Iams v. Civil Service Com'n, Docket No. 77430

• Decision Date: 12 July 1985
• Docket Number: Docket No. 77430
• Parties: David IAMS, on Behalf of himself and on Behalf of a similarly situated group of grievants, Petitioners-Appellants, v. CIVIL SERVICE COMMISSION and Michigan Department of Mental Health, Respondents-Appellees.
• Court: Court of Appeal of Michigan — District of US

Page 883

369 N.W.2d 883

142 Mich.App. 682

David IAMS, on Behalf of himself and on Behalf of a similarly situated group of grievants Petitioners-Appellants, v. CIVIL SERVICE COMMISSION and Michigan Department of Mental Health, Respondents-Appellees.

Docket No. 77430.

Court of Appeals of Michigan.

Submitted Jan. 16, 1985.

Decided March 26, 1985.

Released for Publication July 12, 1985.

Loomis, Ewert, Ederer, Parsley, Davis & Gotting by Maurice E. Schoenberger and Michael G. Lofuren, Lansing, for petitioners-appellants.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and Arthur E. D'Hondt and Deborah Anne Devine, Asst. Attys. Gen., for respondents-appellees.

Before R.B. BURNS, P.J., and BRONSON and HOBSON, ^* JJ.

PER CURIAM.

Petitioners appeal as of right from a circuit court order affirming the Civil Service Commission Employment Relations Board's denial of petitioners' grievance regarding pay increases.

A new system of classifying positions in the state civil service system known as the "benchmark factor ranking system" was adopted by the Michigan Civil Service Commission on June 13, 1975, pursuant to Const.1963, art. 11, Sec. 5. Benchmark conversion for petitioners, 17 employees at the Department of Mental Health's Muskegon Regional Center for Developmental Disabilities, took effect on September 16, 1979. Prior to benchmark conversion, petitioners were all classified as Nursing Service Supervisors 06 (NSS-06) and were paid $6.76 per hour, the maximum pay step within that classification. Upon benchmark conversion, petitioners were reclassified as Residential Care Aide Supervisors VB (RCAS-VB) and were paid $6.95 per hour the first pay step of that new classification. Simultaneously, their anniversary date for purposes of advancing to the second step of the new classification was uniformly changed to the date of benchmark conversion, i.e., September 16. These changes were in accord with the Civil Service Commission's Bureau of Classification policy memo # 7, which provided in pertinent part:

"2. Employees who were at the maximum of their old pay range and who are at less than the maximum of the pay range after conversion will receive step increases using the effective date of the implementation as the anniversary date for step increases."

Policy memo # 7 also provided in part:

"3, Employees who were at less than the maximum of their old pay range and who are at less than the maximum of the pay range after conversion retain their anniversary date for step increases."

Two employees at the Muskegon facility, also classified as NSS-06 prior to the benchmark conversion, had less seniority than petitioners and were not at the maximum pay step within the NSS-06 classification at the time of benchmark conversion. Accordingly, under paragraph 3 of policy memo # 7, they also moved into the new RCAS-VB classification first pay step upon conversion, but kept their anniversary dates for pay step increases as well as their service hours toward the pay increase. The effect of this application of policy memo # 7 was that, as of January, 1980, one of the less senior employees, Eugene Rake, was earning $7.89 per hour while petitioners and another less senior employee, William Johnson, earned $7.44 per hour. By March, 1980, both Rake and Johnson were earning $7.89 per hour while petitioners continued to earn $7.44 per hour. Petitioners did not catch up with the less senior employees until September 16, 1980. This cycle, known as "leapfrogging", in which all employees received equal pay for three to four months per year and the remaining eight to nine months those with seniority received less pay, continued for three years until September, 1982, when petitioners reached the top pay step in their pay range along with the junior employees.

Prior to benchmark conversion, the Civil Service Commission also issued policy memo # 6. The purpose of that memo was to allow each agency the opportunity to resolve problems which were anticipated under the conversion. The memo reads in pertinent part:

"The standards for pre-authorized special salary approval are as follows:

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"4. There are special circumstances which would result in an injustice to the employee, if a special salary adjustment were not granted.

