Opinion ID: 1379180
Heading Depth: 4
Heading Rank: 1

Heading: Whether Bowen has a property interest in full separation pay

Text: As a State employee under the National Guard AGR program, Bowen's pay was federally funded under 32 U.S.C. § 502(f). Upon his termination he was entitled to severance pay under Department of Defense Pay Manual (DoDPM), Chapter 4, Section B, 40411a. Once DMVA determined that Bowen was guilty of misconduct, however, his severance pay was reduced by one-half and he lost severance pay in the approximate amount of $37,030. DoDPM, Chapter 4, Section B, 40411b. The superior court found that property interests protected under Alaska's due process clause are defined by existing state laws, rules, or customs. The superior court relied on Breeden v. City of Nome, 628 P.2d 924, 926 (Alaska 1981) (quoting Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972)), in which this court stated: Property interests, of course, are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law  rules or understandings that secure certain benefits and that support claims of entitlement to those benefits. [15] The superior court found that where pay manuals define the amount of separation pay due an employee upon involuntary discharge, the employee has a legitimate expectation of a certain amount of such pay upon involuntary termination. The court concluded that Bowen established a protected property interest in such pay. The State contends that Bowen does not have a property interest in full separation pay. The State maintains that separation pay for an AGR member is only payable upon the member being involuntarily released before the scheduled end of a tour, and then it is only available to those who meet the eligibility requirements outlined in DoDPM. The State argues that a member with AGR status cannot place any reasonable reliance upon a benefit that becomes available only in the event that the member is ordered out of the program before his or her tour comes to an end. The State also points to DoDPM Chapter 4, