J. Thabaraj as its witnesses. Respondent offered Respondent's Exhibits 1 through 7, inclusive, each of which was received into evidence.
In early 1979, the Department of Administration, Division of Personnel, prepared for the Governor a document entitled Recommended Salaries and Benefits for Career Service Employees for the Biennium July 1, 1979, to June 30, 1981. The purpose of this document was to assist the Governor in making recommendations to the 1979 Legislature regarding salaries and benefits for the State's Career Service employees.
Approximately one month after publication of its initial recommendations, the Department of Administration published a supplement to those recommendations to reflect the results of collective bargaining negotiations with various bargaining units and to clarify certain points. With respect to merit salary increases, it was recommended that all funds not distributed as guaranteed merit increases in accordance with specific collective bargaining agreements be "distributed at the discretion of management" to employees with six months satisfactory service as of September 1, 1980. For the supervisory bargaining unit of which all Petitioners are members, all merit funds were to be distributed at the discretion of management.
The Governor's recommendations contained in the document prepared by the Department of Administration were furnished to legislators and all State agencies prior to adoption of the Appropriations Act. In 1979, in the Appropriations Act for the Biennium 1979-81, as supplemented in 1980 by the 1980 Supplemental General Appropriations Act, the Legislature appropriated certain funds to be used for merit salary increases for Career Service employees. These raises were to become effective September 1, 1980. Funds were allocated in a total dollar amount for each collective bargaining unit within each state agency. The Legislature, in appropriating funds for salary increases and benefits for Career Service employees, specifically provided that such funds were to be distributed in accordance with the Governor's recommendations. Ch. 79-212, Sec. 21, Laws of Florida.
The Department of Environmental Regulation received merit increase monies for its Career Service employees within the following bargaining units: supervisory-professional, professional, administrative clerical, operational services, and managerial/confidential. Petitioners Leslee A. Williams, Sylvia
E. Sakamoto, and Rosemary Bottcher are Career Service employees employed in the Bureau of Water Analysis, Division of Environmental Programs. Leslee Williams is a Microbiologist III. Sylvia Sakamoto and Rosemary Bottcher are Chemist III's. Petitioners are employees within the Supervsory/professional collective bargaining unit.
On July 31, 1980, the Secretary of the Department of Administration sent a memorandum to all Department heads with attached instructions for implementation of salary increases for employees in all affected bargaining units, including the supervisory unit. The instructions for distribution of merit salary increases to employees in the supervisory unit provided that the distribution of funds to eligible employees was discretionary with management, subject only to a cap on the maximum amount any employee could receive. This cap of 10, 7.5, or 5 percent of an employee's salary is determined by the employee's official performance evaluation rating. With regard to "discretionary merit salary advancements", the instructions noted that:
These increases are provided to reward current employees based upon their performance. These increases are intended
to allow employees to progress within the salary range in recognition of their increased worth to the State as an employee. The proper implementation of merit salary advancements is critical to the State's ability to reward tie most competent, qualified and productive employees. While the funds are
discretionary as to the actual amount any one employee may receive, management has no discretion as to whether the Funds may or may not be distributed.
These instructions were received by DER in early August of 1980, and DER immediately began taking steps necessary to implement the salary increases in time for inclusion in employees' September paychecks.
In August, 1980, the Secretary of the Department of Environmental Regulation authorized each of the directors of the three principal divisions within the Department (the Divisions of Environmental Programs, Environmental Permitting, and Administrative Services), as well as the offices of General Counsel and the Secretary, individually, to establish or determine the methods, standards for determining employee merit and employee performance and performance to be used within each division or office for identification of those Career Service employees eligible to receive a merit salary increase.
By memorandum dated August 2, 1980 the Director of the Division of Environmental Programs requested that all Bureau Chiefs in his division and certain supervisors meet with him to establish a ranking of employees within the division to be used in determining the amount of merit salary increase each eligible employee would receive. This memorandum provided, in part, as follows:
. . . We have available a certain amount of "discretionary" money which can be given as merit raises. This will be over and above those pay increases through pay adjustments or cost of living increases, which are mandated by the Legislature.
The discretionary amounts are small; but they are significant enough that we should make every effort to insure fairness recognition of outstanding service and encouragement of those whom the Department needs to keep. The final decision on all increases will be mine alone, but the preliminary ranking and classification of the various persons will be done in collaboration with all of you.
We will begin with the personnel evaluations. However, since grading standards for the evaluations differ among various supervisors, we will attempt to bring all evaluation ratings to comparable scales. We will then try to emphasize those qualities, both within the ratings and those not included in the
particular categories, which most contribute to
the mission of the Department. We must all try to eliminate our personal biases in this
process and the biases inherent in the evaluation system. If we succeed, the raises will be
both fair and perceived as fair and will
be a help to Division and Department morale. I ask your complete cooperation in this process. (Emphasis added)
On September 2, 1980, the Director of the Division of Environmental Programs sent a memorandum to all employees of the division explaining the process used in computing merit salary increases for division employees. The September 2, 1980, memorandum contained the following provisions:
The raises were awarded based on relative scores given to each employee. This scoring was done by the Director,
Deputy Director and Bureau Chiefs
(together with independent office heads for those classes which contained their subordinates) in joint session. First, each employee's evaluation was considered and then related to that of ether employees in the class. The employee's other attributes and contribution to his program and the Department was then discussed.
His immediate supervisor's rating tendencies were considered (and we, incidentally, gained a very good idea of how different were the different scoring scales used) and the supervisor was called and consulted if there was difficulty in reaching a consensus. In almost every
case one or more of the Bureau Chiefs, other than the employee's own, had experience
and opinions on that employee to share. We repeatedly examined each other on the possibility of bias and favoritism.
Finally, the employee was given a weighted percentage score. Although some discussions were more protracted than others,
complete consensus was reached in every case.
The Director and Deputy Director then translated the relative scores into both the base salary and the dollars available
within the class. Some small further subjective judgements were necessary because of rounding and some inexactness in the formula but they were extremely minor - no more than $1.00 per person and usually much less. The raises given reflect very closely the relative scores from the joint sessions.
There is considerable agreement between the curve of the merit raises and the curve of the evaluations. They are far from
congruent, however. Some employees with relatively high evaluations got no merit raises; others relatively low got substantial ones. In each case the discussions were very extensive and the decision was made only after all were convinced that an injustice would otherwise result. Such inflated and deflated evaluations will be the subject of much additional scrutiny in the coming year.
Merit salary increases for all 192 Career Service employees within the Division of Environmental Programs were determined pursuant to the methods, standards for determining employee merit and employee performance, and procedures contained in the memoranda of August 25, 1980, and September 2, 1980.
The three Division directors, the General Counsel, and the Secretary of DER each used different methods to award merit salary increases to employees in their respective offices.
The method used by the Director of the Division of Environmental Programs to award merit salary increases for 1980 was different from the various methods used by DER in the past to distribute similar appropriations. Since at least 1975, DER has made a separate determination each year that funds appropriated for merit increases of the manner in which those funds would be distributed. A decision made one year was not prospectively applicable to future appropriations.
Since at least 1975, the Department of Environmental Regulation has evaluated the job performance of its Career Service employees on an annual basis pursuant to procedures applicable to the entire Department. Currently, the Department follows the employee performance evaluation procedures contained in Section 3.2, Department of Environmental Regulation, Administrative Services Internal Management Policies and Procedures Manual ("ASIMPP") including exhibits attached thereto. These procedures and criteria were adopted by the Department pursuant to Rule 22A-9.02(1), Florida Administrative Code, and Section 110.201, Florida Statutes, but have never been adopted as "rules" through Section 120.54, Florida Statutes rulemaking proceedings. The policy of the Department, as stated in the ASIMPP, is to use performance evaluations ". . . to award or deny salary increases . . ."
In 1976, 1977 and 1978, merit salary increases were awarded to career service employees in the Department based solely upon performance evaluations. In each of those years, the "merit" of employees was determined by the annual performance evaluations, but a differing method of computing the dollar amount was used for each year. However, within categories of employees having the same performance evaluation rating, the method of calculating the dollar amount was uniformly applied. These standards and procedures for awarding merit salary increases in 1976, 1977, and 1978 were in written form, were established by the Secretary of the Department, and were communicated to all employees. There were no merit raises in 1979. Since at least June 19, 1978, the Department of Environmental Regulation has also had in effect a written policy statement which provides in part:
The personnel Rules and Regulations provide that merit/anniversary increases be based on performance evaluations
Petitioners were given performance evaluations in the summer of 1980 pursuant to the procedures in Sec. 3.2, ASIMPP and each Petitioner was rated "above satisfactory." Petitioners each had at least six months continuous and satisfactory service on September 1, 1980, and were otherwise eligible to receive a merit salary increase on September 1, 1980, but were denied such a salary increase. Neither of the methods and procedures used by the Division of Environmental Programs to distribute merit salary increases to division employees for 1980, as outlined in the memoranda of August 25, 1980 and September 2, 1980, nor the methods used by the other two divisions and the General Counsel and Secretary were adopted through formal rulemaking in accordance with Section 120.54, Florida Statutes. In each case, the procedures used applied only to Career Service employees within that division or office who were eligible for a merit increase and were used only to determine the distribution of those funds appropriated by the Legislature for the biennium 1979-81.
Counsel for Petitioners and Respondent stipulated that the methods used by the Division of Environmental Programs to determine merit salary increases affect the private interests of Petitioners, and further, that Petitioners have standing to bring this petition pursuant to Section 120.56, Florida Statutes.
Counsel for both Petitioners and Respondent have submitted proposed findings of fact for consideration by the Hearing Officer. To the extent that such findings of fact are not adopted in this order, they have been rejected as being either irrelevant to the issues in this cause, or as not having been supported by the evidence.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.56, Florida Statutes.
