               IN THE SUPREME COURT OF NORTH CAROLINA

                                     No. 1PA19

                              Filed 28 February 2020

TERESSA B. ROUSE, Petitioner

              v.

FORSYTH COUNTY DEPARTMENT OF SOCIAL SERVICES, Respondent



      On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision

of the Court of Appeals, 822 S.E.2d 100 (N.C. Ct. App. 2018), affirming, in part, and

vacating, in part, a final decision entered on 18 April 2017 by Administrative Law

Judge J. Randall May in the Office of Administrative Hearings.         Heard in the

Supreme Court on 10 December 2019.


      Elliot Morgan Parsonage, PLLC, by Benjamin P. Winikoff, Robert M. Elliot,
      and J. Griffin Morgan, for petitioner-appellant.

      Office of Forsyth County Attorney, by Assistant County Attorney Gloria L.
      Woods, for respondent-appellee.

      Tin Fulton Walker & Owen, PLLC, by John W. Gresham, and Edelstein &
      Payne, by M. Travis Payne, for North Carolina Advocates for Justice, amicus
      curiae.


      ERVIN, Justice.


      This case presents the question of whether an administrative law judge has

the authority to award back pay and attorneys’ fees to local government employees

protected under the North Carolina Human Resources Act who prevail in a wrongful
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                                  Opinion of the Court



termination proceeding before the Office of Administrative Hearings. In view of the

fact that N.C.G.S. § 126-34.02 explicitly provides that an administrative law judge

has the authority to award back pay and attorneys’ fees to any protected state and

local government employee, we reverse the Court of Appeals’ decision to the contrary

and remand this case to the Court of Appeals for further proceedings not inconsistent

with this opinion.

      Petitioner Teressa B. Rouse worked for respondent Forsyth County

Department of Social Services for nineteen years, with her most recent employment

being as a Senior Social Worker working in the After Hours Unit, where her job duties

included receiving and screening juvenile abuse, neglect, and dependency reports. On

20 June 2016, Ms. Rouse met a father, who was accompanied by his son, who claimed

to be homeless, and who inquired about the possibility that his son might be placed

in foster care. After Ms. Rouse explained the circumstances under which the son

could be placed in foster care, the father declined to pursue that option any further.

      Upon making this decision, the father contacted the son’s mother using Ms.

Rouse’s phone and learned that the mother did not want her son to live in her home.

While speaking with Ms. Rouse, the mother explained her refusal to provide a home

for the son by stating that the son had previously molested her daughters. Upon

receiving this information, Ms. Rouse questioned the mother concerning whether she

had filed a report or contacted law enforcement officers about the son’s alleged

conduct and received a negative response. Subsequently, the mother recanted her


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allegation against the son, stating that she did not say that her son had molested her

daughters and that she had only meant to say that the son had “tendencies.” In

addition, the father and the son each denied the mother’s allegation. Ultimately, Ms.

Rouse concluded that the mother’s initial statement was not entitled to any credence

and that there was no basis for believing that any sexual abuse had actually occurred.

      After the mother promised to give the son’s housing situation further thought,

the father contacted the child’s paternal grandmother and made arrangements for

her to house the son that night. On the following day, the mother contacted Ms.

Rouse and agreed to allow the son to stay at her residence. Ms. Rouse took no further

action with respect to the mother’s initial allegation that the son had sexually abused

her daughters.

      In mid-July 2016, the Forsyth County DSS received a request for assistance

from the Wilkes County Department of Social Services arising from a 16 July 2016

allegation that the son had sexually molested his sisters. On 22 September 2016, the

Department dismissed Ms. Rouse from its employment on the grounds that her

alleged mishandling of the mother’s allegation that the son had sexually abused her

daughters provided just cause for the termination of Ms. Rouse’s employment based

upon grossly inefficient job performance and unacceptable personal conduct.

