Title: Rouse v. Forsyth County Department of Social Services
Citation: N/A
Docket Number: 1PA19
State: north-carolina
Issuer: north-carolina Supreme Court
Date: February 28, 2020

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 
ROUSE V. FORSYTH CTY. DEP’T OF SOC. SERVS. 
 
Opinion of the Court 
 
 
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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).