STATE HUMAN RESOURCES COMMISSION RIF PRIORITY CONSIDERATION AND EXEMPTIONS. RULE CONTACT PERSON: David Pierce,

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1 FISCAL NOTE STATE HUMAN RESOURCES COMMISSION RIF PRIORITY CONSIDERATION AND EXEMPTIONS RULE CONTACT PERSON: David Pierce, RULEMAKING COORDINATOR: Shari Howard, RULES: 25 NCAC 01H 1001 EXEMPT PRIORITY CONSIDERATION- POLICY AND SCOPE (AMEND) 25 NCAC 01H.1003 AGENCY RESPONSIBILITIES (AMEND) 25 NCAC 01H.1004 OFFICE OF STATE PERSONNEL RESPONSIBILITIES (REPEAL) 25 NCAC 01H.1005 MANDATORY RIGHT TO A POSITION (REPEAL) STATUTORY AUTHORITY: G.S. Chapter 126-4; FISCAL IMPACT SUMMARY: State Government: Yes Local Government: N/A Substantial Impact: None Federal Government: N/A Small Businesses: N/A EFFECTIVE DATE: Upon conclusion of rulemaking process. RULE SUMMARY AND IMPACT: The changes are required to comply with SB744 (S. L ) the Appropriations Act of 2014 and HB1133 (S.L ) which amended G.S (e). In addition, Rule 01H.1001 went through the temporary rulemaking process as a result of changes in the law during the 2013 legislative session as reflected in HB834 (S.L , Sections 4.3, 4.4, 4.6 and 7.6 ) we are now beginning the permanent rulemaking process for Rule 01H NCAC 01H.1001 G.S. 126 has always been unclear on reemployment priorities for employees who are appointed to an exempt position and then move to another exempt position and are later separated. Past interpretation of the law has been mixed on whether those transferred employees did or did not receive priority reemployment. The change to G.S (e) now clarifies the eligibility for reemployment for those employees who transfer between exempt positions without a break in service. This only covers appointed employees who had career status and less than 10 cumulative years of employment in positions subject to the State Human Resources Act (SHRA) prior to their exempt appointment and who were employed in an SHRA position on or before August 20, Currently, out of 1,470 exempt employees, there are approximately 1,176 that had career status and were hired on or before August 20, Out of those 1,176 with prior career status, approximately 400 had less than ten years of service. It is difficult to estimate the number of employees out of the 400 who may transfer between exempt positions after being appointed. The number of transferred employees is expected to be low but would be impacted by the period of time the appointing official is in office. It is estimated that less than 5% of appointed employees would transfer between exempt positions during a four-year term. As time passes, the number of employees eligible

2 for reemployment priority will decrease as there will be fewer appointed employees that were hired on or before August 20, As a result of the changes, affected exempt employees will have priority reemployment rights over current State employees who have less cumulative State service and any non-state employee applicant in the applicant pool. The exempt employee shall be offered the job unless there are non-exempt RIF employees or current State employees with more cumulative State service in the applicant pool. This should improve an exempt employees opportunity for reemployment which should shorten the period of job search and time spent in unemployment. Of course, the time spent in job search is impacted by the exempt employee voluntarily applying for jobs for which he or she is qualified and dependent on the qualifications of the RIF employees and current State employees in the applicant pool. The rule may also affect exempt employees hired after August 20, 2013, who might have enjoyed reemployment priority in the absence of this rule change. Those employees may experience a longer job search and a longer time spent in unemployment. While that may be a significant impact, the agency does not have the necessary data given all the unknowns (number of future exempt employees transferred and then separated, effect of rule change on their time unemployed, salary rate, etc.) to estimate whether that impact would be substantial. The proposed change would also impact State agencies since their pool of candidates for an open position would be affected by the change. However, given the small number of employees affected by the rule, this impact would be limited. The rule changes also contain several clarification and housekeeping changes such as referencing the Statute that defines career status; clarifying that the priority is a reemployment priority; combining exempt managerial with exempt policymaking since the priorities are the same; clarifying that an employee is qualified as set forth in the job vacancy announcement ; clarifying that reemployment priority for higher level positions is up to the same salary grade (or salary grade equivalency) of the most recent subject position held prior to placement in the exempt position for the remainder of the 12-month period. These clarification and housekeeping changes have no impact. In addition, 01H.1001 (b) was amended to delete reference to employees notified of or separated by a reduction in force as having greater priority than an exempt employee with reemployment priority. This is incompliance with G.S (f) which states RIF employees and reemployment priority created by G.S (1) shall have equal priority. This is a correction of the rule to comply with the existing law. 25 NCAC 01H.1003 and 01H.1004 Clarification is necessary in the rule to state that the notification of reemployments rights needs to be made in writing to the employee no later than the time of separation. This amendment should ensure correct and timely notification to employees. This has been the practice but is now being clarified in the rule. We do not anticipate any impact from this clarification. The requirement for agencies to notify the Office of State Human Resources (OSHR) when an exempt employee is separated and when their priority reemployment rights have terminated is being deleted. OSHR has not maintained this data for some time. Since the implementation of the BEACON HR/Payroll system, agencies maintain the appointment and removal of exempt employees in the BEACON system. There is a report agencies can run that provides information about exempt priorities based on data entered in the BEACON system. Due to loss of HR staff through budget reductions, OSHR has not provided outplacement services for several years. This should have no impact. 25 NCAC 01H.1005 is being recommended for repeal. All requirements in this rule are a duplication of G.S (e). This law is very clear on the mandated reassignment rights for exempt policymaking and exempt managerial employees and no further clarification is needed in rules.