      On 21 October 2016, Ms. Rouse filed a contested case petition with the Office

of Administrative Hearings in which she alleged that the Department had (1) failed

to follow the proper procedures prior to making the dismissal decision, (2) failed to


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follow the proper procedures in dismissing her from its employment, and

(3) dismissed her from its employment without just cause. An evidentiary hearing

was held in this case on 31 January 2017 before the administrative law judge. On 18

April 2017, the administrative law judge entered an order reversing the Department’s

decision to terminate Ms. Rouse’s employment on the grounds that the Department

had violated Ms. Rouse’s procedural rights and lacked just cause to dismiss Ms. Rouse

from its employment. In light of this decision, the administrative law judge ordered

the Department to reinstate Ms. Rouse “to her position as Senior Social Worker, or

comparable position . . . with all applicable back pay and benefits” and to pay Ms.

Rouse’s attorneys’ fees. The Department noted an appeal to the Court of Appeals

from the administrative law judge’s order.

      In seeking relief from the administrative law judge’s order before the Court of

Appeals, the Department contended that the administrative law judge had erred by

concluding that it had violated Ms. Rouse’s procedural rights and lacked the just

cause necessary to support the decision to dismiss Ms. Rouse from its employment

and by awarding Ms. Rouse back pay and attorneys’ fees. On 6 November 2018, the

Court of Appeals filed an opinion affirming the administrative law judge’s decision,

in part, and vacating that decision, in part. Rouse v. Forsyth Cty. Dep’t of Soc. Servs.,

822 S.E.2d 100, 113 (N.C. Ct. App. 2018). As an initial matter, the Court of Appeals

upheld the administrative law judge’s decision to overturn the Department’s

dismissal decision on the grounds that the record developed before the administrative


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law judge “provided substantial evidence to support [its] findings of fact and the

conclusions of law” that Ms. Rouse had not engaged in grossly inefficient job

performance or unacceptable personal conduct Id. at 102. On the other hand, acting

in reliance upon its prior decision in Watlington v. Dep’t of Soc. Servs. Rockingham

Cty., 252 N.C. App. 512, 799 S.E.2d 396 (2017), the Court of Appeals concluded that

the administrative law judge lacked the authority to award back pay and attorneys’

fees to Ms. Rouse on the grounds that the administrative regulations contained in

Title 25, Subchapter I, of the North Carolina Administrative Code and the statutory

provisions embodied in N.C.G.S. § 150B-33(b)(11) did not provide for the making of

such awards for local government employees wrongfully discharged in violation of the

North Carolina Human Resources Act. Rouse, 822 S.E.2d at 113. On 10 May 2019,

this Court allowed Ms. Rouse’s request for discretionary review of that portion of the

Court of Appeals’ decision holding that the administrative law judge lacked the

authority to award her back pay and attorneys’ fees.1

       In seeking to persuade us to overturn the Court of Appeals’ decision with

respect to the backpay and attorneys’ fees issue, Ms. Rouse points out that, in

accordance with N.C.G.S. § 126-5(a), employees of local departments of social services


       1 Although this Court denied the Department’s request for discretionary review of the
Court of Appeals’ decision to uphold the administrative law judge’s decision that Ms. Rouse
had been wrongfully dismissed, the Department devoted a substantial portion of its brief
before this Court to an argument that the administrative law judge had reached the wrong
result with respect to the wrongful discharge issue. Needless to say, the wrongful discharge
issue is not before this Court, see N.C.R. App. P. 16(a), so we decline to address that issue
any further in this opinion.

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are protected under the relevant provisions of the North Carolina Human Resources

Act. According to Ms. Rouse, N.C.G.S. § 126-34.02(a)(3) authorizes an administrative

law judge who determines that a protected employee has been unlawfully discharged

to “[d]irect other suitable action to correct the abuse which may include the

requirement of payment for any loss of salary which has resulted from the improper

action of the appointing authority.” As a result, Ms. Rouse argues that “the same

statute that authorized the [administrative law judge] to reinstate [Ms.] Rouse

authorized the [administrative law judge] to award backpay as payment for her two-

year loss of salary,” with the absence of any administrative rule authorizing an award

of backpay having “no effect on the statutory mandate of N.C.[G.S.] § 126-34.02,

which provided the authority to [the administrative law judge] to grant [Ms.] Rouse

the remedies of payment for loss of salary and attorneys’ fees.” As a result, for this

and other reasons, Ms. Rouse urges us to reinstate the administrative law judge’s

backpay award.

