Section 45 of the Civil Service Law concerns the civil service status of employees upon the acquisition of a private institution or enterprise by government. The Kern case concerns the reverse: what is the civil service status of public employees continued in employment upon the privatization of their former governmental operation?
Kenneth H. Kern and Mary Dickerson, former employees of the State Department of Health at the Roswell Park Cancer Institute [Institute], were transferred to the Roswell Park Cancer Institute Corporation [Corporation] together with all other employees the Institute.
The Corporation was created in 1997 as a public benefit corporation by the Roswell Park Cancer Institute Corporation Act [Public Authorities Law Section 3553 enacted by Chapter 5, Section 2, Laws of 1997]. The Corporation and its employees are subject to the Civil Service Law and have the rights of State employees for purposes of the applicable provisions of the Civil Service Law, "[e]xcept as provided by [the Act] and rules issued pursuant thereto" ... pursuant to an internal merit system administered by a merit board.
Kern and Dickerson filed applications to take the New York State 1999 Promotional Test Battery Examination No. 01-001. Their applications were rejected by the State Department of Civil Service because they did "not have permanent competitive status as [State employees]". After exhausting their administrative appeals to the State Civil Service Commission, Kern and Dickerson sued.
A Supreme Court justice dismissed their petition, ruling that the Civil Service Law applied only to public corporation employees' rights within the corporation. Kern and Dickerson appealed, contending that employees of the corporation had the same rights as State employees under the Civil Service Law, including the right to take State promotional examinations pursuant to Civil Service Law Section 52.
The Appellate Division said that Kern's and Dickerson's rights were a function of the Legislature's intent based on the "plain meaning" of Chapter 5 of the Laws of 1997.
The court's conclusion:
While it is true that the Act expressly provides in general terms for civil service coverage, collective bargaining rights and retirement rights for corporation employees ... it is also apparent that the Legislature elected not to confer upon the employees of the corporation all the benefits of the Civil Service Law inasmuch as the Act provides a specific procedure whereby they are ranked, compensated and promoted pursuant to an internal merit system specifically laid out in the legislation.
According to the decision, the Corporation's merit system operates independently of the State civil service system. Evidence of this independence: corporation positions are classified separately and are not necessarily based upon the same criteria as might be applied in the classification of positions in State service.
Dismissing their appeal, the Appellate Division pointed out that the Legislature could have granted the full benefits of the civil service system to Corporation employees as it had done in adopting legislation concerning employees of the New York State Thruway Authority, the State's Environmental Facilities Corporation and the Nassau Health Care Corporation, had it chosen to do so.
As a general rule, unless the law specifically makes the Civil Service Law applicable to the employees of a public benefit corporation, such persons are not subject to its provisions. For example, although Section 8087 of the Unconsolidated Laws provides that the employees of the New York City Off-track Betting Corporation are subject to the Civil Service Law and "other laws applicable to civil service personnel," statutes creating other OTBs do not include such a provision. Accordingly, the Court have ruled that employees of such other OTBs are not in the public service for the purposes of the Civil Service Law.
Sometimes legislation may be enacted that provides for the retention of certain benefits when a State worker's status changes but he or she remains an employee of the State. For example, Section 355-a(10)(a) of the Education Law provides that an employee of the State University in the classified service whose position is jurisdictionally reclassified to the unclassified service "shall retain the rights and privileges of his [or her] classified service jurisdictional classification with respect to discipline, dismissal and suspension for as long as he [or she] remains in the redesignated position."