Present: Carrico, C.J., Compton, Stephenson, Lacy, Hassell,
Keenan, JJ., and Whiting, Senior Justice

VIRGINIA DEPARTMENT OF TAXATION
                                               OPINION BY
v.   Record No. 941729               SENIOR JUSTICE HENRY H. WHITING

                                            November 3, 1995
MAURIE L. DAUGHTRY

       FROM THE CIRCUIT COURT OF THE CITY OF NEWPORT NEWS
                     Randolph T. West, Judge

VIRGINIA DEPARTMENT OF CORRECTIONS

v.   Record No. 941955
JAMES DILLON

               FROM THE CIRCUIT COURT OF HALIFAX COUNTY
                   Charles L. McCormick, III, Judge


     In these appeals, the common issue is whether state-agency

employers implemented the decisions of two grievance panels

issued pursuant to the provisions of former Code § 2.1-114.5:1.

     The plaintiffs in these cases are state employees entitled

to file grievances under the provisions of former Code § 2.1-

114.5:1, in modified form now Code §§ 2.1-116.05 to -116.07.

Following are the pertinent provisions of the statutes in effect

when these issue arose:
          Definition of grievance. -- A grievance shall be a
     complaint or dispute by an employee relating to his
     employment, including but not necessarily limited to
     (i) disciplinary actions, including dismissals,
     demotions and suspensions[.]

Former Code § 2.1-114.5:1(A) (Supp. 1994).

          Management responsibilities. -- Management
     reserves the exclusive right to manage the affairs and
     operations of state government. Accordingly, the
     following complaints are nongrievable: . . . (vii) the
     . . . transfer [and] assignment . . . of employees
     within the agency.

Former Code § 2.1-114.5:1(B) (Supp. 1994).
          The decision of the panel shall be final and
          binding and shall be consistent with
          provisions of law and written policy.

Former Code § 2.1-114.5:1(D)(4)(d) (Supp. 1994).

          Either party may petition the circuit court having
     jurisdiction in the locality in which the grievant is
     employed for an order requiring implementation of the
     panel decision.

Former Code § 2.1-114.5:1(F) (Supp. 1994).

                                 I.

     Maurie L. Daughtry was first employed in the Norfolk

district office of the Virginia Department of Taxation as a field

representative, dealing in person with delinquent taxpayers.    In

July 1990, the Department terminated Daughtry's employment for a

number of asserted reasons.   A grievance panel determined that

the Department proved several of these reasons, which included

lying to management, disruptive behavior, arguing, and

insubordination, but reversed Daughtry's dismissal and imposed a

30-day suspension.   The panel also recommended that she be

transferred to another office.

     The Department reinstated Daughtry and transferred her to

its Peninsula district office in Newport News.   On March 13,

1992, Daughtry's employment was again terminated because of her

alleged unsatisfactory job performance and the Department's

receipt of information from the office of Daughtry's psychiatrist

and another Department employee that Daughtry had threatened to

kill one of her supervisors and herself if she were terminated.




                                 -2-
     Daughtry appealed that decision to a grievance panel.      The

panel held a hearing on whether the Department was justified in

terminating Daughtry because of the threats and her

unsatisfactory job performance.    At that hearing, a witness

described the Department's receipt of information about the

threats, and Daughtry did not deny making them.   The grievance

panel found that Daughtry's termination "was motivated in part

because of the alleged immediate need to remove the employee from

the premises of the Peninsula Office."
     The panel "modifie[d] the termination action by the agency

because of mitigating circumstances and recommend[ed]

reinstatement to the same or similar position" after Daughtry was

evaluated by a mental health professional who would certify that

Daughtry was fit to return to the stresses and demands of her

position in the Department.   The panel also recommended that

Daughtry be assigned to an office other than the Peninsula

office, where Dallas Parker, a supervisor with whom Daughtry had

a problem, worked.

     After being notified that it could not require or recommend

the mental health evaluation, the panel modified its decision by

(1) "order[ing Daughtry's] reinstatement to the same or similar

position," (2) deleting its recommendations of an evaluation by a

mental health professional and a transfer to another office, and

(3) adding the following:   "The panel did not feel that the

Agency was justified in termination either for threatening a




                                  -3-
supervisor or unsatisfactory job performance."

     Upon the conclusion of the Department's unsuccessful appeal

of the amended panel decision, the Department reinstated Daughtry

as an employee.    However, the Department transferred her

temporarily to its Richmond office and advised Daughtry that she

could elect to be assigned permanently to that office or to any

district office other than the Norfolk, Peninsula, or Bristol

offices. 1   The Department also directed Daughtry to undergo a

mental health evaluation to certify her "readiness for duty"

prior to reporting for work on December 16, 1992.    Although

Daughtry reported for work, she did not provide the required

certificate and she did not begin work.
     Thereafter, the Department advised Daughtry that if she

failed to report for work with the required certification by

December 23, this would be considered as her resignation.