      Similarly, Ms. Rouse argues that N.C.G.S. § 126-34.02(e) “permits an award of

attorneys’ fees to all employees subject to the [North Carolina Human Resources Act],

including local government employees.”          According to Ms. Rouse, the Court of

Appeals’ focus upon the absence of any language in N.C.G.S. § 150B-33(b)(11)

authorizing attorneys’ fee awards to unlawfully discharged local government

employees “ignor[es] the explicit mandate of N.C.[G.S.] § 126-34.02 and fail[s] to

reconcile the two statutes [so as] to give effect to both.” For that reason, Ms. Rouse


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contends that the Court of Appeals erred by setting aside the administrative law

judge’s attorneys’ fee award as well.

      The Department, on the other hand, argues that personnel actions involving

State employees are governed by Subchapter J of Title 25 of the North Carolina

Administrative Code, while personnel actions involving local government employees

are subject to Subchapter I. As a result of the fact that the regulation authorizing

back pay awards to local government employees expired on 1 November 2014, “[n]o

remedies were set out in the amendments for local government employees at the time

of the decision in this matter.” According to the Department, “[t]he application of 25

[N.C. Admin. Code] Subchapter 01I exclusively to local government employees for

rights and remedies was settled before the [administrative law judge] decision in this

case” in Watlington, with there being “a host of other [ ] provisions” of the North

Carolina Human Resources Act that are limited to state employees and with there

being “no express statutory provision under the [North Carolina Human Resources

Act] or regulatory provisions at the time of the decision in this matter which

specifically authorizes an award of attorneys’ fees to local government employees

effective as of [Ms. Rouse’s] dismissal.” In view of the fact that the Court of Appeals

held in Watlington “that it was erroneous to award backpay and attorneys’ fees to a

local government employee under 25 [N.C. Admin. Code] Subchapter J at the time of

the decision[,]” the Department also argues that “it was [also] error for the




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[administrative law judge] just a few days later . . . to apply Subchapter 01J to this

matter and award back pay and attorneys’ fees.”

      The General Assembly enacted the North Carolina Human Resources Act “to

establish for the government of the State a system of personnel administration under

the Governor, based on accepted principles of personnel administration and applying

the best methods as evolved in government and industry.” N.C.G.S. § 126-1 (2019).

The North Carolina Human Resources Act applies to all State employees that are not

exempted from its coverage and to the employees of certain local entities, including

local departments of social services. Id. § 126-5(a)(1), (2)(b). According to N.C.G.S.

§ 126-34.02(a), once an agency whose employees are protected by the North Carolina

Human Resources Act makes a final decision to terminate a protected employee2 from

its employment, the adversely affected employee “may file a contested case in the

Office of Administrative Hearings under Article 3 of Chapter 150B of the General

Statutes,” id. § 126-34.02(a), and may seek relief from the agency’s termination

decision on the grounds “that he or she was dismissed, demoted, or suspended for

disciplinary reasons without just cause.” Id. § 126-34.02(b)(3). In the event that the

administrative law judge upholds the validity of the employee’s challenge to his or

her dismissal, demotion, or suspension, it may:

             (1)   Reinstate any employee to the position from which
             the employee has been removed.


      2 The Department does not contend that Ms. Rouse is not a protected employee for
purposes of the North Carolina Human Resources Act.

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             (2)   Order the employment, promotion, transfer, or
             salary adjustment of any individual to whom it has been
             wrongfully denied.

             (3)    Direct other suitable action to correct the abuse
             which may include the requirement of payment for any loss
             of salary which has resulted from the improper action of
             the appointing authority.

Id. § 126-34.02(a). In addition, an administrative law judge “may award attorneys’

fees to an employee where reinstatement or back pay is ordered.” Id. § 126-34.02(e).

As a result, an administrative law judge who has determined that a protected

employee has been discharged from his or her employment by a covered agency

without just cause is statutorily authorized to award back pay and attorneys’ fees to

the wrongfully discharged employee.