Section 120.52(14), Florida Statutes, defines "rule" as: each agency statement of general
applicability that implements, interprets,
or prescribes law or policy or describes the organization, procedure, or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule. The term also includes the amendment or repeal of a rule . . .
The memoranda of August 25, 1980 and September 25, 1980 do not constitute "rules" within the intent and meaning of Section 120.52(14), Florida Statutes. It is clear from the 1979-1980 legislation authorizing funds to be utilized for merit salary increases, when considered with the history of that legislation, that the Florida Legislature never intended to require an agency to go through formal rulemaking to award merit salary increases. Further, the memoranda, by their very terms, are limited to merit salary increases for the 1979-81 biennium, and are not prospectively applicable to any other budget year.
See, Department of Commerce v. Matthews Corporation, 358 So.2d 256, 258 (Fla. 1
DCA 1978)
Further, the questioned memoranda contain no objective criteria for the evaluation of employee performance1 and, as a result, do not ". . . [purport] in and of [themselves] to create certain rights and adversely affect others". Department of Administration v. Stevens, 344 So.2d 290, 296 (Fla. 1 DCA 1977). The agency could hardly have used the language contained in the disputed memoranda as a "rule of decision", Department of Administration v. Harvey, 356 So.2d 323, 326 (Fla. 1 DCA 1977), since the memoranda contain no standards or criteria to serve as a "yardstick" by which to measure employee "merit". That fact clearly differentiates this case from Dann v. Florida State University, DOAH case N 79-558R (May 15, 1979), where the document declared to be a rule contained ". . . procedures and guidelines for merit increases, equity increases, and other increases." The documents in question in this case simply contain no such objectively discernible procedures or guidelines.
Neither were the memoranda such that their implementation [left] . . . little or no room for discretionary modification." Stevens, Id. Instead the memorandum constitute nothing more than a declaration of agency intent to exercise its discretion in the award of merit salary increases, using official employee performance evaluations as a starting point, and supplementing those evaluations with a totally subjective evaluation of additional factors perceived as important by an employee's agency supervisor. While the approach outlined in the two memoranda may have differed from agency policy with regard to the award of merit salary increases in prior years, the decision to use the new methodology amounts to nothing more than a shift in agency policy. As previously indicated, DER has never adopted formal rules governing the award of merit salary increases, nor is it required by statute or regulation to do so. Under this set of facts,
The APA does not chill the open development of policy by forbidding all utterance of it except within the strict rulemaking process of Section
120.54. Agencies will hardly be encouraged to structure their discretion progressively by vague standards, then definite standards, then broad principles, then rules if they cannot record and communicate emerging policy in those forms without offending Section 120.54. The
folly of imposing rulemaking procedures on all statements of incipient policy is evident . . . (McDonald v. Department
of Banking and Finance, 346 So.2d 569, 581 (Fla. 1st DCA, 1977).
As the Court in Florida Cities Water Company v. Florida Public Service Commission, 384 So.2d 120, 1281 (Fla. 1980) observed, ". . . agencies are not required to implement rulemaking procedures each time a new policy is developed The concept of an agency "moving from vague standards to definite standards," to broad principles, to rules" contemplates a progressive procedure whereby as agency policy takes form and ultimately develops into "rules", the exercise of agency "discretion" becomes further and further confined within principles established by agency rules. Contrary to the classical conception of a "rule",
the memoranda challenged in this proceeding in no way limit the exercise of the agency's "discretion" in the award of merit salary increases. If anything, the challenged memoranda simply operate as a reaffirmation of the agency's intent to use discretionary" factors in making merit salary determinations.
Finally, Petitioners argue that the questioned memoranda are invalid rules because of perceived conflicts with Section 110.201, Florida Statutes, and Rule 22A-9.02(3), Florida Administrative Code, a rule promulgated by the Department of Administration. It is unnecessary to reach this issue in this proceeding in light of the determination that the memoranda do not constitute rules, so that these issues are more properly raised in a proceeding under Section 120.57(1), Florida Statutes. The procedure envisioned by the two memoranda partakes more of "individual adjudication" than of the quasi- legislative character of "rulemaking". In essence, the policy enunciated in the memoranda does not in and of itself create or adversely affect Petitioners' rights. The policy only truly "affects" employees of the agency when it is applied to their particular situation and results in either the granting or denial of a merit salary increase. Accordingly, any employee dissatisfaction with the result of award of merit salary increases lends itself more to resolution through the exercise of the agency's quasi-judicial jurisdiction under Section 120.57(1), Florida Statutes.
Petitioners having failed to demonstrate that the memoranda of August 25, 1980 and September 2, 1980 constitute "rules" within the intent and meaning of Section 120.52(14), Florida Statutes, the relief sought by Petitioners should be, and the same is hereby DENIED.
