Employer Must Explain Why It Uses Rule Of Three

The New Jersey Civil Service Act allows an employer to use a Rule of Three to bypass a candidate who ranked higher on a competitive examination. When an employer does so, it must report to the State’s Department of Personnel (DOP) why it did so. The purpose for the report is to assure that the appointing power was not exercised arbitrarily and to provide a basis for review.

In a case involving the City of Ocean City, the New Jersey Supreme Court considered whether the employer is required to state the reasons why it used the Rule of Three. The case began in 2007, when the City sought to fill three vacant firefighter positions. Nicholas Foglio ranked second on the firefighter eligibility list. At the time the list was certified, Foglio had served for eight years as a fireman/emergency medical technician in multiple volunteer fire departments, logging over 1,000 total hours. He was licensed by the state as an EMT and received a number of state and county certifications in relevant skill sets, including confined space awareness, confined space operations, rope rescue, firefighting, fire attack, and truck operations. Foglio was the only candidate on the eligible list with any prior firefighting experience and training.

On July 11, 2007, the City appointed eligible candidates ranked first (a student teacher), third (a bartender), and fourth (a lifeguard), bypassing Foglio. The City reported to the DOP that it had bypassed Foglio because the two lower-ranked eligible candidates “best meet the needs of the Department.” Foglio sued, contending the New Jersey statutory scheme required the employer to give a better statement of reasons as to why it was bypassing him.

The New Jersey Supreme Court agreed with Foglio. The Court reasoned that the Rule of Three “recognizes employment discretion and seeks to ensure that such discretion is not exercised in a way inconsistent with ‘merit’ considerations. Once the appointing authority exercises its discretion and selects the candidate(s), the regulations promulgated by the Commission require that it file a report with the DOP. If the appointing authority chooses to bypass a higher-ranked candidate, it remains bound to provide a statement of the reasons why the appointee was selected instead of a higher-ranked eligible. The purpose of that regulation is to guard against favoritism and arbitrary actions by an appointing authority and facilitate administrative review by the DOP.

“The statement of reasons requirement has been embedded in the civil service selection process for over 70 years and is now codified in state statutes. Our Constitution requires all appointment or promotion decisions be merit and fitness based, as far as practicable on competitive examination. The competitive examination is the favored model because it provides an objective measure of the candidates’ abilities. Where an appointing body chooses to bypass a candidate that ranked higher on a test, that decision is facially inconsistent with merit and fitness principles unless the appointing authority provides a statement of legitimate reasons for the bypass. Without those reasons, the DOP can have no certainty that the appointment process was not exercised arbitrarily and would have no basis for review.”

The Court then turned to whether the City’s stated reasons for bypassing Foglio were adequate. The Court found that they were not: “What is wrong with ‘best meets needs of Department’ is not its brevity, but its failure to reveal anything about the bypass decision. The City might just as well have stated: ‘We liked them better,’ an equally unrevealing explanation. The required statement needs to address the reasons why a higher-ranked candidate was bypassed. For example, the City might have relied on a preference for a college degree; or the performance of the applicants in the give-and-take of an interview; or on extraordinary character and employment references.

“Had Foglio been chosen over a higher-ranked eligible, the City could have pointed to his vast firefighting experience and training. Each of those reasons would have satisfied The possibilities are endless – as varied as the candidates themselves. What is not permitted is the kind of conclusory, unrevealing statement issued in this case that did not explain the selection process or otherwise assure that the bypass of a higher-ranked candidate was not arbitrary.”

In re Foglio, 2011 WL 2811375 (N.J. 2011).