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MOU Provision Allowing Purge Of Negative Personnel Records Over One Year Old Violated The Public Policy Supporting The State’s Merit System
The California Department of Human Resources (State) had a memorandum of understanding (MOU) with the International Union of Operating Engineers (the Union) regarding terms and conditions of employment for State employees classified as bargaining unit 12. MOU Article 16.7(G) said that “materials of a negative nature” placed in an employee’s personnel file shall, at the request of the employee, “be purged … after one year.” This provision did not apply to “formal adverse actions” as defined in the Government Code or to “material of a negative nature for which actions have occurred during the intervening one year period.”
In 2014 and 2015, an employee in bargaining unit 12, referenced as B.H., reviewed his personnel file at the Department of Water Resources (DWR) and requested that materials of a negative nature be purged. In March 2016, DWR disciplined B.H. by reducing his salary by 10% for one year. This discipline was based on various acts or omissions between 2013 and the end of 2015. To support the discipline and demonstrate that B.H. received progressive discipline, DWR referenced numerous counseling and corrective memoranda that contained negative material in the notice of disciplinary action. The dates of these memoranda ranged from 2007 to 2015.
After B.H. appealed his discipline, the parties reached an agreement to settle the disciplinary action. In the settlement agreement, B.H. agreed to accept a 10% salary reduction for six months and waive his right to challenge his disciplinary action in any other proceeding. During the settlement discussions, the Union filed a grievance alleging the DWR violated MOU Article 16.7 by relying on prior corrective action to discipline B.H. since the memoranda on file for more than one year should have been purged. The parties were unable to resolve the dispute and participated in arbitration. The arbitrator found the State violated the MOU and ordered the State to “cease and desist” from violating Article 16.7.
The State subsequently sought a trial court review of the award. In its lawsuit, the State argued the award should be vacated because the arbitrator’s interpretation of Article 16.7 violated public policy by undermining State departments’ ability to take appropriate disciplinary action based on progressive discipline. The State also argued the arbitrator’s interpretation of Article 16.7 would interfere with the State Personnel Board’s constitutional duty to review disciplinary action. The trial court disagreed and found that the arbitrator correctly interpreted the MOU. The State appealed.
The merit principle of State civil service employment mandates that: “In the civil service permanent appointment and promotion shall be made under a general system based on merit ascertained by competitive examination.” Under this merit principle, State employees are to be recruited, selected, and advanced under conditions of political neutrality, equal opportunity, and competition on the basis of merit and competence. MOU’s, even when approved by the Legislature, may not contravene the merit principle.
The court noted that enforcing Article 16.7 as the arbitrator had interpreted it would impermissibly undermine the State merit principle. This is because the State would be unable to retain, consider, or rely on negative material in counseling and corrective memoranda older than one-year-old after a file-purge request. The court reasoned that these documents memorialize an employee’s ongoing work performance, provide warnings of areas needing improvement, and may have a material bearing on subsequent disciplinary decisions. Purging these records would substantially undermine that State’s ability to make fair and fact-based evaluations of employee performance and take disciplinary action based on merit. For these reasons, the court concluded the arbitrator’s decision violated public policy.
Further, the court concluded the arbitrator’s interpretation would interfere with the State’s ability to carry out progressive discipline, which is required by the State Personnel Board. The court noted that the DWR had extensively documented B.H.’s behavior over the years with counseling and corrective memoranda. However, under the arbitrator’s interpretation, that evidence had to be removed and could not be used or relied on to support the disciplinary action or to verify that progressive discipline occurred. If B.H. exhibited similar work deficiencies in the future warranting disciplinary action, DWR would have no record that it followed progressive discipline. Finally, the State Personnel Board could not confirm whether the DWR followed progressive discipline rules if the purge was permitted.
Thus, the court determined the trial could have vacated the arbitrator’s award.
Dep’t of Human Res. v. Int’l Union of Operating Engineers, 2020 WL 7395171 (Cal. Ct. App. Dec. 17, 2020).
The court explicitly limited its opinion to the one-year purge policy: “We offer no opinion whether a three-year provision . . . would survive the same public policy challenge against which the MOU provision in this case—with its one-year provision—did not.” As a result, it remains unclear whether an MOU provision requiring the purging of negative material after more than one year would violate the public policy supporting the State’s merit system.