      In holding that the administrative law judge lacked the authority to award

back pay to Ms. Rouse after determining that she had been wrongfully discharged

from the Department’s employment, the Court of Appeals began by pointing out that

Ms. Rouse was a local government, rather than a state, employee and that

Subchapter I of Title 25 of the North Carolina Administrative Code contained no

provision authorizing an award of back pay to wrongfully discharged local

government employees. Rouse, 822 S.E.2d at 113 (noting that the Court of Appeals

“has held that Title 25’s Subchapter J applies to State employees, while Subchapter

I applies to local government employees” (citing Watlington, 252 N.C. App. at 523,




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799 S.E.2d at 403)).3 In view of the fact that nothing in Subchapter I of Title 25 of

the North Carolina Administrative Code mentioned the availability of backpay

awards to wrongfully discharged local government employees, the Court of Appeals

concluded that backpay was not one of the remedies to which such wrongfully

discharged employees might be entitled. Id.; see also Watlington, 252 N.C. App. at

526, 799 S.E.2d 404. As a result, as was the case in Watlington, the Court of Appeals

concluded that the administrative law judge lacked the authority to award back pay

to Ms. Rouse despite the fact that she had been wrongfully discharged from the

Department’s employment. Rouse, 822 S.E.2d at 113.




       3  Prior to 30 November 2014, Title 25, Subchapter B of the North Carolina
Administrative Code provided for backpay awards in in appeals by allegedly aggrieved state
and protected local government employees to the State Personnel Commission, 25 N.C.
Admin. Code 1B.0421 (2014), which served as the factfinding body in public employee
wrongful discharge cases at that time. See N.C.G.S. § 126-37 (2009) (repealed 2013). This
provision of Title 25, Subchapter B expired on 30 November 2014, 25 N.C. Admin. Code
1B.0421 (Supp. Jan. 2015), with no replacement regulation applicable to protected local
government employees ever having been adopted. In 2011, the General Assembly amended
N.C.G.S. § 126-37 to provide that the Office of Administrative Hearings, rather than the State
Personnel Commission, would have factfinding authority in cases involving alleged wrongful
dismissals and other prohibited adverse personnel actions directed to protected state and
local employees. Act of June 18, 2011, S.L. 2011-398, § 44, 2011 N.C. Sess. Laws 1678, 1693–
94. In 2013, the General Assembly repealed N.C.G.S. § 126-37 and replaced it with N.C.G.S.
§ 126-34.02, while continuing to assign factfinding responsibility to the Office of
Administrative Hearings rather than reassigning it to the Human Resources Commission.
Act of July 25, 2013, S.L. 2013–382, § 6.1, 2013 N.C. Sess. Laws 1559, 1564–70. The Human
Resources Commission’s failure to replace 25 N.C. Admin. Code 1B.0421 with an equivalent
provision applicable to protected local government employees following its expiration
resulted in the absence of any regulation specifically authorizing the making of backpay
awards to unlawfully discharged local government employees upon which the Court of
Appeals relied in Watlington. See Watlington, 252 N.C. App. 526, 799 S.E.2d at 404.

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      The Court of Appeals’ determination that the absence of any regulatory

provision authorizing an award of back pay to an unlawfully discharged local

government employee precludes the making of such an award in spite of the fact that

the relevant statutory provisions clearly authorize the making of such an award rests

upon a fundamental misapprehension of the relative importance of statutory

provisions and administrative regulations.           Simply put, the absence of an

implementing regulation has no bearing upon the extent to which a statutory remedy

is available to a successful litigant. On the contrary, “[w]hatever force and effect a

rule or regulation has is derived entirely from the statute under which it is enacted.”

Swaney v. Peden Steel Co., 259 N.C. 531, 542, 131 S.E.2d 601, 609 (1963) (ellipsis

omitted) (citation omitted). For that reason, the Court of Appeals has long recognized

that “[a]n administrative agency has no power to promulgate rules and regulations

which alter or add to the law it was set up to administer or which have the effect of

substantive law.” State of North Carolina ex rel. Comm’r of Ins. v. Integon Life Ins.

