties. Respondent CBDA testified the contract amounts had been reduced. This argument was dismissed at hearing on motion of the CBDA.

Appellant alleged her layoff was procedurally flawed because she was selected for layoff and her layoff was justified to DPA based on seniority - not the operational necessity of her position compared to other positions.

Appellant's argument is without merit for several reasons. First, there was no evidence the DPA approved the layoff plan simply because the two employees to be laid off had less than 30-months of State service. Second, this argument dismisses the DOF's July 25, 2004 instruction to Departments that they should carefully select their personnel reductions and that they should be prepared to defend their selections and the expected programmatic impact. Although initial surplus, SROA and SSROA designations were made using 30-months of State service as a guide, this guide was modified. The CBDA reviewed its initial designation of appellant's layoff status, considered the programmatic impact of eliminating her position, and decided the impact on the authority's mission would be minimized by appellant's layoff rather than elimination of any other position. Appellant's identification as a surplus employee was always based on reduced funding and therefore, a lack of funds to maintain all of its pre-reduction positions. There was no evidence appellant would not have been laid off if the CBDA's budget was not reduced.

Appellant alleged her layoff should be set aside because the DPA failed to properly implement the provisions of the MOU. Section 13.1 (g) specifically provides that it is the "Departments filling vacancies" who shall offer the positions to employees. The DPA's responsibility as outlined in Section 13.1 (h) is to provide a hearing officer to decide any dispute.

Appellant, or more accurately, PECG, specifically complained that DPA did not establish a system whereby employees on the SSROA list were contacted directly about job vacancies. While PECG may desire different procedures regarding the SSROA process, there is no evidence that the DPA violated any bargaining agreement, statute or case law by not implementing such procedures. Appellant admitted she saw her name on the SSROA list and in fact received information about job vacancies.

The DPA did conduct training sessions regarding the SSROA Process which included all State departments. It revised its SROA Manual in November 2002 to include the SSROA Program. DPA's analysts worked with the parties in this case to ensure the appropriate classes were put on the SSROA list and to ensure the parties acted in accordance with what the State believed was its obligation to BU 9 employees.

On the DPA's motion, the ALJ dismissed this argument at hearing based on appellant's failure to provide any legal basis that established the DPA's implementation responsibility in this area.

Appellant alleged the ARB violated Section 13.1 (g) between July 7, 2003 and February 28, 2004 by laterally transferring a BU 9 employee from one BU 9 position to another BU 9 position; by transferring a BU 9 employee and his position to another unit; by allowing a supervisory employee to voluntarily demote to a BU 9 position; by appointing a non-BU 9 employee into a BU 9 Air Pollution Specialist position after the employee completed a Training and Development (T&D) assignment; by allowing a BU 9 employee to demote within the same BU 9 classification; and, by allowing four BU 9 employees to mandatorily reinstate after a statutorily authorized leave.

Appellant alleged the DOT violated Section 13.1 (g) between July 7, 2003 and February 28, 2004 by laterally transferring approximately 28 BU 9 employees from one BU 9 position to another BU 9 position; by transferring a non-BU 9 Transportation Engineering Technician into a BU 9 TEC position; and by allowing two BU 9 employees to mandatorily reinstate after leave of absence.

It was undisputed that the ARB and the DOT performed the contested personnel actions. It was also undisputed that Sacramento, Solano, Yolo, Sutter, Placer, El Dorado, Amador, San Joaquin, and Contra Costa Counties represented "the same geographic area" referred to in MOU Section 13.1 (g). The parties stipulated that at least some of the contested transactions resulted in employees being assigned to positions within the nine county areas described above. There was no dispute that the contested personnel actions listed above involved positions for which the appellant was qualified and that the positions were equivalent in salary and responsibility as also required in MOU Section 13.1 (g).

The parties contended their dispute stems from the interpretation of "vacancies" or "vacancy" in MOU Section 13.1 (g). Appellant argued the language in Section 13.1 (g) is clear and unambiguous and provides no exceptions. The State argued "vacancy" should be defined in a technical sense as it has customarily been applied under the SROA Program. The State argued "vacancy" must be defined as an unfilled, funded permanent position, which if filled, would increase the total number of an appointing power's employees. The DOT and ARB further argued that Section 13.1 (g) was not applicable in the instant case because they themselves were in a layoff mode and had excess BU 9 personnel who were in danger of layoff.