Whereupon, Daughtry filed a petition in the circuit court to

implement the panel's decision under the provisions of former

Code § 2.1-114.5:1(F).    She also secured a temporary injunction

restraining the Department from terminating her employment

pending a hearing.


     1
      The record discloses that Richmond is the closest office to

Daughtry's home in Chesapeake, other than the Norfolk and

Peninsula offices where Daughtry had experienced prior

disciplinary problems.




                                 -4-
     Following an ore tenus hearing, the chancellor held that the

Department had not implemented the panel's decision and ordered

it to reinstate Daughtry in "the same or similar position in its

Newport News or Norfolk Office" without requiring Daughtry "to

undergo a mental evaluation as a condition for reinstatement."

The Department appeals.

     The Department contends that since the grievance panel "did

not find [that] the death threat was not made," it would have

been irresponsible not to transfer Daughtry from the office in

which the evidence showed that the death threats were made.

Thus, the Department argues that its transfer of Daughtry to

another office and its requirement of a mental health evaluation

before she resumed work were "within management's prerogative

[under former Code § 2.1-114.5:1(B)] and consistent with its duty

to provide a safe working environment for all employees."
     Daughtry contends that "the agency's attempt to block Ms.

Daughtry's return to duty was in bad-faith," and that we decided

this issue adversely to the Department's contention in Zicca v.
City of Hampton, 240 Va. 468, 397 S.E.2d 882 (1990).    We disagree

with Daughtry.

     Zicca involved an employer's effort to subvert the grievance

panel's decision by the subterfuge of assigning Zicca on paper to

his former position, but never having him perform the duties of

that position, and transferring him the following day to another

position.   Id. at 469-71, 397 S.E.2d at 882-83.   Here, there was




                                -5-
no finding or evidence of an attempted subterfuge or bad faith;

rather, the Department informed Daughtry by letter dated three

weeks before she returned that she would be assigned to the

Richmond office.

     Further, the employer in Zicca gave no reason for Zicca's

transfer; here, the record provides uncontradicted evidence of a

compelling necessity to transfer Daughtry from the office in

which she had made threats to kill her supervisor.   And the

chancellor could not direct Daughtry's reassignment to the

Norfolk office because such reassignments are the sole

responsibility of the employer under the provisions of former

Code § 2-114.5:1(B).   Accordingly, we conclude that the

Department, in the proper exercise of its management

responsibilities reserved under this code section, was justified

in transferring Daughtry to its Richmond office.
     Next, we consider whether the Department had the right under

these circumstances to require that Daughtry obtain a mental

health evaluation before returning to work, as it claims on

appeal.   Daughtry successfully contended before the chancellor

that the Department had no right to impose this condition upon

the panel's order reinstating Daughtry, especially since it had

not adopted a written policy giving it the right to require that

its employees submit to mental examinations.   Again, we disagree

with Daughtry.

     Given the serious nature of Daughtry's threats, the evidence



                                -6-
of her apparently unstable mental condition, and the Department's

responsibility for the safety of the supervisors and employees in

the Richmond office, we think that the Department was justified

in requiring Daughtry to establish her fitness to return to work.

 Nor, under the circumstances of this case, do we think that the

Department was required to have adopted a written policy giving

it such a right, as Daughtry urges. 2   See Hill v. City of Winona,

454 N.W.2d 659, 661 (Minn. App. 1990) (employer can require

employee to submit to psychological examination if unwritten

policy is reasonably applied).   Accordingly, we hold that the

Department was justified in requiring that Daughtry submit to and

pay for a mental examination by a mental health professional of

her choice prior to resuming work.
     Therefore, we will reverse the final decree of the

chancellor and enter a final decree dismissing the petition.


     2
      We note that an unwritten policy does not give the

Department unfettered discretion to require employees to submit

to mental examinations.   If the Department unreasonably required

such an examination, the employee could have refused to submit to

the examination and raised the issue as a grievance if the

employee was disciplined as a result of such refusal.    Former

Code § 2.1-114.5:1(A)(i) (Supp. 1994).    And the employee's right

to raise the issue has not been abrogated by the amendments to

the grievance statute.    Code § 2.1-116.06(A)(i).



                                 -7-
                                II.