Co., 28 N.C. App. 7, 11, 220 S.E.2d 409, 412 (1975) (citations omitted). Similarly, in

the absence of legislative language making the effectiveness of a particular statutory

provision contingent upon the promulgation of related administrative regulations,

the fact that the provisions of a properly enacted statute are not mirrored in the

related administrative regulations has no bearing upon the extent to which the

relevant statutory provision is entitled to be given full force and effect. As a result,

given that Ms. Rouse was a protected employee for purposes of the North Carolina


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Human Resources Act,4 the fact that an administrative law judge is explicitly

authorized by N.C.G.S. § 126-34.02(a)(3) to award backpay to a wrongfully discharged

state or local government employee conclusively resolves the issue of whether the

administrative law judge had the authority to require that Ms. Rouse receive

backpay.

      Similarly, the Court of Appeals failed to rely upon the relevant statutory

provision in determining that the administrative law judge lacked the authority to

require the Department to pay attorneys’ fees to Ms. Rouse. To be sure, N.C.G.S.

§ 150B-33(b)(11) provides that “[a]n administrative law judge may . . . [o]rder the

assessment of reasonable attorneys’ fees . . . against the State agency involved in

contested cases decided . . . under Chapter 126 where the administrative law judge

finds discrimination, harassment, or orders reinstatement or back pay.” N.C.G.S.

§ 150B-33(b)(11) (2019) (emphasis added). Although section 150B-33(b)(11) does not,

as the Court of Appeals noted, provide for an award of attorneys’ fees to unlawfully

discharged local employees, the absence of any reference to such an attorneys’ fee

award in that statutory provision has no bearing upon the proper resolution of the



      4  On 1 July 2018, the Forsyth County Board of Commissioners approved the creation
of a consolidated human services agency that combined the existing Forsyth County social
services and public health departments. See Fran Daniel, Forsyth County Commissioners
Vote to Consolidate DSS and Public Health Departments, Winston-Salem J., (June 21, 2018),
https://perma.cc/MK52-Q97C. Although the North Carolina Human Resources Act does not
provide any protections to the employees of such a consolidated human services agency, see
N.C.G.S. § 126-5(a)(2) (2019), Ms. Rouse was never employed by the consolidated human
services agency and retained her rights as an employee of a county department of social
services at the time of her termination from the Department’s employment.

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issue of whether the administrative law judge had the authority to award attorneys’

fees to Ms. Rouse given that, as we have already noted, N.C.G.S. § 126-34.02(e)

expressly authorizes an administrative law judge to “award attorneys’ fees to an

employee where reinstatement or back pay is ordered.” Id. § 126-34.02(e). In other

words, the fact that N.C.G.S. § 150B-33(b)(11) makes no reference to the making of

an attorneys’ fee award to a wrongfully discharged local government employee has no

bearing upon the issue of whether such an award is authorized for unlawfully

discharged local government employees by N.C.G.S. § 126-34.02(e).

       Thus, for the reasons set forth in more detail above, the administrative law

judge had ample, express statutory authority to award back pay and attorneys’ fees

to Ms. Rouse. The fact that such remedies are not provided for in Subchapter I of

Title 25 of the North Carolina Administrative Code or authorized by N.C.G.S. § 150B-

33(b)(11) provides no basis for the decisions reached by the Court of Appeals in this

case and in Watlington, the relevant portions of which we expressly overrule. As a

result, the Court of Appeals’ decision to invalidate the administrative law judge’s

decision to award back pay and attorneys’ fees to Ms. Rouse is reversed and this case

is remanded to the Court of Appeals for further proceedings not inconsistent with this

opinion.5


       5 In its brief to this Court, the Department argued that the administrative law judge
had failed to make certain required findings of fact prior to awarding attorneys’ fees to Ms.
Rouse, citing Hunt v. Dep’t of Pub. Safety, 817 S.E.2d 257 (N.C. Ct. App. 2018). The
Department did not, however, advance this argument before the Court of Appeals or seek to
present it for our consideration in its discretionary review petition. As a result, we decline

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       REVERSED AND REMANDED.




to entertain this argument and will not address it further. See Higgins v. Simmons, 324 N.C.
100, 103, 376 S.E.2d 449, 452 (1989) (stating that “a contention not made in the court below
may not be raised for the first time on appeal”); see also N.C.R. App. P. 10(a)(1), 16(a).

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