After North Carolina's 1997 reform of the State Personnel Act, what happened to RIF priorities, where did personnel directors fit in the exempt-position scheme, and could job applicants sue over political-affiliation discrimination?

Plain-English summary

State Personnel Director Ronald Penny had three implementation questions about Session Law 1997-520 (S.B. 886), the State Personnel Act reform that became effective September 17, 1997. Senior Deputy AG Ann Reed and Special Deputy AG Lars Nance answered each in turn.

1. Reduction-in-force priority and the new "most qualified" definition. S.B. 886 added G.S. § 126-14.2(b), defining "most qualified person." The new definition (subsection (b)(3)) directs the hiring authority to apply the priorities already in Chapter 126 and in State Personnel Commission policy when figuring out who is most qualified. The AG's read: this does not collapse RIF priority into a pure qualifications comparison. A minimally qualified reduction-in-force candidate still got the job over a stronger non-state-employee applicant. Just placing the RIF candidate into the "most qualified pool" was not enough; the existing priority rule continued to operate.

2. Personnel professionals and policymaking-exempt status. S.B. 886 expanded the definition of policymaking-exempt to require loyalty to the Governor or elected department head as a reasonably necessary component. At the same time, the new statute expressly excluded personnel professionals (including Personnel Directors) from policymaking-exempt status. Penny asked what happened to personnel professionals already classified as policymaking-exempt when S.B. 886 took effect. The AG's read: existing designations under the prior law remain valid until the next required redesignation date, which was May 1, 2001. After that date, no personnel professional could be in a policymaking-exempt slot. Any new personnel-professional position created after September 17, 1997, or any one re-shaped by reorganization after that date, had to come in either as subject to the State Personnel Act or as managerial-exempt, never as policymaking-exempt. The new numerical and definitional limits (e.g., the reduction from 30 to 20 exempt policymaking positions under G.S. § 126-5(d)) followed the same rule: existing designations survive until May 1, 2001; new or reorganized positions get the new limits immediately. A department could always strip the exempt label off a position; the timing restriction was only on adding exempt labels, not removing them.

3. Political affiliation as a new contested-case ground. S.B. 886 added "political affiliation" to the list of protected categories in G.S. § 126-34.1(b)(3). Penny asked whether this gave applicants a new claim. The AG's read: yes. Before the amendment, an applicant for initial state employment could file a contested case in the Office of Administrative Hearings under Article 3 of Chapter 150B over denial of equal opportunity on account of age, sex, race, color, national origin, religion, creed, or handicap. Adding political affiliation enlarged the available grounds for an initial-employment contested case. This was new and substantive: a candidate who could show denial of equal opportunity on account of political affiliation now had an administrative path to challenge the decision.

Currency note

This opinion was issued in 1997. 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 rewritten and renamed (it is now the State Human Resources Act, codified in Chapter 126 with many sections renumbered or replaced); the May 1, 2001 sunset on then-existing policymaking-exempt designations is long past; and the political-affiliation claim has continued to evolve in case law. Anyone analyzing a current Chapter 126 question should look at the current text and recent decisions, not at this 1997 implementation letter.

Background and statutory framework

The State Personnel Act (now the State Human Resources Act), codified in Chapter 126 of the General Statutes, governs state-government employment in North Carolina. It establishes a merit-based civil service for most state jobs, defines categories of exempt positions where an agency head can hire based on policy alignment, and sets up grievance and contested-case procedures.

Session Law 1997-520 (S.B. 886) was a substantial reform package. Its main changes addressed who could occupy policymaking-exempt slots, how qualifications were measured for hiring decisions, and what grievance rights state employees and applicants had. The reform was driven in part by the new General Assembly majority's desire to recalibrate the balance between political accountability and merit protection at the senior management level.

Two design choices in S.B. 886 mattered for Penny's questions. First, the legislature tightened the policymaking-exempt definition by requiring loyalty as a reasonably necessary component, then carved personnel professionals out of policymaking-exempt status. The intent: senior policy posts could be politically aligned, but the people running the personnel function had to be insulated. Second, the legislature broadened applicant grievance rights by listing political affiliation as a new prohibited basis for denying equal opportunity, recognizing that the same political-accountability concerns at the top of an agency should not run all the way down through the hiring process.

The 2001 sunset on then-existing exempt designations was an accommodation. Stripping every personnel director out of policymaking-exempt status overnight would have created agency-wide reclassification chaos. The May 1, 2001 deadline (the next regular redesignation cycle) let agencies plan the transition.

Common questions

Did this opinion bind later interpretations of "most qualified person"?

No. As an AG advisory opinion, it had only persuasive force. But the substantive point (that RIF priority is layered over the "most qualified" analysis, not replaced by it) reflected the structure the legislature had created and would have controlled most practical disputes during the 1997-2001 transition window.

Could a non-state-employee applicant ever beat a RIF candidate after S.B. 886?

Under the opinion's reading, only if the RIF candidate was not minimally qualified for the position. The RIF priority did not require the displaced state employee to be the strongest candidate, only minimally qualified. If the RIF candidate could not perform the job at a minimum level, the priority did not attach and the position could go to the better outside candidate.

What happened to personnel professionals after May 1, 2001?

The AG's opinion told agencies the answer in advance: personnel professionals could not occupy a policymaking-exempt slot after that date. They had to be moved either into State-Personnel-Act-covered positions or into managerial-exempt status. Agencies that did not plan ahead faced forced reclassifications.

How did political-affiliation grievance rights interact with patronage hiring?

