In Re Hood

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No.  88-271


In re Grievance of                           Supreme Court
Robert L. Hood and
Thomas O. Mahar, Jr.                         On Appeal from
                                             Labor Relations Board

                                             October Term, 1989


Dinah  Yessne, Acting Chair

Michael R.Zimmerman, VSEA Staff Attorney, Montpelier, for plaintiffs-
  appellees

Jeffrey L. Amestoy, Attorney General, and Michael Seibert, Assistant
  Attorney General, Montpelier, for defendant-appellant


PRESENT:  Allen, Peck, Gibson and Morse, JJ., and Barney, C.J. (Ret.),
          Specially Assigned


       ALLEN, J.  The State appeals from a decision of the Vermont Labor
Relations Board restoring two state employees to their former pay grades and
awarding them back pay for wages lost as a result of their "involuntary
demotion."  We reverse.
     On January 14, 1987, Governor Madeline Kunin, citing 3 V.S.A. {{ 209
and 2001, (FN1) signed an executive order that provided, in part, as follows:
            [I] do hereby transfer the following positions and
          incumbents from the Agency of Environmental Conserva-
          tion, Department of Water Resources, to the Department
          of Labor & Industry, with position duties to be defined
          by the Department of Labor & Industry and the appro-
          priate classification action to be taken by the
          Department of Personnel, both to be completed by the
          effective date of the transfer:

               WA 0130, Plumbing Review Chief
               WA 0139, Environmental Technician C
Grievant Robert Hood, Jr., a classified state employee since 1960, and
grievant Thomas Mahar, Jr., a classified state employee since 1972, were the
two "incumbents" affected by the order.  Pursuant to that order, (FN2) on April
16, 1987, the Commissioner of the Department of Labor & Industry sent to the
Department of Personnel a description of the duties for the revised Plumbing
Inspector class, a recommendation that the pay grade for the class be
increased from pay grade 17 to pay grade 18, and a memorandum that included
the following language:
          As you can see from the Executive Order this will result
          in an involuntary demotion for the two AEC employees.  I
          understand that reduction in force procedures are not
          necessary to do and that the incumbents' salaries will
          not be reduced.
On April 22, 1987, the Director of Personnel Operations informed the
Commissioner that the two positions named in the order had been reallocated
to the class of Plumbing Inspector, which had been reassigned to pay grade
18.  See 3 V.S.A. { 310(a) (Department of Personnel has duty to classify
positions based on job descriptions).  On May 1, 1987, the Commissioner
informed grievants that because the reallocation of their former positions
represented an "involuntary demotion" for them (Hood had been at pay grade
20 while Mahar had been at pay grade 19), their current salaries would not
be reduced. (FN3)
     Grievants reported for work at the Department of Labor & Industry on
May 17, 1987.  Although grievants retained their current salaries, they
suffered adverse economic consequences as a result of the State's actions.
Because Hood's salary was above the maximum for pay grade 18, he was pre-
cluded from later moving to a higher step within the pay scale.  Similarly,
Mahar would derive smaller salary increases from future stepups within the
pay scale.
     In July of 1987, Hood and Mahar filed a grievance alleging that they
were unlawfully demoted in violation of the collective bargaining agreement
(Contract) between the State and the Vermont State Employees' Association.
The Vermont Labor Relations Board ordered that the grievants be restored to
their former pay grade, with back pay.  The Board's ruling was based on its
conclusion that the Contract and the personnel rules permitted an employee
to be demoted only when there was a reduction in the work force, (FN4) which did
not occur here.  While conceding that the executive order had authorized
"appropriate classification action," the Board reasoned that any such action
cannot prejudice an employee beyond what is permitted by the Contract and
personnel rules.  According to the Board, while positions may be
"reallocated" downward as a result of a classification review, employees
are "transferred" or "demoted."
     Despite the deferential standard accorded to Board determinations, see
Vermont State Colleges Faculty Fed'n v. Vermont State Colleges, 151 Vt. 457,
460, 561 A.2d 417, 419-20 (1989), we reject the Board's conclusion that the
State's actions in this matter violated the Contract and the personnel
rules.  The Board's reasoning was as follows: (1) The executive order
"transferred" the grievants.  (2) Personnel Rule 2.041 defines "transfer" as
a change of an employee to a position within the same pay grade.  (3)  The
Contract defines "demotion" as "the change of an employee from one pay
scale to another pay scale for which a lower maximum rate of pay is
provided."  (4) Grievants were moved to a pay scale with a lower maximum
rate of pay; hence, they were "demoted."  (5) Personnel Rule 11.05 allows
the demotion of employees "for cause" or "because of reduction in force."
(6) There was no reduction in work force and Article 17 of the Contract
prohibits demotion as a disciplinary step.  (7) Therefore, the State's
actions constituted an unauthorized demotion.
     We conclude that the Board's reasoning is flawed because both the
Contract and the personnel rules authorized the State's actions here, which
are more accurately characterized as implementing downward reallocations,
not demotions.
     The construction of collective bargaining agreements is governed by
traditional principles of contract law.  Vermont State Colleges, 151 Vt. at
461, 561 A.2d  at 420.  "A fundamental maxim of contract law is that in con-
struing an agreement effect should, if possible, be given to every material
provision as part of an intergrated whole."  Id.; see also In re Stacey, 138
Vt. 68, 72-73, 411 A.2d 1359, 1361-62 (1980) ("In construing written
contracts to ascertain the parties' intent, Vermont courts seek to give
effect to all material parts of the contract and to form a harmonious
result.").
     An examination of the instant Contract in its entirety, and a
comparison of the contract provisions with the personnel rules, reveals the
intention of the parties to recognize the State's authority not only to
reallocate positions downward but also to change the pay scale of the
incumbents currently holding those positions.  Article 19 of the Contract,
entitled "Classification Review and Classification Grievance," expressly
retains the State's unilateral authority to reallocate positions, subject to
challenge through a classification grievance, which may be brought by
"employees" who are dissatisfied with their classification or assigned pay
grade. (FN5) Further, Personnel Rule 6.074 makes it clear that a downward
reallocation of an employee's position directly affects the financial status
of the incumbent employee.  Under Rule 6.0741, an employee with more than
three years service whose position is "reallocated downward through no fault
of his own" is not subject to a reduction in salary (as opposed to a
reduction in "pay grade" or "pay scale"). (FN6) Rule 6.0742, which applies to
downwardly reallocated employees with less than three years service, also
preserves the employee's salary, unless it exceeds the maximum of the new
pay scale.
     The problem is that the State's actions in this case fit within the
Contract definition for both "demotion" and "reallocation" ("the change of a
position from one class to another class").  Although Rule 11.05 states that
demotions are only allowed "for cause" or for "reduction in force," Rule
6.074 clearly contemplates that incumbent employees may be "demoted" (placed
within a lower pay scale) as a result of the downward reallocation of the
incumbents' positions.  Because the Contract expressly gives the State the
right to unilaterally reallocate positions, we must conclude that the
State's actions here were authorized by the Contract and the personnel
rules.
     A lawful executive order transferred grievants and, at the same time,
ordered a classification review of the transferred positions.  Following a
description and review of the duties involved, the positions were reallo-
cated downward, and the incumbent employees retained their former salaries,
albeit at a lower pay grade.  Each one of these actions was authorized by
statute, contract provision, or personnel rule.  The Board's decision cannot
stand.

