When the 1991 NC legislature rewrote the state personnel statutes to make career-employee status depend on job level rather than pay grade, and said the new rules applied to employees hired on or after July 1, 1993, did that leave employees hired before July 1, 1993 stuck under the old (slower) tenure rules?

Plain-English summary

State Personnel Director Ronald G. Penny faced a transition-rule puzzle. In 1991, the General Assembly enacted Chapter 354 of the Session Laws, a substantial rewrite of the State Personnel Act. The old framework tied tenure ("permanent employee" status) to pay grade. The new framework tied tenure ("career employee" status) to position level. The new rules generally made tenure faster to achieve. Section 9 of Chapter 354 set an effective date of July 1, 1993, and added: "this act . . . applies to all State employees hired on or after that date."

The ambiguous question: did current employees (those hired before July 1, 1993) continue under the old paygrade-tied rules forever, or did they switch to the new level-dependent rules when the act took effect?

Penny gave a concrete example. An Attorney I at paygrade 75 hired July 1, 1991, would not become permanent until July 1, 1996 under the old paygrade-tied rules (a five-year wait). The same Attorney I hired July 1, 1993 under the new system would become career-tenured on July 1, 1995 (a two-year wait). If the statute was read to lock current employees into the old rule, the existing employee would wait a year longer for tenure than a newly-hired colleague doing the same work. Penny recognized the equal-protection problem and asked the AG.

Special Deputy Attorney General Lars F. Nance and Chief Deputy Attorney General Andrew A. Vanore Jr. concluded the statute should be read to apply to all state employees, not just new hires.

Their reasoning had two strands.

Constitutional avoidance. Courts interpret statutes, where possible, to avoid constitutional doubt. A dual personnel system that disadvantaged current employees relative to new hires would face an equal-protection challenge under both the federal and state constitutions. Equal protection requires a "reasonable means to a legitimate state objective." Powe v. Odell, 312 N.C. 410 (1984). It is "hard to articulate" a legitimate reason for treating veteran employees worse than new hires, the AG observed. Other personnel statutes in fact favor existing employees (G.S. § 126-7.1 priority consideration; longevity pay; retention rights; pay-inequity protection). A dual system reversing that policy would have been an unusual classification with no apparent justification. Under class-legislation doctrine (Cheek v. City of Charlotte, 273 N.C. 293 (1968); Harris v. Flaherty, 90 N.C. App. 110 (1988)), "statutes are generally voided as class legislation whenever persons engaged in the same business are subject to different restrictions or are given different privileges under the same conditions." Two state employees in the same Attorney I position differing only by their hire date would fit that description.

Structural reading. The legislative architecture of Chapter 354 favored a unified system, not a dual one. Sections 2 through 7 of the act systematically removed paygrade-dependent terminology ("permanent employee," "permanent State employee") and replaced it with level-dependent terminology ("career employee"). If the act intended to preserve the old paygrade-dependent system for current employees, those sections would have done that work differently. Instead, the act seemed to eliminate the paygrade framework altogether. That suggested the "applies to all State employees hired on or after that date" clause was a clumsy effective-date clause rather than a substantive grandfathering rule.

The AG also flagged a strategic litigation concern. The 1991 session enacted Chapter 354 and delayed the effective date until July 1993, after a new administration was inaugurated. A current employee disadvantaged by a dual system "may attempt to argue that the legislation benefits the new hires who were brought in by a new administration." Whatever the actual political motive, the legal vulnerability would have been real.

The bottom-line legal conclusion: the General Assembly intended to benefit all state employees equally with the reform. The act should be construed accordingly. Current and new hires were subject to the same level-dependent classification system after July 1, 1993.

Currency note

This opinion was issued in 1993. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The State Personnel Act has been substantially restructured multiple times since 1993, including the 2013 conversion to the State Human Resources Act (G.S. Ch. 126) and various rounds of classification reform. The specific tenure tracks discussed in this opinion (paygrade 75, five-year vs. two-year) no longer accurately describe current personnel rules. The interpretive principles invoked (constitutional avoidance, anti-class-legislation construction, equal protection) remain durable features of NC statutory interpretation.

Background and statutory framework

The North Carolina State Personnel Act (originally Chapter 126 of the General Statutes) is the master statute governing employment of most state government employees. It defines who is covered, sets up the State Personnel Commission, establishes tenure rules, governs disciplinary appeals, and provides for related protections. Its goal is professionalized civil service: state employment based on merit, not patronage, with reasonable job protection for employees who have served competently.

"Tenure" in the state-government sense means civil-service protection: an employee who has completed a probationary period cannot be discharged except for just cause, and has the right to challenge discharge through an appeal process. Achieving tenure ("permanent" status under the old terminology, "career" status under the new) is a milestone.

