Knutzen v. Department of Insurance & Finance

879 P.2d 1335, 129 Or. App. 565, 1994 Ore. App. LEXIS 1199
CourtCourt of Appeals of Oregon
DecidedAugust 10, 1994
DocketMA-13-92; CA A80869
StatusPublished

This text of 879 P.2d 1335 (Knutzen v. Department of Insurance & Finance) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Knutzen v. Department of Insurance & Finance, 879 P.2d 1335, 129 Or. App. 565, 1994 Ore. App. LEXIS 1199 (Or. Ct. App. 1994).

Opinion

LEESON, J.

The Department of Insurance and Finance (DIF)1 petitions for review of an Employment Relations Board (ERB) order that set aside DIF’s removal of an employee from the management service. We reverse and remand.

Petitioner below, Loy Knutzen (petitioner), began working for a division of DIF in 1980. Three years later, he was appointed to a management service position. He remained in the management service although his specific job assignment changed. In 1992, the governor directed DIF to reduce its work force by 45 positions as part of a state-wide reduction. In late February or early March, 1992, the director of DIF instructed petitioner’s division administrator to eliminate nine management service positions. At that time, DIF had a policy establishing general criteria to be considered in the lay off of management service employees. On March 5, 1992, while administrators were deciding which management positions would be eliminated, DIF revised its management service lay off policy. The revised policy established a 12-step procedure to be followed when management service employees were laid off as a consequence of reorganization. However, neither the original nor revised policy was followed to determine which DIF management positions were to be eliminated. On March 18, petitioner received notice that his position would be eliminated. He received formal written notice on September 14, 1992, that he would be “laid off.”2 Petitioner was restored to a classified position when his management service position was eliminated.

Petitioner appealed the decision to eliminate his management position to the Executive Department. It upheld DIF’s decision. He then appealed to ERB arguing, among other things, that DIF’s failure to follow the established management service lay off policy and procedure violated [568]*568ORS 240.570.3 ERB, acting on its authority to review personnel actions under ORS 240.086(1), found that the policy and procedure had not been properly followed, and ordered DIF to restore petitioner to his former management service position, without loss of pay.

DIF petitioned for judicial review. It argues that ERB lacked authority to review and set aside petitioner’s removal from the management service, because the position was eliminated in a reorganization. According to DIF, ERB’s review of such a decision is limited by ORS 240.560(4) to whether the lay off was ordered “in good faith for cause.”4

An agency may act only within the scope of its statutory authority. Sunshine Dairy v. Peterson, et al, 183 Or 305, 193 P2d 543 (1948); Board of Comm. of Clackamas County v. LCDC, 35 Or App 725, 582 P2d 59 (1978). ERB receives its statutory authority from ORS chapter 240, the State Personnel Relations Law. Its general duties are stated in ORS 240.086, which provides, in part:

“The duties of the board shall be to:
“(1) Review any personnel action affecting an employee, who is not in a certified or recognized appropriate collective bargaining unit, that is alleged to be arbitrary or contrary to law or rule, or taken for political reason, and set aside such action if it finds these allegations to be correct.
it* * * * *
“(3) Adopt such rules or hold such hearings as it finds necessary to perform the duties, functions and powers imposed on or vested in it by law.” (Emphasis supplied.)

ERB also has a more specific role as a quasi-judicial appeal board. Its authority in that role is found in ORS 240.560, which provides, in part:

“(1) A regular employee who is reduced, dismissed, suspended or demoted, shall have the right to appeal to the board * * *.
i<* * * * *
[569]*569“(3) If the board finds that the action complained of was taken by the appointing authority for any political, religious or racial reasons, or because of sex, marital status or age, the employee shall be reinstated to the position and shall not suffer any loss in pay.
‘ ‘ (4) In all other cases, if the board finds that the action was not taken in good faith for cause, it shall order the immediate reinstatement and the reemployment of the employee in the position without the loss of pay.” (Emphasis supplied.)

In Payne v. Department of Commerce, 61 Or App 165, 656 P2d 361 (1982), on recon 62 Or App 433, 661 P2d 119, rev den.295 Or 841 (1983), cert den 470 US 1083 (1985), we held that ERB’s scope of review under ORS 240.560(4) is limited to whether an action was taken “in good faith for cause.” We rejected the argument that ORS 240.560(4) gives ERB the authority to set aside or modify a personnel action that is in violation of a personnel rule.

This case requires us to determine whether ORS 240.086(1) or ORS 240.560 controls ERB’s authority to review lay offs in the management service.

The public employee category of “management service” was created by the legislature in 1981. Or Laws 1981, ch 409. It was added to the existing categories of “classified” (ORS 240.210), “unclassified” (ORS 240.205), and “exempt” (ORS 240.200) employees. The management service is a hybrid of the classified and unclassified services: The legislature placed management service employees in a special status similar to unclassified employees, but gave them some of the protections enjoyed by classified employees. For example, Oregon Laws 1981, chapter 409, section 3, amended ORS 240.240 to exempt management service employees from application of the State Personnel Relations Law. ORS 240.240(1) provides that “[t]he unclassified service or, except as provided in ORS 240.250, the management service shall not be subject to this chapteri.]”5

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Related

Portland General Electric Co. v. Bureau of Labor & Industries
859 P.2d 1143 (Oregon Supreme Court, 1993)
Sunshine Dairy v. Peterson
193 P.2d 543 (Oregon Supreme Court, 1948)
Payne v. Department of Commerce, Building Codes Division
661 P.2d 119 (Court of Appeals of Oregon, 1883)
Payne v. Department of Commerce
656 P.2d 361 (Court of Appeals of Oregon, 1982)

Cite This Page — Counsel Stack

Bluebook (online)
879 P.2d 1335, 129 Or. App. 565, 1994 Ore. App. LEXIS 1199, Counsel Stack Legal Research, https://law.counselstack.com/opinion/knutzen-v-department-of-insurance-finance-orctapp-1994.