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"6. In the case of conversion from the position comparison system to the benchmark factor ranking system, employees of greater seniority in a class may move to the same step of the pay range as employees with lesser seniority. Special steps are not allowed in these instances. A special step increase is allowed, if an employee with lesser seniority moves to a higher step than an employee with greater seniority. The increases shall be effective the same day, to maintain the same pay for the two employees."

Pursuant to the civil service employee grievance procedure, petitioners filed a statement of grievance on February 28, 1980, claiming that the "leapfrogging" was inequitable under paragraph 4 of policy memo # 6 and seeking a reinstatement of their previous anniversary dates by a reallocation of the hours accumulated toward the next pay step prior to benchmark conversion. They also sought retroactive payment of the difference in pay this reallocation would create. A fourth-step grievance hearing was held before a hearing officer on November 5, 1980. The issue submitted was whether the Department of Mental Health abused its discretion by failing to grant petitioners a special salary consideration in accordance with policy memo # 6. Petitioners contended that the Department of Mental Health (Department) abused its discretion in failing to appropriately apply policy memo # 6 to correct or adjust the injustice worked on them because of benchmark conversion.

On January 20, 1981, the hearing officer granted petitioners' grievance and ordered petitioners placed at the same pay step as Rake, effective each date Rake moved into a higher step and received a pay increase. In his opinion, the hearing officer stated:

"There is no doubt that the situation described in this case is patently unfair to the Grievants, despite the fact that what occurred with respect to the Grievants was in accord with Policy Memo No. 7. It is the opinion of the Hearing Officer that the Bureau of Classification, recognizing the existence of the inequities related to the operation of that policy, provided in Policy Memo No. 6 a method for the removal of such inequities.

"Item 6 of Policy Memo No. 6 speaks directly to the situation involved herein.

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"The Hearing officer believes that provision was intended to apply to situations like that present in this case and that the purpose of the language 'shall be effective the same day' is to authorize the increase for the employee with greater seniority on the same day that the employee with lesser seniority moves to a higher step because of the passing of the latter's anniversary date.

"The Hearing Officer notes that the appointing authority is not mandated to grant such special steps. The Hearing Officer, nevertheless, believes that the inequities in this case resulting from the Department's inaction are so grievous as to make that inaction an abuse of discretion. In addition to the foregoing the Hearing Officer notes that he has equitable authority, apart from whatever discretion the Department may have, to redress unfairness. In this case the exercise of that equitable authority is quite appropriate."

The department filed an application for leave to appeal with the Employment Relations Board on February 19, 1981. On October 26, 1981, the Employment Relations Board sent the parties a notice for discussion of the application and requested the presence of a representative of the Bureau of Classification. In addition to discussing the issue raised below, these parties were requested to prepare to discuss three other subjects:

"1. Whether there have been other cases of employees at less than maximum salary in a pay range being benchmarked into a common class, level, salary range and step with employees at maximum; where the junior employees retain their old anniversary dates and the senior employees start a new anniversary date; and the juniors move to the second year step as much as a year ahead of the seniors.

"2. The application of Bureau of Classification Policy 6, Section 6, to leapfrogging after the date of benchmark.

"3. Whether a Department has absolute discretion to grant or withhold relief provided for in Policy 6, Section 6."

The proceeding before the Employment Relations Board was held on January 6, 1982. Roger Kent, on behalf of the Department of Mental Health, argued that petitioners received a pay raise effective September 16, 1979, and two weeks later, on October 1, 1979, they received another pay raise. He stated that granting an increase for the 17 petitioners would amount to a $30,000 to $40,000 expenditure, or the equivalent of the salary for three direct care workers. This was taken into consideration when the Department of Mental Health decided to deny the special pay increase petitioners had requested: management thought it was better to retain staff than to give others an additional pay raise. He argued that policy memo # 6 had been applied equally and that no special step increases had been given within the department. He further argued that policy memo # 6 was discretionary and that the decision made by the Department of Mental Health to deny petitioners' requested pay increase was in the best interest of the agency.

Joseph Slivensky, representing the Bureau of Classification, reported on the events which led to benchmark conversion and the adoption of policy memos # 6 and # 7. He testified that implementation of the benchmark conversion process within the Department of Mental Health was more complicated than in other departments. Prior to conversion, the Legislature and the Governor both initiated task forces to look...