Pre-1991, tenure tracks were keyed to pay grade. Higher-paying positions had longer probationary periods. The premise was that higher-paying positions involved greater responsibility, so the State needed more time to evaluate fit before granting tenure. The flaw was that pay grade is a noisy proxy for actual responsibility; an Attorney I at paygrade 75 might do work substantively similar to a Senior Attorney at paygrade 80, but the tenure clock ran on the paygrade rather than the responsibility.

The 1991 reform replaced paygrade with position-level analysis, parallel to the Fair Labor Standards Act's primary/secondary/professional/management/consultant categories. This was a more principled fit between job content and tenure timing. It also generally accelerated tenure for many positions, particularly mid-level professional positions previously stuck on multi-year paygrade tracks.

The transition question was a recurring pattern in personnel reform. New rules typically favor employees in some way. If the reform applies only prospectively, existing employees who served under the worse old rules feel betrayed by a system that rewards arrivals. If the reform applies retrospectively (or sweeps in current employees at the effective date), there is no betrayal but the administrative cost of recalculation is real. The 1991 Session 354 effective-date clause appeared to choose the prospective approach, but the AG's opinion read it as choosing the sweep-in approach to avoid constitutional difficulty.

The constitutional-avoidance move is a recurring NC AG technique. When a statute can be read two ways, one of which raises serious constitutional concern and one of which does not, the AG (and courts) generally pick the constitutional reading. Powe v. Odell and Swanson v. State are the canonical NC cases the AG cited for the substantive equal-protection rule, but the avoidance principle itself comes from a longer tradition.

Common questions

If the AG opinion was right, did it mean current employees who would have already reached the new shorter tenure threshold by July 1, 1993 became tenured immediately on that date?

Yes. The opinion's logic was that current employees were entitled to the new level-dependent classification system once it took effect. An employee whose actual service already exceeded the new threshold for their position level would, on July 1, 1993, be a career employee.

Could the General Assembly have legally created a dual personnel system if it wanted to?

It could have tried, but the AG opinion suggests it would have faced a constitutional challenge. To survive, the legislature would have needed to articulate a "legitimate state interest" served by treating veterans worse than new hires. The opinion's tone (that such a reason is "hard to articulate") implies the AG would have viewed the constitutional defense as weak.

What happens if a court later disagrees with the AG opinion?

AG opinions are persuasive, not binding. A court could potentially read Section 9 of Chapter 354 as a clear grandfathering rule and reject the AG's constitutional-avoidance approach. But for purposes of agency administration in 1993, the State Personnel Director was entitled to act on the AG's interpretation. If a court later reversed, the State would face a remedy question (back-tenure for affected employees, recalculation of leave and benefits, and so on).

Why was this question even framed as an interpretive issue rather than a legislative-fix request?

The AG could have responded that the cleanest path was for the legislature to amend Section 9 to clarify the rule. But the legislature was not in session, and the act was about to take effect. The State Personnel Director needed a workable administrative rule for July 1, 1993. The AG provided one through interpretation rather than waiting for legislative clarification.

Source

• Landing page: https://ncdoj.gov/opinions/career-state-employees/

Citations

• N.C.G.S. § 126-1A (career state employee definition)
• N.C.G.S. §§ 126-4, 126-5(c), 126-36.2, 126-39 (sections rewritten by Chapter 354)
• N.C.G.S. § 126-7.1 (priority consideration)
• 1991 Session Laws, Ch. 354, §§ 1-9
• Powe v. Odell, 312 N.C. 410, 322 S.E.2d 762 (1984)
• Swanson v. State of North Carolina, 330 N.C. 390, 410 S.E.2d 490 (1991)
• Harris v. Flaherty, 90 N.C. App. 110, 367 S.E.2d 364 (1988)
• Cheek v. City of Charlotte, 273 N.C. 293, 160 S.E.2d 18 (1968)

Original opinion text

June 4, 1993

Mr. Ronald G. Penny
State Personnel Director
Office of State Personnel
Administration Building
Raleigh, North Carolina 27602

RE: Request for Opinion – Career State Employees

Dear Mr. Penny:

This letter is in response to your letter dated May 17, 1993, and a follow-up to my letter dated May 20th. In your letter, you noted that G.S. 126-1A defines the term "career state employee". An employee's status as a tenured public employee, under G.S. 126-1A, is linked to the level of his position. The terms "primary", "secondary", "professional", "management" and "consultant" are defined in G.S. 126-1A. The definitions parallel the classification of positions for Fair Labor Standards purposes. You point out in your letter that the 1991 Session Laws, C. 354, s .9, indicate that "[t]his act becomes effective July 1, 1993, and applies to all State employees hired on or after that date.

Your specific question is whether State employees hired prior to July 1, 1993, benefit by the legislative reduction in the time it takes to achieve tenured public employee status. Alternatively, you ask whether current employees will continue to be subject to the more stringent tenure standards linked to an employee's paygrade after the new statute becomes effective. You recognize in your letter the constitutional problem apparent in treating public employees with greater state service less favorably than newer hires. For example, a paygrade 75 Attorney I hired July 1, 1991, will not become permanent until July 1, 1996, under the present law; whereas, if that same Attorney I were hired July 1, 1993, under the new system, he would attain tenured public employee status on July 1, 1995. The question thus becomes: Does the fact the legislature specifically indicated that G.S. 126-1A applies to employees hired after July 1, 1993, preclude application of the new tenure tracking to employees hired prior to July 1, 1993?

