Probationary Employees Who May Be Terminated for Subjective Reasons Lack Property Interest in their Position

05.18.2018

In the recent case of Palm v. Los Angeles Department of Water and Power, __ F.3d __, 2018 WL 2142652 (9th Cir. 2018), the Ninth Circuit Court of Appeal found that a permanent employee serving in a probationary promotional position lacked a constitutionally protected property interest in his probationary position.

Background
The plaintiff Richard Palm worked for the Los Angeles Department of Water and Power (“DWP”) as a Steam Plant Assistant for many years. In late 2012, DWP promoted him to a supervisory position.  During the position’s six-month probationary period, the plaintiff raised several complaints about his immediate supervisor’s conduct.  After working five months in the probationary promotional position, DWP offered the plaintiff the choice of either forced resignation or termination from his current probationary position.  The plaintiff chose to resign and return to his prior permanent position as a Steam Plant Assistant, and filed suit against DWP. 

Ultimately, the plaintiff sought leave to amend his complaint to allege violation of his Fourteenth Amendment due process rights.  The district court denied this request, finding that the plaintiff could not state a Fourteenth Amendment claim because he lacked a property interest in his probationary promotional position.  The plaintiff appealed this refusal to the Ninth Circuit Court of Appeals.

Court’s Reasoning
The Court of Appeal began by noting that procedural due process protections apply only to deprivations of constitutionally protected property interests.  California law protects an employee’s property interest in continued employment if the employer restricts the grounds on which employees may be discharged – such as limiting discharges to those “for just cause.” The Court emphasized that “whether a property interest exists is therefore informed by the process involved in terminating an employee, rather than any talismanic labels applied to a particular position,” such as permanent or probationary.  Given this, “even a probationary employee could have a reasonable expectation of continued employment.”

The Court of Appeal found that the Los Angeles’ Charter qualified as the “applicable state law” in this matter, given that city charters constitute the law of the State itself under California’s Constitution.  Given this, the Court scrutinized the text of the City’s Charter and Civil Service Rules to discern whether the plaintiff had a protected property interest in his probationary position.  The Los Angeles Charter restricted the ability to terminate “classified” employees “except for cause,” suggesting a general property interest in civil service positions.  However, the Court observed that another section of the Charter permitted the termination of probationary employees “based only on a subjective finding that the employee has demonstrated unsatisfactory performance — a fact that cuts sharply against a finding of a property interest in the probationary position.”  The Court also found that the Los Angeles Civil Service Rules permitted DWP to terminate probationary employees without the right of appeal to the Board of Civil Service Commissioners.  This lack of appeal right reinforced the Court’s finding that the plaintiff lacked a protected property interest.

The Court of Appeal rejected the plaintiff’s argument that these general rules did not apply to him, because he had previously held a permanent position as a Steam Plant Assistant.  The Court found that the plaintiff’s permanent status in one position had no effect upon his probationary status in a promotional position, under the City’s Charter and Civil Service Rules.  Further, the Court relied on its prior decision in McGraw v. City of Huntington Beach, 882 F.2d 384 (9th Cir. 1989).  While that case presented the same legal issue, the City of Huntington Beach (unlike this plaintiff) had terminated the employee from both her probationary position and her prior permanent position.  The Court discerned that it had distinguished between the two property interests involved in that prior dispute, and found that the plaintiff had “retained reasonable expectations of continued employment, at least to continued employment in the [pre-probationary] position from which [she] had been promoted."  However, in both disputes, this limited protection did not imbue either plaintiff with due process protections in the probationary promotional position.

Take-Away
This case reflects that public employees do not receive due process rights for probationary positions, if employers are free to terminate probationary employees without “cause” or for subjective reasons.  Further, the Court was careful to apply this rule to permanent employees serving in a probationary promotional position.  So long as state law or local charters permit an employer to terminate an employee serving a probationary period without cause, it is irrelevant for due process purposes whether the employee previously held a permanent or non-probationary position.

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