The MOU does not provide a definition of vacancy. The standard rules of contract interpretation require the words of a contract to be viewed in their "ordinary and popular sense, rather than according to their strict legal meaning, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed." (Civil Code ¶ 1644; People v. R.J. Reynolds Tobacco Company (2003) 107 Cal.App.4th 516, 525-526.)

This plain meaning rule supports appellant's definition of vacancy. Black's Law Dictionary (8th ed. 2004) at page 1584 defines the usual reference to vacancy as being "an office or post that is unfilled even temporarily." The California Supreme Court concurred with this definition, defining vacancy "with relation to an office, [as] a state of being unoccupied." (Fields v. Fong Eu and Brown (1976) 18 Cal.3d 322, 332.) The definition of vacancy is further clarified in 67 Corpus Juris Secundum (2005) Officers, Section 100, pp. 321-323. It states, "The word vacancy has no technical meaning; an office is vacant whenever it is unoccupied by a legally qualified incumbent ...." (Id. p. 323.)

The appellant's argument for the plain meaning definition of "vacancy" is further bolster by the fact that the SROA Program is not specifically referenced in the MOU.

However, not every contested personnel transaction in this case constituted the filling of an unoccupied position. California courts have held that mandatorily reinstating employees from statutorily authorized leaves of absence does not constitute the filling of a vacancy. The courts reasoned that employees taking such leaves are not separated from employment and therefore, merely suspend their occupancy of a position. (Lewis v. California Unemployment Insurance Appeals Board (1976) 56 Cal.App.3d 729, 738-739.) The mandatorily reinstated employees in this case were all on statutorily authorized leaves of absence as provided in Government Code sections 19991.1, 19991.6, and/or 19878 et seq. Therefore, the DOT and the ARB did not violate the MOU by mandatorily reinstating employees.

The ARB also did not violate the MOU by filling vacant positions when it appointed a non-BU 9 employee to a BU 9 position after completion of a T&D assignment; when it allowed a BU 9 employee to demote within the same BU 9 classification; or, when it transferred a BU 9 employee and his position to another unit. In the case of the appointment after the T&D assignment, the incumbent applied for a vacant BU 9 Air Pollution Specialist position advertised in September 2002. She was chosen to fill this vacancy and the ARB began the process of reclassifying her and the vacant BU 9 position for which she applied in January, 2003 - several months before appellant was identified as surplus. The placement was essentially a promotion in place. There was no vacant position. Therefore, this transaction is outside the scope of MOU Section 13.1 (g). PECG's Chief Spokesman at the bargaining table since 1992 concurred with this reasoning. At hearing he testified, "a promotion in place typically is somebody who moves up because there wasn't [a] vacancy."

The same reasoning that applies to promotions in place also applies to the demotion of a BU 9 employee from one range in a BU 9 classification to a lower range in the same classification. This is essentially a "demotion in place." There was no unfilled position but merely a reclassification of a position and its incumbent. There is also no vacant position when a BU 9 position and its incumbent is transferred to another unit. Therefore, applying the ordinary, plain meaning of the word "vacancy" urged by appellant, the State did not violate the MOU by mandatorily reinstating employees; by placing an employee in a BU 9 position when she completed a T&D assignment; by allowing a BU 9 employee to voluntarily demote within the same classification; or by transferring a BU 9 employee and his position to another unit.

An analysis and definition of "vacancy" in MOU Section 13.1 (g) is insufficient to determine all the issues in this case. "The whole of the contract must be taken together so as to give effect to every part, if reasonably practical, each clause helping to interpret the other." (Civil Code Section 1641; Stanford Ranch, Inc. v. Maryland Cas. Co (9th Cir. 1996) 89 F.3d 618.)

While the definition of vacancy within MOU Section 13.1 (g) may be clear, the State's obligation to offer vacancies under this section is ambiguous. Section 13.1 (g) mandates the State offer positions to employees "facing layoff, demotion in lieu of layoff or mandatory geographic transfer...." However, the phrase "facing layoff" is undefined and ambiguous.

Section 13.1 (d) gives the State discretion to fill vacant positions by offering "affected employees" a transfer or demotion in lieu of layoff pursuant to Government Code sections 19997.8 through 19997.10 and applicable DPA Rules. The phrase "affected employees" is undefined and ambiguous.

Although the phrases "employees facing layoff ..." and "affected employees" represent distinct groups, it is reasonable to conclude that the phrase "affected employees" applies to a wider range of employees than does the phrase "employees facing layoff ...." "Affected employees" includes among other employees, those identified in MOU Section 13.1 (g) as facing layoff, demotion in lieu of layoff or mandatory geographic transfer."

