NO. 91-403
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
STATE PERSONNEL DIVISION OF THE
DEPARTMENT OF ADMINISTRATION,
STATE OF MONTANA,
Petitioner and Appellant,
-vs-
BOARD OF PERSONNEL APPEALS, Division
of the Department of Labor and Industry
of the State of Montana; and COMMUNITY
CORRECTIONS SPECIALISTS 11, Department
of Institutions,
Respondents and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Dorothy McCarter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
David L. Ohler argued, Legal Counsel, Dept. of
Administration, State Personnel Division, Helena,
Montana
For Respondents:
Melanie Symons argued, Legal Counsel, Dept. of Labor
and Industry, Board of Personnel Appeals, Helena,
Montana
J. C. Weingartner argued, Attorney at Law, Community
Corrections Specialists 11, Helena, Montana
Submitted: January 8, 1992
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
The State Personnel Division (Division) of the Department of
Administration appeals from a decision and order of the District
Court of the First Judicial District, Lewis and Clark County. The
District Court affirmed a final order of the co-respondent Board of
Personnel Appeals (Board) which granted retroactive pay to the co-
respondents Community Corrections Specialists 11, employees of the
Department of Institutions (employees). We reverse and remand.
The issue we address on appeal is whether the District Court
erred in affirming the Board's order granting retroactive pay to
the employees.
The employees initiated a classification appeal by filing a
petition with the Board on April 24, 1987. They sought a
classification review of their Community Corrections Specialist I1
(CCS 11), grade 12, classification. The Board designated the
classification appeal a group classification appeal pursuant to
24.26.513, ARM.
The Division submitted a Step I11 response to the group
classification appeal on August 31, 1987. The response included
the Division's findings that the employees' positions were properly
classified as CCS 11, grade 12. The Division also found that while
the appeal investigation did not yield a more appropriate class for
the employees, comparisons to other positions, including Community
Corrections Specialist I11 (CCS III), grade 13, indicated a need
for a series review; complicating the classification appeal was a
reassignment of some employees to the then newly-created Department
of Family Services. The Division further found:
The State Personnel Division shall conduct a review of
the Community Corrections Specialist Series to determine
whether 1) the reassignment of some [of the employees] to
the Department of Family Services will affect their
position classifications; 2) a grade level distinction
exists between the [CCS I1 and CCS 1111 classes; and 3)
the appropriate grade levels have been assigned to
Community Corrections Specialists Series.
On September 15, 1987, the parties stipulated that, pending
the series review, the employees' classification appeal would
remain in full force and effect; the stipulation specifically
preserved the established date of filing. The stipulation also
waived the time requirement for appealing the Step I11 decision
until the series review was completed.
The Division completed its series review on June 3, 1988. It
developed a new classification for positions assigned adult case
supervision under the Department of Institutions. All positions at
grades 11 and 12 were reclassified to Probation and Parole Officer,
grade 13. Positions assigned juvenile case loads, under the
Department of Family Services, were reclassified as Family Services
Specialists 11, grade 13. The reclassification and resultant
upgrade became effective on July 1, 1988. The Division determined
that the employees were not entitled to retroactive pay because
they were properly classified when they filed their classification
appeal, based on the standards then in place.
On June 10, 1988, the employees advanced their classification
appeal to Step IV of the grievance procedure. The parties
stipulated to the issues to be presented to the hearing examiner at
a hearing which was held on January 13, 1989. The issues were
whether the CCS I11 class specification was a better description of
the employees1 position duties than CCS I1 and whether the
employees1 position duties were more similar to those positions
assigned to CCS 111.
The hearing examiner issued his findings of fact, conclusions
of law and recommended order on April 7, 1989. He found that the
CCS I11 class was distinguished from the employees' class only by
the addition of special assignments. However, he denied the
employees1 request to be reclassified on the grounds that they did
not demonstrate that they performed the additional duties assigned
to the higher class, that they were improperly classified, or that
the Division failed to comply with the established methods or
standards when considering their classification appeal.
The hearing examiner also found that the Division's
investigation resulting from the employees' classification appeal
indicated a need for a classification series review and that I1[a]ny
upgrade resultant from that series review must be retroactive." He
concluded that the employees were aggrieved when their
reclassification was not made retroactive. He recommended an order
that those employees reclassified as a result of the series review
be paid the difference between what they had been paid and what
they would have been paid had the results of the series review been
made retroactive to thirty days prior to the date of their
classification appeal.