     Reversed.


                                 FOR THE COURT:




                                 ________________________________
                                 Chief Justice




FN1.    3 V.S.A. { 209 provides, in part, that the governor "may transfer,
temporarily or permanently, subordinates of any one of [the] departments to
another department as the needs of the state may seem to him to require."
        3 V.S.A. { 2001 provides that "[t]he governor may make such changes
in the organization of the executive branch or in the assignment of its
units as he considers necessary for efficient administration."

FN2.    The executive order was submitted to the general assembly in
accordance with 3 V.S.A. { 2002.  Neither house passed a disapproving
resolution.

FN3.    Under the collective bargaining agreement between the State and the
Vermont State Employees' Association, "demotion" is defined as "the change
of an employee from one pay scale to another pay scale for which a lower
maximum rate of pay is provided."  Further, under { 6.074 of the Personnel
Administration Rules, "[a] permanent status employee with three or more
years of continuous State service whose position is reallocated downward
through no fault of his own and whose service in the position is at least
fully satisfactory shall not be subject to a reduction in salary."

FN4.    The Board has since changed its position on this point.  In In re
Grievance of Hood, 11 V.L.R.B. 64, 73-74 (1988), the Board noted that
Personnel Rule 11.05 permitted demotion "for cause" or "because of reduction
in force" but that a lawful demotion could only result from a reduction in
work force because Article 17 of the Contract, relating to disciplinary
actions, had removed demotion as one of the disciplinary steps available for
"just cause."  In a later case currently on appeal in this Court, In re
Grievance of Ulrich, 12 V.L.R.B. 230, 239-41 (1989), the Board held that
although "disciplinary demotions are clearly prohibited" by Article 17, Rule
11.05 does not prohibit demotions "for cause" unrelated to disciplinary
actions.  According to the Board, "downward reallocations" are permitted
because they are demotions "for cause" and yet are not the result of
disciplinary actions.  Id. at 240.  The Board stated that its change of
opinion on this point did not disturb its ruling in Hood "since the demotion
of the grievants therein clearly was not for cause due to the requirement
that their transfer must be to a position of the same pay grade."  Id. at
241.

FN5.    Grievants did not file a classification grievance in the instant
matter.

FN6.    Grievants have not argued that the term "salary" in 6.0741 is the
equivalent of the terms "pay grade" or "pay scale."