New SOG Bulletin: Personnel Decisions for North Carolina’s Consolidated Human Services Agencies

Published for Coates' Canons on January 18, 2022.

To date, 28 counties in North Carolina have established consolidated human services agencies (“CHSAs”). All but one of these 28 agencies include both public health and social services.  When a board of county commissioners (“BOCC”) decides to establish a new CHSA, North Carolina law gives the BOCC the option to make CHSA employees subject to county personnel policies and ordinances instead of keeping them subject to the State Human Resources Act (the “SHRA”).  If a BOCC creates a CHSA and does not explicitly elect to keep the CHSA’s employees subject to the SHRA, the county faces a new hurdle. It is required to ensure that its personnel policies for CHSA employees “comply with all applicable federal laws, rules, and regulations requiring the establishment of merit personnel systems.”

Why might a county choose to keep CHSA employees under the SHRA, or conversely, move them over to the coverage of county personnel policies? How can a county with a CHSA ensure it is compliant with the federal merit personnel standards? Can a county that has not created a CHSA take any action to exempt its human services employees from any portion of the SHRA? I address these questions and other topics related to CHSA personnel matters in a new bulletin published by the School of Government: Personnel Decisions for North Carolina’s Consolidated Human Services Agencies.  This bulletin is intended to be a helpful resource for counties with CHSAs and counties that are considering creating a CHSA. Read on for a brief overview of some of the topics explored in more depth in the bulletin.

The SHRA Decision

Under G.S § 126-5(a)(2), employees working for county health departments and departments of social services are subject to the SHRA with respect to recruitment, selection, and dismissal procedures.  In 2012, the North Carolina General Assembly enacted S.L. 2012-126, allowing all North Carolina counties with a county manager to create a CHSA having the authority to carry out the human services functions of various county agencies, including the local health department and the county department of social services (“DSS”). In a major departure from the traditional arrangement, S.L. 2012-126 allowed a BOCC to make employees of a CHSA subject to county personnel policies and ordinances instead of the SHRA.

This personnel decision is a choice that counties must make as part of the consolidation process. Employees of a new CHSA are subject to county personnel policies by default unless the BOCC elects to subject the employees to the SHRA.  Conversely, the “default setting” for employees of a traditional non-consolidated local health department and DSS is to be subject to the SHRA. If the BOCC wants to keep its social services and public health employees subject to the SHRA when creating a CHSA, it must explicitly elect to do so in the form of a resolution. The bulletin explores some of the reasons why a county may decide for or against keeping its CHSA employees subject to the SHRA.

The Federal Merit Personnel Systems Requirements

G.S. § 153A-77(d) mandates that all CHSAs comply with the federal merit personnel systems requirements, which are found at 5 CFR § 900.603. For counties that elect to keep their CHSA employees subject to the SHRA, the CHSA will generally be compliant with the federal merit personnel system standards simply by complying with the SHRA’s procedures.  However, when a county wants to remove its CHSA employees from the SHRA, it should first instruct the county attorney (or outside counsel) to conduct a careful review of county personnel policies, procedures, and ordinances to ensure that they meet each of the federal standards. To the extent that they do not reflect the federal merit personnel system standards, these documents and practices will need to be modified specifically for CHSA employees. More information regarding compliance with the federal merit personnel systems standards may be found in the new bulletin.

What is a “Substantially Equivalent” County Personnel System?

Counties can remove social services and public health employees from certain aspects of SHRA coverage without creating a CHSA. This is accomplished by applying for and receiving a “substantially equivalent” exemption from the Office of State Human Resources (“OSHR”). The SHRA allows the State Human Resources Commission (acting through the OSHR) to determine whether particular elements of a county’s personnel management system are “substantially equivalent” to the SHRA (G.S. § 126-11; 25 NCAC 1I.2407). Counties can petition for this designation in five aspects of personnel management: (i) Recruitment, Selection, and Advancement, (ii) Classification/Compensation; (iii) Training; (iv) Employee Relations; and (v) Political Activity.  If the county’s petition is approved, county employees who are subject to the SHRA (including public health and social services employees) become subject to the county personnel system and are exempted from the SHRA solely with respect to those approved aspects of personnel management.

Any North Carolina county can apply for a substantially equivalent personnel system exemption, regardless of whether it has created a CHSA. However, unlike the personnel option available to counties with a CHSA under G.S. § 153A-77(d), the substantially equivalent designation under G.S. § 126-11 is not a blanket exemption from all aspects of the SHRA. It allows counties to substitute their own county policies and procedures for the SHRA in particular aspects of personnel management, but does not allow counties to move SHRA-covered employees over to the coverage of the county personnel system in its entirety. The bulletin describes some reasons why a county might choose to seek a substantially equivalent exemption.

What Happens to Protections Under the SHRA When CHSA Employees are Moved Under County Personnel Policies?

Employees may lose some protections and benefits when a county opts to have CHSA employees governed by county personnel policies and ordinances instead of the SHRA. First, it is currently an unsettled question of law whether someone who has attained career status under the SHRA (meaning they can be terminated only for “just cause”) loses that status when that individual is converted to a CHSA employee. Second, a CHSA employee who is moved to the county’s personnel policies loses access to the employee grievance procedure established by the SHRA. That procedure allows an employee to contest a final agency decision by filing a contested case in the Office of Administrative Hearings (“OAH”). The bulletin addresses both of these issues in more detail.

Other Personnel Decisions When Creating a CHSA

Except as otherwise provided by law, the individual appointed as the CHSA director acquires all of the powers and duties as a social services director and a local health director (if both social services and public health are consolidated into the CHSA).  See G.S. § 153A-77(e). The CHSA director is permitted, but not required, to delegate most of these powers and duties to other staff members within the agency.  The county manager and the CHSA director have tremendous flexibility in deciding how to delegate these powers and duties and in how to structure the internal organization of the CHSA. The new bulletin describes some of the internal organization structures that counties have created for their CHSAs, explains a statutory limitation on this organizational structuring authority, and provides recommendations regarding delegations of authority to CHSA staff members.