The Division filed exceptions to the findings of fact,
conclusions of law and recommended order. The Division asserted
that because the hearing examiner found against the employees on
the two issues stipulated to by the parties prior to the hearing,
the hearing examiner's recommendation that the employees be awarded
retroactive pay was improper. After oral argument, the Board
remanded the case to the hearing examiner for further proceedings
pursuant to the stipulations in effect at the time of the previous
hearing, together with the issue of retroactive pay. The Board's
order did not address the question of retroactivity other than
setting the cause for rehearing.
Another hearing was set for September 26, 1989. At a
prehearing conference on September 5, 1989, the parties agreed that
the hearing examiner would not hear additional evidence on the two
previously stipulated issues. The sole issue presented to the
hearing examiner was whether there was lllinkage"between the
employees1 classification appeal and the series review and, if so,
whether that linkage provided a basis for retroactive pay.
The hearing examiner issued his second findings of fact,
conclusions of law and recommended order on March 14, 1990. He
reaffirmed his earlier findings on the original two issues and
further found that there was linkage between the employees1
classification appeal and the series review. He found that the
Division recognized the need for a series review prior to the
employees1 classification appeal and, while the classification
appeal may not have been the motivating factor for the series
review, it was g factor which, together with others, accelerated
that review to correct a recognized need. The hearing examiner
again recommended retroactive pay based on his conclusion that the
linkage between the employees1 classification appeal and the series
review 'I [m]eans that the [employees] were aggrieved when their
resultant reclassification and upgrade was not made retroactive to
thirty (30) days prior to the date of their Wage and Classification
Appeal. I'
The Division again filed exceptions to the findings of fact,
conclusions of law and recommended order. The matter was argued to
the Board on June 6, 1990. The Division argued that the hearing
examiner's recommendation of retroactive pay was improper because
the employees were not found to be aggrieved on the two original
stipulated issues. It further argued that, because the employees
were properly classified at the time they brought their appeal, any
link between the employees' appeal and the Division's series review
was not sufficient to provide a basis for retroactive pay. The
Board adopted the hearing examiner's findings of fact, conclusions
of law and recommended order on June 28, 1990. The Division's
petition for rehearing was denied.
The Division filed a petition for judicial review of the
Board's decision and order in the District Court on October 5,
1990. The court determined that the Board's decisions were
substantially supported by the record. It further determined that
the award of retroactive pay to the employees was proper and
affirmed the Board's decision and order. This appeal followed.
Did the District Court err in affirming the Board's order
granting retroactive pay to the employees?
In reviewing an administrative agency's findings of fact, the
standard of judicial review used is whether the findings are
clearly erroneous in view of the reliable, probative and
substantial evidence in the whole record. Section 2-4-704, MCA;
Dept. of Revenue v. UPS, Inc. (Mont. 19921, 830 P.2d 1259, 49
St.Rep. 20. An agency's conclusions of law will be upheld if the
agency's interpretation of the law is correct. Steer, Inc. v.
Department of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601,
603.
The Division contends that the District Court erred in
affirming the Board's order granting retroactive pay because the
order was contrary to this Court's decision in Matter of the
Classification Appeal of Warren C. Mead v. Board of Personnel
Appeals (1988), 235 Mont. 208, 766 P.2d 1300. A review of Matter
of Mead is necessary for resolution of the present case.
Matter of Mead involved a classification appeal by Highway
Patrol Officers. Employees in the positions of Sergeant,
Lieutenant and Captain initiated a grievance before the Board
seeking to compel the Division to adopt new position descriptions,
develop new class specifications and reclassify their respective
positions. New position descriptions were submitted to, and
adopted by, the Division. The Division then reclassified the
positions. The new classification resulted in an assignment of the
same grades to the officers. The officers appealed the assignment
of grades to the Board. A hearing examiner found that the officers
were aggrieved and recommendedthat they be reclassified by raising
their grade levels one pay grade. The Board amended the
recommended order by requiring the Division to conduct a
classification series review.
The Division conducted a series review and recommended that
the officers retain the original grade assigned to their class.
The Board rejected the recommendation and adopted the hearing
examiner's original findings of fact, conclusions of law and
recommended order. The district court reversed the Board's order
on the basis that it violated 5 2-18-203(2), MCA, which prohibits
an appeal of the grade assigned to a class.