The contested-case route in G.S. § 126-34.1(b) was available to applicants for "initial State employment." A candidate who believed political affiliation had been used against them at hiring could file in the Office of Administrative Hearings under Article 3 of Chapter 150B. This created an administrative remedy short of a federal § 1983 patronage suit, with its own evidentiary standards and remedial scope.

Did the opinion address state employees already in patronage-protected positions?

It did not, beyond the personnel-professional carve-out. The opinion focused on three specific implementation questions Penny asked. For employees already in service, S.B. 886's other changes (definitions of policymaking-exempt, grievance procedures for current employees under other subsections of § 126-34) would have controlled, and those were not the subject of this opinion.

Source

• Landing page: https://ncdoj.gov/opinions/state-personnel-act/

Citations

• Session Law 1997-520 (S.B. 886)
• G.S. § 126-5
• G.S. § 126-14.2
• G.S. § 126-34.1
• Chapter 150B (Administrative Procedure Act), Article 3

Original opinion text

November 10, 1997

Mr. Ronald G. Penny
State Personnel Director
Office of State Personnel
116 West Jones Street
Raleigh, N. C. 27603-8004

RE: Advisory Opinion: State Personnel Act; Session Law 1997-520 (S.B. 886); G.S. § 126-5, G.S. § 126-124.2, G.S. § 126-34.1(b)

Dear Ron:

This letter is in response to your recent memorandum requesting our opinion on three issues related to the implementation of Session Law 1997-520 (hereinafter "S.B. 886"), which was signed into law and became effective September 17, 1997.

First, you asked how priority considerations existing prior to the enactment of SB 886 mesh with G.S. § 126-14.2(b)(3). G.S. § 126-14.2(b) provides a definition for the phrase: "most qualified person." This definition specifically recognizes that in determining who is most qualified the hiring authority applies and utilizes the priorities found in Chapter 126 and the State Personnel Commission's policies. For example, under Commission rules a reduction-in-force candidate who is minimally qualified for a vacant position would receive priority consideration over nonstate employee applicants for a job who are arguably better qualified. G.S. 126-14.2(b)(3) contemplates that the determination of who is substantially more qualified applies the statute plus State Personnel Commission rules and policies. Merely placing a reduction-in-force candidate in the most qualified pool does not satisfy the priority, since under Commission policies a reduction-in-force candidate receives the job over a non-state employee if the reduction-in-force candidate is minimally qualified to perform the job.

Your second issue involves the appropriate classification of personnel professionals who were classified as policymaking exempt prior to the enactment of SB 886. When agencies last submitted their list of exempt positions, most included their personnel director. SB 886 expanded the definition of policymaking exempt to require loyalty to the Governor or elected department head as a reasonably necessary component of placement in a policymaking exempt position. Personnel professionals, which include Personnel Directors, were specifically excluded in SB 886 from policymaking exempt positions. You ask what is the present status of these personnel professionals in light of the fact they can no longer occupy policymaking exempt positions. Positions currently listed as policymaking exempt, including personnel professional positions, were approved by the Legislature under G.S. 126-5, prior to September 17, 1997, the effective date of SB 886. Currently established policymaking exempt positions were approved as policymaking exempt positions under the law existing when they were designated. It is our opinion that all currently approved policymaking exempt positions, including personnel professionals, remain policymaking exempt until a new designation list is required on May 1, 2001. Personnel professionals, however, may not occupy a policymaking exempt slot after May 1, 2001. This date, however is the outside limit for retaining a personnel professional in a policymaking exempt position. A newly created personnel professional position, or one involved in a departmental reorganization, must be listed as subject to the State Personnel Act or placed in a managerial exempt position. A department in submitting a new or reorganized exempt position after SB 886's effective date, September 17, 1997, would look to the new two-prong definition of "exempt position[s]". G.S. 126-5(b)(1), (2), (3) and (4) Both the numerical and definitional limitations imposed by SB 886 under G.S. 126-5(a)(1) and (2) would apply to newly created positions or positions affected by a reorganization.

Your next question involves reducing the number of exempt policymaking positions from thirty to twenty under G.S. 126-5(d). As previously stated those policymaking exempt positions designated by law prior to the effective date of SB 886 remain in effect until May 1, 2001. When a new exemption list is submitted the new numerical and definitional restrictions of SB 886 apply. A reorganization or the creation of a new position after SB 886's effective date of September 17, 1997, also, implicates the new restrictions. Nonetheless, even without a reorganization or a new senior position the department can always reverse the status of an exempt position making it fully subject to the act. The timing restriction is on designating an exemption, not removing it.

Your final question was whether adding "political affiliation" to G.S. 126-34.1(b)(3) provides new grounds for bringing a contested case. It appears that the addition of political affiliation to G.S. 126-34.1(b)(3) enlarges the grounds for a contested case by applicants for initial State employment. G.S. 126-34.1(b) states that "[a]n applicant for initial State employment may file in the Office of Administrative Hearings a contested case under Article 3 of Chapter 150B of the General Statutes based upon: . . . [d]enial of equal opportunity and compensation on account of the employee's . . . political affiliation. . .". Prior to SB 886 an applicant could grieve a denial of equal opportunity employment based on age, sex, race, color, national origin, religion, creed or handicap discrimination. Adding political affiliation discrimination to the list of prohibited acts is new and enlarges the potential grounds for an applicant's claims.

I trust this fully answers your inquiry. Let us know if you need additional assistance.

Ann Reed
Senior Deputy Attorney General

Lars F. Nance
Special Deputy Attorney General