Merit principle reform needed for private sector employment

The purpose of statutes governing employment, as in other areas of human endeavor, is presumable, to ensure a more just and equitable workplace for employees. Human nature being what it is, such laws, with attendant administrative regulations, are enacted to ensure this end.

In civil service employment in California, the merit principle is embodied in the California Constitution: "In the civil service permanent appointment and promotion shall be made under a general system based on merit ascertained by competitive examination." Cal Const., Art. VII, Section 1(b).

The merit principle was held controlling in vacating an arbitration award in the recent published decision, Department of Human Resources, et al. v. International Union of Operating Engineers, 2020 DJDAR 132420. At issue was the employer's relying on prior corrective and counseling memoranda that had occurred more than one year prior, to support disciplinary action against an employee. The employee's union claimed that this was in violation of an article in the memoranda precluding reference to disciplinary actions that had occurred one year previous to the current charge. The Court of Appeal reversed the arbitrator's decision in favor of the union. The decision had been based on the arbitrator's finding that the state had violated an article in the memoranda by using purged documents to support the disciplinary action. The court found that the arbitrator had exceeded his powers "by issuing an award that violates a well-defined public policy."

The public policy in issue was the merit principle. The court noted: "Under this merit principle, public employees are to be recruited, selected and advanced under conditions of political neutrality, equal opportunity, and competition on the basis of merit and competence. State Personnel Bd. v. Department of Personnel Admin. (2005) 37 Cal.4th 512, 526." The court further noted that the merit principle was implicated by decisions to impose discipline as well as decisions to hire or promote state employees. "A state civil service based on the merit principle can be achieved ... by the (State Personnel) Board only by developing and consistently applying uniform standards for employee hiring, promotion and discipline." Principles of progressive discipline were noted by the court as essential where a state employer seeks to discipline an employee for his or her work performance. The court held that the arbitrator's refusal to consider all negative documentation regarding the employee's performance more than one year old violated the merit principle, in that precluding such prior disciplinary action "will substantially undermine that state employer's ability to (i) make a fair and fact-based evaluation of the employee's performance, and (ii) decide on disciplinary action based on merit."

This case underscores that the merit principle, where a corresponding reliance on progressive discipline is appropriate for performance related discipline, including terminations, is viewed as fundamental constitutionally based public policy for civil service employees. The State Personnel Board was created as the primary entity to enforce such policy by implementing civil service statutes, adopting rules, and reviewing disciplinary actions.

The court's overview of the merit principle in the interest of civil service employment should serve to promote awareness of the importance of this principle in private sector employment as well. Other fundamental public policies are enshrined in our state Constitution, including the right to privacy (Article 1, Sec. 1) and the right to be free from invidious discrimination based on race, gender, national origin, and other protected statuses (Article 1, Sec. 8). The right to progressive discipline based on the merit principle, equal to that recognized for civil service employees, should be recognized for non-government employees as well -- at least for those non-governmental entities with over a threshold minimum number of employees.

The emotional and financial harm resulting from precipitous discharges of employees without good cause would be far less possible if a legislatively mandated policy were in place requiring recognition of the merit principle in private sector employment. An agency similar to the EDD, with administrative law judges hearing appeals of denials of unemployment insurance claims, should be available for employees claiming that they have been terminated for alleged performance deficiencies. These reforms would, of course, require a reexamination of the anachronistic "at-will" doctrine to which this country, other than the state of Montana, has been committed notwithstanding its abolition in all other countries in the industrialized world. 