On appeal, the Board argued that under 5 2-18-1012, MCA, and
our decision in Hutchin v. State (1984), 213 Mont. 15, 688 P.2d
1257, it had authority to resolve any grievance even if resolution
of the classification appeal resulted in reallocation of the grade
assigned to a class. Section 2-18-1012, MCA, provides in part:
If upon the preponderance of the evidence taken at the
hearing the board is of the opinion that the employee is
aggrieved, it may issue an order to the appropriate
agency or agencies of state government requiring such
action as will resolve the employee's grievance.
Hutchin involved a wrongful discharge grievance--rather than a
classification appeal under 5 2-18-203--by a former employee of the
Department of Fish, Wildlife and Parks. Under 5 87-1-205, MCA,
grievances against that Department are governed by $ 5 2-18-1011
through 2-18-1013, MCA. The Board found the employee aggrieved,
ordered reinstatement and denied an award of back pay. In
affirming the Board's decision, we stated that ''[ilt is apparent
from section 2-18-1012, MCA, that if the Board of Personnel Appeals
determines that the employee is aggrieved, it has full discretion
to resolve the employee's grievance." Hutchin, 213 Mont. at 19,
We rejected the Board's contention in Matter of Mead that,
based on our holding in Hutchin, it had the authority to resolve
any grievance. We affirmed the district court's reversal of the
Board's decision, stating:
Contrary to [the Board's] contention, the District
Court found that the Board is limited in a classification
appeal by 5 2-18-203(2), MCA, to determining whether a
position has been properly classified by the Division.
The court held that the Board was without authority to
create new classifications or to assign grades to
classifications, and it distinguished Hutchin by stating:
"Hutchin involved the discharge of a state employee
for personal use of state owned property. In Hutchin the
board directed that the discharged employee 'be
reinstated as of the date of this final order to the
position he held with the department' at the time of his
termination. That is the type of remedy that is uniquely
within the discretion of the board. However, the board's
order here usurps a function that has been delegated
exclusively to the division."
We agree with the District Court's holding that the
board is limited to determining whether a position is
properly classified. If a position is improperly
classified, the Board may then order the Division to
reclassify the position in accordance with its existing
policy.
Matter of Mead, 235 Mont. at 215-16, 766 P.2d at 1304-05.
Thus, under 5 2-18-203(2), MCA, and Matter of Mead, the Board
in a classification appeal is limited to determining whether a
position is properly classified. I the Board determines that the
f
position is improperly classified, and the employee is, therefore,
aggrieved, the Board can resolve the grievance under 5 2-18-1012,
MCA, by ordering the Division to reclassify the employee's position
and, as appropriate, ordering other remedies such as retroactive
pay. In contrast, because no classification appeal was involved in
Hutchin, the Board was not limited by 5 2-18-203, MCA, and was free
to fashion an appropriate remedy under 5 2-18-1012, MCA, upon
finding that an employee was aggrieved.
We conclude that, under the circumstances presented in the
present case, the Board exceeded its legal authority when it
granted retroactive pay to the employees. Prior to the first
hearing before the hearing examiner, the parties stipulated that
the issues were whether the employees were improperly classified as
CCS I1 and whether they should have been classified as CCS 111.
The employees were not found to be aggrieved on either issue. The
hearing examiner, and ultimately the Board, found that the
employees were properly classified as CCS I1 based on the class
specifications that were in place at the time the employees brought
their classification appeal. These findings remained unchanged
throughout the subsequent history of the case.
Even though the Board found that the employees were properly
classified at the time they brought their classification appeal, it
awarded the employees the increase in pay which resulted from their
reclassification, retroactive to thirty days before they brought
their appeal. This grant of retroactive pay was based on a finding
of "linkaget1
between the employees1 classification appeal and the
Division's series review. While linkage between the classification
appeal and the series review existed, we conclude that that linkage
was not legally sufficient to provide a basis for retroactive pay.
Under 5 2-18-203, MCA, and Matter of Mead, a determination by the
Board that the employees were improperly classified was a
prerequisite to granting a remedy to the employees. Having found
the employees to be properly classified, the Board exceeded its
statutory authority in granting retroactive pay.
In addition, because the employees were found to be properly
classified as CCS 11, grade 12, at the time they brought their
appeal, the effect of the award of retroactive pay was to upgrade
the employees' positions to a higher pay grade during the very time
period that they were found to be properly classified. As such,
the Board's order was tantamount to an assignment of a new grade to
the employees' class in violation of § 2-18-203 (2), MCA. Matter of
Mead, 235 Mont. at 217-18, 766 P.2d at 1306. Based on the
foregoing, it is clear that the Board incorrectly concluded that
the employees were entitled to retroactive pay and exceeded its
authority in granting such pay. Accordingly, we hold that the
District Court erred in affirming the Board's order.