The Government Code sections 19997.8 through 19997.10 included in MOU Section 13.1 (d) refer only to demotion-in-lieu of layoff. These sections permit demotion to either filled or unfilled positions and provide that an employee displaced by demotion in lieu of layoff has the same right to demote as the employee who displaced him/her.

Although the word "transfer" is not defined in MOU Section 13.1 (d), it is defined in Section 19.2, the MOU's Supersession clause, which incorporates Government Code section 19994.1. Government Code section 19994.1 permits an appointing power to transfer an employee under its jurisdiction (1) to another position in the same class; or (2) from one location to another whether in the same or different position; or (3) to a different class or as permitted under Government Code section 19050.5. Government Code section 19050.5 states, in relevant part: "Notwithstanding Section 3517.6, an appointing power may transfer any employee under his or her jurisdiction, to another position in a different class designated as appropriate by the board [SPB]."

Thus, pursuant to the above statutes and MOU Section 13.1(d) the State has the discretion to internally transfer and demote employees into a variety of vacant positions. The discretion to fill vacancies through internal transfer and demotions in lieu of layoff provides layoff protection to BU 9 employees referenced in both Sections 13.1 (d) and 13.1 (g). This interpretation reconciles these sections, while furthering the intent of the parties to provide enhanced protection for BU 9 employees to retain State employment. The apparent main purpose of the parties is to be given effect. When an ambiguity or inconsistency exists in the language of the contract, the factfinder must give effect to the parties main purpose. (See Sy First Family Ltd. Partnership v. Chung (1999) 70 Cal.App.4th 1334, 1342.)

In this case, the magnitude of anticipated revenue deficiencies, multiple demands for layoff plans and increasing numbers of position reductions, complicated by negotiations with the DOF, made the identification of those who might be facing layoff and those who would be affected by the layoff a "moving target." Every position potentially eliminated affects not only the employee in the position to be eliminated but also other employees who could be "bumped," demoted, transferred, or who would otherwise voluntarily react to a situation created by potential layoff. All of these transactions result in the shifting of potential vacancies that could be filled by a BU 9 employee. Indeed, testimony at hearing indicated that BU 9 positions statewide were at risk and no position was considered immune from potential elimination. At one point in 2003, the DOT had approximately 600 more employees than its budget could support. Two to 300 of these were BU 9 positions. At one point in 2003, the ARB was overstaffed by approximately 100 positions. Fifty-two employees were identified as subject to layoff. This included BU 9 employees. The DOT's internal transfers protected funds and authorized positions from elimination by the DOF. This mitigated the need for BU 9 layoffs. The ARB's internal transfers also prevented the layoff of BU 9 employees. No BU 9 employee was laid off at the DOT or ARB. The State did not violate the MOU by internally transferring BU 9 employees from one BU 9 position to another BU 9 position because such transfers are authorized under MOU Section 13.1 (d).

Section 13.2 first appeared in the MOU in 2003. It recognizes the DOF's authority in Section 4.10 of the 2003 Budget Act to ensure the integrity of the 2003 Budget by reducing and reallocating appropriations. It mandates the State mitigate BU 9 layoffs during the 2003/2004 fiscal year. While the types of actions that may be taken to mitigate a layoff are not specifically defined, the language of Section 13.2 may be reasonably interpreted as expanding Section 13.1 (d). Instead of allowing the State discretion to transfer or demote-in-lieu of layoff, it mandates such actions. Therefore, this section further supports the internal transfers authorized by the DOT and ARB in this case.

Appellant argued that the DOT violated MOU Section 13.1 (g) when it a non-BU 9 employee, into a vacant BU 9 position. The evidence shows the non-BU 9 employee's "Appointment Request" was completed on June 30, 2003 and at that time his reporting date was established as July 14, 2003. The vacant position was considered filled on that date. This is before appellant was identified as surplus or subject to Section 13.1 (g) or 13.2. Therefore, the DOT did not violate the MOU when it appointed a non-BU 9 employee into a vacant BU 9 position.