3 The change in the law does remove the 35 mile limit for reassignment. This gives an agency greater flexibility in finding a reassignment opportunity in compliance with the law. Prior to the law change, an agency could not reassign an employee to a position located more than 35 miles from the current work location. As the 35 mile limit was previously removed in the law for RIF employees, this law change was required to align the reassignment rights for exempt employees with the priority rights for non-exempt RIF employees. It also aligns the law with an agency s right to reassign any current non-exempt State employee to any position regardless of the miles between the old and new worksite. Both exempt and non-exempt employees who are reassigned more than 50 miles may be eligible for reimbursement for cost of relocation in compliance with reimbursement policies outlined in the State Budget Manual issued by the Office of State Budget and Management.

4 APPENDIX 25 NCAC 01H.1001 is proposed for amendment as follows: 25 NCAC 01H.1001 EXEMPT PRIORITY REEMPLOYMENT CONSIDERATION POLICY AND SCOPE (a) The rules in this Section H.1000 apply to employees hired on or before August 20, 2013 and removed from: (1) Exempt policymaking positions for reasons other than just cause; and (2) Exempt managerial positions for reasons other than just cause. cause but not because the employee's selection violated G.S ; and (3) Exempt managerial positions because the employee's selection violated G.S (b) A career State employee as defined in G.S with less than 10 years cumulative service in subject positions prior to placement in an exempt policymaking or exempt managerial position, who is removed from an exempt policymaking or exempt managerial position for reasons other than just cause, shall receive a one-time reemployment priority. This reemployment priority shall be exercised by the employee within one year following the date of the employee's separation. Upon notice to the agency that priority is being requested, the The employee shall be offered any available non-exempt subject position for which the employee has applied and is qualified as set forth in the job vacancy announcement when the position applied for is equal to or below the salary grade (or salary grade equivalency) of the most recent subject position held prior to placement in the exempt policymaking or exempt managerial position unless an offer has been made to, and accepted by, a person qualified for mandated reassignment under 25 NCAC 01H.1005 G.S (e)(2) or G.S (e)(4) or an employee notified of or separated by a reduction in force, or a current State employee with greater cumulative State service subject to the State Human Resources Act. (c) A career State employee with less than 10 years cumulative service in subject positions prior to placement in an exempt managerial position, who is removed from an exempt managerial position for reasons other than just cause but not because the employee's selection violated G.S , shall receive a one-time reemployment priority, to be exercised by the employee within one year following the date of the employee's separation. The employee shall be offered any available non-exempt position for which the employee has applied and is qualified, when the position applied for is equal to or below the salary grade (or salary grade equivalency) of the most recent subject position held prior to placement in the exempt managerial position unless an offer has been made to, and accepted by, a person qualified under 25 NCAC 01H.1005, or an employee notified of or separated by a reduction in force, or a current State employee with greater cumulative State service subject to the State Personnel Act. (d) A career State employee with less than 10 years of service who was removed from an exempt managerial position because the employee's selection violated G. S shall receive a one-time reemployment priority, to be exercised by the employee within one year following the date of the employee's separation. Upon notice to the agency that priority is being requested, the employee shall be offered any available non-exempt position for which the employee has applied and is qualified, when the position applied for is equal to or below the salary grade (or salary grade equivalency) of the most recent position held prior to placement in the exempt managerial position