In examining any legislation, an overriding principle is to construe it in a manner that makes it constitutional. The constitutionality of this statute would be tested against the dictates of the equal protection clause. The equal protection clause requires "the legislative classification in the statute [to] provide a reasonable means to a legitimate state objective." Powe v. Odell, 312 N.C. 410, 412, 322 S.E.2d 762, 763 (1984). "The question is whether [the classification is] reasonable and not arbitrary . . . . [T]he test as to arbitrariness is whether the distinctions drawn . . . bear some relationship to a conceivable legitimate governmental interest." Swanson v. State of North Carolina, 330 N.C. 390, 396, 410 S.E.2d 490, 494 (1991).

No legislative history articulates why the State would have a legitimate interest in treating current employees less favorably than new hires. Frankly, it is hard to articulate such a reason. In fact, other personnel statutes favor existing employees over new hires. [E.g., G.S. 126-7.1, gives State employees priority consideration for positions; North Carolina Office of State Personnel Manual §7, page 41, provides longevity pay, §7, page 44.1, provides priority retention rights and §7, page 44.4, avoids pay inequities and paygrade references.] Several sections of Chapter 354 of the 1991 Session Laws (hereinafter Chapter 354) indicates an intent to eliminate the term "permanent employee" where tenured status is based on paygrade, and substitute in its place the term "career employee" where tenure is level dependent. Section 2 of Chapter 354 rewrites G.S. 126-4 by removing the paygrade designations and substituting in their place level dependent designations. Section 3 of Chapter 354 rewrites G.S. 126-5(c) to incorporate the same paygrade to level dependent change. Sections 4 and 5 of Chapter 354 eliminate the paygrade dependent term "permanent employee" and use instead the level dependent term "career employee". Section 6 of Chapter 354 rewrites G.S. 126-36.2 by including the term "career", with its level dependent implication, to modify the term "state employee". Finally, Section 7 of Chapter 354 rewrites G.S. 126-39 to eliminate the definition of State employee based on paygrade. The scope of Article 8 of Chapter 126, concerning employee appeals, was pegged to career employee status, and the terms "permanent State employee", "permanent employee", "State employee" and "former State employee", all of which referred to paygrade status, were eliminated. An employee's right to appeal under Article 8, after July 1, 1993, is linked to career status, which is level dependent.

Section 9 of Chapter 354 indicates that the changes become effective July 1, 1993, and that the act applies to all state employees hired on or after that date. However, the fact that Chapter 354 adds one new section defining "career employee" and rewrites the rest of Chapter 126 eliminating the term "permanent employee" indicates that the legislature intended for all employees to be treated alike. If the legislature had intended a dual personnel system, disadvantaging current employees, it presumably would have done so specifically.

By rewriting Chapter 126 and eliminating the old paygrade dependent terms, the legislature has indicated that it prefers a unified system. A unified system is not subject to attack under the equal protection clause. If Chapter 354 is used to create a dual personnel system that disadvantages current employees, it could come under attack as class legislation. Under the State and federal equal protection clauses, whenever a state statute has the effect of creating separate classifications, preferring one group over another, the statute must be related to a legitimate state interest. Harris v. Flaherty, 90 N.C. App. 110, 367 S.E.2d 364 (1988). The leading North Carolina case challenging a statute as class legislation is Cheek v. City of Charlotte, 273 N.C. 293, 160 S.E.2d 18 (1968). The Cheek court held that statutes are generally voided as class legislation whenever persons engaged in the same business are subject to different restrictions or are given different privileges under the same conditions. See, id. at 298-99. If Chapter 354 is interpreted to treat the current state employees less favorably than new hires, the statute may be attacked as class legislation and subjected to a higher standard of equal protection analysis. A potential litigant disadvantaged by a dual personnel system may also attempt to argue that the legislation benefits the new hires who were brought in by a new administration. The current employee, subjected to a dual personnel system, may attach significance to the fact Chapter 354 was ratified in June 1991, but delayed until July 1993, after a new administration had been inaugurated.

In summary, it is our opinion that in enacting Chapter 354 the General Assembly intended to equally benefit all employees. Otherwise, any intent to create a dual personnel system would have been specifically articulated. The legislature is presumed to have intended a fair, even handed treatment of all its employees. The fact that Chapter 354 had a delayed effective date does not indicate a desire to create a dual personnel system that may be challenged as impermissible class legislation. Current employees and new hires should therefore be subject to the same level dependent classification system, with reduced tenure requirements, when Chapter 354 becomes effective on July 1, 1993.

Andrew A. Vanore, Jr.
Chief Deputy Attorney General

Lars F. Nance
Special Deputy Attorney General