Appellant argued the ARB violated MOU Section 13.1 (g) when it allowed a supervisor to voluntarily demote from her position into the BU 9 position of Staff Air Pollution Specialist effective October 15, 2003. Section 19253 gives an appointing power the discretion to voluntarily demote an employee to a vacant position. There was no evidence the supervisor's previous supervisor position was reclassified; that a commitment to her had been made prior to the time appellant was notified of her surplus status; or that she exercised any statutorily or constitutionally mandated right. The BU 9 position that was either vacant or created in this circumstance should have been offered to the appellant.​​ The ARB violated the BU 9 MOU when it permitted the Supervisor to voluntarily demote into a BU 9 position.

 

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Appellant was lawfully laid off from her CBDA position of Engineer, Water Resources. The layoff was a result of the State's budget crisis. The DOF was legislatively authorized to reduce the CBDA's budget and allocated positions pursuant to Section 4.10 of the 2003 Budget Act. The CBDA's hiring of employees in different classifications for which appellant was not qualified was not done in bad faith. The hirings were procedurally proper and consistent with DPA's past practice of not approving layoff plans if appointing authorities had vacant positions in the same classifications as employees identified for layoff.

The DPA did not violate the MOU. Appellant failed to present any authority for her argument that DPA was unilaterally responsible for implementing MOU Section 13.1 (g).

The DOT did not violate the MOU. Its internal transfer of BU 9 employees from one BU 9 position to another was permitted under MOU Section 13.1 (d) and required under MOU Section 13.2. The DOT's mandatory reinstatements to BU 9 positions did not constitute the filling of vacancies. The DOT's appointment of a non-BU 9 employee into a vacant BU 9 position was completed prior to the time appellant was placed on surplus/SSROA status.

Based on the reasoning set forth above, the ARB did not violate the MOU by internally transferring BU 9 employees from one BU 9 position to another BU 9 position or when it mandatorily reinstated employees. It did not violate the MOU when it transferred a BU 9 position and incumbent to another unit; when it allowed a BU 9 employee to demote within the same BU 9 classification; or, when it appointed a non-BU 9 employee to a BU 9 position after completion of a T&D assignment because such transactions did not fill a vacant position.

The ARB did violate the MOU when it allowed a Supervisor to voluntarily demote into the BU 9 position of Staff Air Pollution Specialist. Based on the evidence presented, appellant made a prima facie showing that a BU 9 vacancy existed or was created after the time appellant was designated surplus and covered by MOU Article 13. There was no evidence the supervisor had any mandatory right to this BU 9 position.

 

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that appellant's appeal of her layoff from the CBDA in her position of Engineer - Water Resources effective March 1, 2004, is denied. Appellant's appeal alleging violation of the BU 9 MOU by the DOT is denied in its entirety. Appellant's appeal alleging the ARB violated the BU 9 MOU by demoting a Supervisor into a BU 9 Staff Air Pollution Specialist position effective October 15, 2003 is granted. All other bases for appeal are denied.

Respondent ARB, is ordered, consistent with all applicable laws and rules, to offer appellant a Staff Air Pollution Specialist position for which she qualifies that is in the same location and comparable to the position she should have been offered on October 15, 2004. Consistent with all applicable laws and rules, appellant is to be appointed to such position if she accepts such offer.

The ARB is ordered to reimburse appellant for any lost wages from March 1, 2004 through the date the ARB offers appellant a position. The ARB is also ordered to reimburse appellant for any reasonable, additional travel expenses appellant actually incurred as a result of her travel to her State job in Berkeley, California. The actual wages appellant earned from March 1, 2004 through the date of the employment offer may be used to offset any amount owed to appellant. It is not the intent that the ARB be punished for its error or that appellant profit.

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1. The term "department" is used generically and includes all State appointing authorities such as Boards, Commissions, Bureaus, etc. In this decision, it is used synonymously with "appointing authority." ‹​
2. Personal services refers to employee-related costs. ‹​
3. The State Restriction of Appointments (SROA) Program is a layoff mitigation program administered by the DPA. Its goal is to retain employees in State se​rvice by restricting the appointing authorities' hiring methods. The SROA Program is described in California Code of Regulations, Title 2, sections 599.854 through 599.854.4 and in the DPA's November 2002 "The California State Restriction of Appointments Manual," SROA Manual for Agency Personnel Officers" (SROA Manual). ‹​
4. A list of the ARB employees whose personnel movements were challenged is included in this decision as Attachment 1. ‹​
5. A list of the DOT employees whose personnel movements were challenged is included in this decision as Attachment 2. ‹​
6. See Fields v. Fong Eu (supra) 18 Cal.3d 322 for the California Supreme Court's analysis of "vacancy" arising from the creation of new judicial positions ‹​​

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