5 unless an offer has been made to, and accepted by, a person qualified under 25 NCAC 01H.1005, or an employee notified of or separated by a reduction in force, or a current State employee with greater cumulative State service subject to the State Personnel Act. (c) A career State employee as defined in G.S who had more than two but less than 10 years of cumulative service in a subject position moves from one exempt policymaking or exempt managerial position to another exempt policymaking or exempt managerial position without a break in service, who is later removed from the last exempt position for reasons other than just cause, shall receive a one-time reemployment priority. This reemployment priority shall be exercised by the employee within one year following the date of the employee's separation. The employee shall be offered any available subject position for which the employee has applied and is qualified as set forth in the job vacancy announcement, when the position applied for is equal to or below the salary grade (or salary grade equivalency) of the most recent subject position held prior to placement in the exempt managerial position unless an offer has been made to, and accepted by, a person qualified for mandated reassignment under G.S (e)(2) or G.S (e)(4) or an employee notified of or separated by a reduction in force, or a current State employee with greater cumulative State service subject to the State Human Resources Act. (e) (d) The reemployment priority considerations described in Paragraph Paragraphs (a), (b) and (c) (b and (c) of this Rule shall expire when a formal an employee refuses an interview or offer is extended for employment in the position for a position for which the employee has applied regardless of the position's salary grade (or salary grade equivalency). or when an employee accepts a position for which he or she has applied. (e) If an employee does not receive notice as described in 25 NCAC 01H.0630(b), Rule 01H.0630(b) of this Subchapter, the employee remains subject to the State Human Resources Act until 10 working days after the employee receives written notification of the exempt status. If an otherwise eligible employee is removed from the position designated as exempt, the employee has shall receive reemployment priority consideration to a position at the same salary grade (or salary grade equivalency) as the most recent subject position. History Note: Authority G.S ; 126-5; S.L , Sections 4.3, 4.4, 4.6, and 7.6.; S.L , Section 55.3.(a) Eff. March 1, 1987; Amended Eff. June 1, 1994; June 1, 1992; November 1, 1988; Recodified from 25 NCAC 01D.0512 Eff. December 29, 2003; Amended Eff. February 1, February 1, 2007; Temporary Amendment Eff. May 23, 2014.

6 25 NCAC 01H.1003 is proposed for amendment as follows: 25 NCAC 01H.1003 AGENCY RESPONSIBILITIES (a) The employing agency shall inform the employee in writing of the priority reemployment consideration to be afforded. afforded no later than the time of separation. (b) The Agency shall notify the Office of State Human Resources when: (1) an employee is officially notified of reduction in force; (2) an eligible employee accepts a position that satisfies the priority consideration; (3) an employee with priority status due to reduction in force is offered a lateral transfer or promotion and refuses, unless the position offered is more than 35 miles from the employee's original workstation; or (4) other conditions that would satisfy or terminate an eligible employee's priority consideration are discovered. History Note: Authority G.S (6),(10); S.L ; Eff. February 1, 2007; Amended Eff. November 1, 2011

7 25 NCAC 01H.1004 is proposed to be repealed as follows: 25 NCAC 01H.1004 OFFICE OF STATE PERSONNEL RESPONSIBILITIES (a) The Office of Human Resources shall maintain a list of employees that will serve as a reference for agencies in applying priority reemployment. (b) The Office of State Personnel shall also provide outplacement assistance to separated employees who wish to seek employment in the private sector. Such assistance includes resumé preparation, personal marketing, and interview skills, along with Employment Security Commission coordination for placement referral. History Note: Authority G.S (6),(10); Eff. February 1, 2007; Amended Eff. November 1, 2011.

8 25 NCAC 01H.1005 is proposed to be repealed as follows: 25 NCAC 01H.1005 MANDATORY RIGHT TO A POSITION (a) A State employee removed from an exempt policymaking position for reasons other than cause with 10 or more years of cumulative service in subject positions, including the immediately preceding 12 months prior to placement in the exempt policymaking position, shall be reassigned to a subject position within the same agency, or if necessary within another agency, at the same salary grade (or salary grade equivalency) and salary rate as their most recent subject position, including all across-the-board legislative increases since placement in the position designated as exempt policymaking. The reassignment must be within a 35-mile radius of the exempt position from which separated. If an employee is offered a reassignment that meets these criteria and refuses to accept, the mandatory right to a position is terminated. (b) A State employee removed from an exempt managerial position for reasons other than cause, but not because the employee's selection violated G.S , with 10 or more years of cumulative service in subject positions, including the immediately preceding 12 months prior to placement in the exempt managerial position, shall be reassigned to a subject position within the same agency, or if necessary within another agency, at the same salary grade (or salary grade equivalency) and salary rate as their most recent subject position, including all across-theboard legislative increases since placement in the position designated as exempt managerial. The reassignment must be within a 35-mile radius of the exempt managerial position from which separated. If an employee is offered a reassignment that meets these criteria and refuses to accept, the mandatory right to a position is terminated. (c) A career State employee removed from an exempt managerial position because the employee's selection violated G.S with 10 or more years service shall be placed in a comparable position at the same salary grade (or salary grade equivalency) and salary equal to that held in the most recent position. (d) If an employee does not receive notice as described in 25 NCAC 01H.0630(b), the employee remains subject to the State Human Resources Act until 10 working days after the employee receives written notification of the exempt status. If the employee is removed from the position designated as exempt, the employee shall be placed in a position at the same salary grade (or salary grade equivalency) and salary equal to that held in the most recent subject position. History Note: Authority G.S ; 126-5; Eff. February 1, 2007