     James R. Dillon was employed by the Bureau of Industrial

Enterprises, a division of the Virginia Department of Corrections

(individually and collectively the Department), as the supervisor

of the Halifax Correctional Sign Shop.    After he failed to report

to work on two days for which he had requested and been denied

annual leave to attend a non-job-related seminar, Dillon was

terminated in March 1992 for "[f]ailure to follow supervisor's

instructions, perform assigned work or otherwise comply with

applicable established written policy."   Upon Dillon's appeal to

a grievance panel, the panel "felt that the written notice

[specifying the grounds for termination] was warranted."

However, it modified Dillon's termination to a 30-day suspension

without pay because of "mitigating circumstances."
     During Dillon's absence from work following his first

termination, the Department discovered that the monthly sales

records of the Sign Shop prepared by inmate workers were inflated

by $432,630 or 137.7% in late 1991 and early 1992, four months of

the period in which Dillon was responsible for verifying the

accuracy of these records.   Although inmate workers prepared

these reports and incentive payments were made to some of the

inmate workers based upon the monthly sales records, Dillon

signed them without verifying their accuracy.   The reports were

then sent to the Department which made substantial overpayments

to some of the inmate workers as a result of these inflated




                                -8-
figures.

     Dillon's employment was again terminated because of his

"[f]ailure to adequately perform assigned work and comply with

[the] applicable written pay plan for [the Sign S]hop."    Dillon

appealed that decision to another grievance panel.    Although

upholding the grounds for termination, the panel overturned the

termination decision and directed that Dillon be suspended for

another 30 days, again because of "mitigating circumstances."
     Upon Dillon's reinstatement, he was not returned to his

former position as Sign Shop Supervisor, but was assigned to the

position of Building and Grounds Supervisor at the Dillwyn

Correctional Center.   Pursuant to former Code § 2.1-114:5:1(F),

Dillon filed a petition in the circuit court for implementation

of the grievance panel decisions.     Concluding that the panel had

no authority to reinstate Dillon except to the position from

which he was discharged, the trial court held that "the result of

the panel opinion in this case is reinstatement of this employee

to his former position" and that the Department had not complied

with the panel's decision.   Accordingly, the trial court ordered

the Department to reinstate Dillon to his former position as Sign

Shop Supervisor.

     The Department argues that the trial court erred in ordering

this reinstatement because (1) neither panel ordered Dillon to be

reinstated to his former or a similar position, (2) Dillon's

transfer was for compelling reasons related to his job




                                -9-
performance, (3) former Code § 2.1-114.5:4(B) gave the Department

the right to transfer Dillon to another job for which he was

well-qualified at the same pay, and (4) the Department was

required to hire a replacement for Dillon in his former job while

his first grievance was pending.   Dillon responds that (1) the

grievance panel had no authority to transfer Dillon to another

position, and (2) since he prevailed in both his grievance

petition proceedings, this case is controlled by Zicca, which he

reads as holding that "[w]hen the agency loses a discharge case,

it must reinstate the person to the job that he previously held."
     We agree with Dillon that the grievance panel had no

authority to transfer him to another position.   See Jones v.

Carter, 234 Va. 621, 625-26, 363 S.E.2d 921, 924 (1988)

(grievance panel does not have authority to promote aggrieved

employee).   And we think that if the employee is reinstated by

the panel, in the absence of evidence of justification for a

transfer to another position within the agency, the agency must

reinstate the person to his former position.

     In this case, however, the evidence demonstrated Dillon's

unsatisfactory job performance in several important respects.     In

1990, Dillon closed the shop for two and a half days without

authorization and was suspended for 10 days for that offense.     In

1992, during a telephone conversation with one of his

supervisors, Dillon was told that the Department had no one who

could replace him for the two days when Dillon wanted to take



                               -10-
leave and that the Department could not close down the shop

during that time.   Dillon responded that he would not come to

work those two days and "you do what you have to do" and then

hung up the telephone.   In 1990, Dillon had been warned that his

job performance was unsatisfactory because of inadequate

production records in the sign shop.    Yet, as noted earlier in

this opinion, in 1991 and 1992, Dillon never checked the sales

records kept by inmate workers and thus permitted them to

substantially inflate the sales figures resulting in overpayments

to some of the inmate workers.
     We conclude that this evidence amply justified the

Department's exercise of the management responsibilities reserved

to employers under former Code § 2.1-114.5:1(B) to reassign

Dillon within the Department to another position in the same pay

grade.   Accordingly, we will reverse the judgment of the trial

court and enter a final order dismissing the petition.
                 Record No. 941729 - Reversed and final decree.
                 Record No. 941955 - Reversed and final judgment.




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