The Division raises additional arguments in support of its
position that the District Court erred in affirming the Board's
order granting retroactive pay to the employees. In light of our
holding in this case, these arguments need not be addressed.
Reversed and remanded for proceedings consistent with this
opinion.
We concur:
Justices
Justice Terry N Trieweiler dissenting.
.
I dissent from the majority opinion.
The majority is correct that pursuant to our decision in Matter
ofMead (l988), 235 Mont. 208, 766 P.2d 1300, the Board of Personnel
Appeals cannot review and correct the grade assigned to a
particular class. However, the majority opinion is incorrect when
it concludes that our decision in Mead and 5 2-18-203, MCA,
requires a determination by the Board that employees were
improperly classified before retroactive pay can be awarded. Our
decision in Mead did not deal with the circumstances under which
retroactive pay can be awarded, and there is nothing in § 2-18-203,
MCA, which specifically links an award of retroactive pay to the
Board's decision on the issue of classification.
Furthermore, I disagree that the employees were found to be
properly classified at the time they brought their appeal. The
State Personnel Division's investigation found that based upon the
classes then available, Community Corrections Specialist 11,
Grade 12, was as good as any. However, the Department went on to
acknowledge that its investigation indicated that a complete review
of the classifications was necessary. That review resulted in the
employees' reclassification. It was in that reclassified posture
that this case came before the Board. The Board simply determined
whether the Department's reclassification of the employees was a
result of their appeal. No one has challenged the Board's finding
that there was in fact linkage between the appeal and the
reclassification by the Department.
The facts in this case are not similar to the facts in Mead.
In that case, the hearing examiner for the Board of Personnel
Appeals recommended raising the employees* grade level by one pay
grade. The Board issued findings and conclusions adopting that
recommendation and we held that the Board was without authority to
entertain an appeal of a pay grade.
In this case, the Board did not issue an order changing the
employees* pay grade. No action of the Board resulted in a change
in the employees* pay grade. The employees appealed their
classifications to the State Personnel Division. As a result of
that appeal, the Division concluded that the classifications in
question should be reviewed. As a result of that review, the
employees were reclassified by the Department and assigned a
different grade.
All the Board did in this case was determine that based upon
the employees' reclassification, they were entitled to retroactive
pay for 30 days prior to the date their appeal was filed. This is
the exact relief authorized by T, 2-18-203(3), MCA. The majority
opinion has placed qualifications on the award that are not found
in the statute.
Our specific holding in Mead was that the Board of Personnel
Appeals could not create classifications, nor assign grades within
classifications. In this case, the Board's decision to award
retroactive pay was not based on its creation of any new
classification. Nor was it based on the Board's assignment of any
new grade to the employees. It was based on the Board's
determination that the Divisionvs review of the employeesv
classifications, and the Department's subsequent reclassification
of the employees, was linked to the employees' original
classification appeal to the Division.
On appeal, the Division argues, and the majority concludes,
that the only issue before the Board was whether the employees
should have been classified CCS 111, rather than CCS 11. The
majority concludes that since the employees did not prevail on this
issue, they were not aggrieved. However, limiting the issue
presented to the Board in that manner is incorrect. At the second
hearing before the Board's hearing examiner, the parties stipulated
that the issue to be decided by the hearing examiner would be:
Whether there is linkage between the wage and
classification appeal of the Community Corrections
Specialist I1 class and the class review of the Community
Corrections Specialist series, and if so, does that
linkage provide a basis for awarding retroactive pay.
After considering the evidence, the hearing examiner found
that there was linkage. There was substantial evidence to support
that finding on appeal, and no one contends that it was clearly
erroneous.
Therefore, I conclude that it was not the Board which changed
the employeesv grade. That grade was changed by the Department in
response to the employees' appeal. The Division, however, refused
to award the retroactive pay to which the employees were entitled,
based upon that reclassification. Therefore, the Board was within
its authority when it considered the issue of retroactive pay on
appeal.
For these reasons, I would affirm the decision of the District
Court.
Justice William E. Hunt, Sr., concurs in the foregoing dissent
of Justice Trieweiler.
Justice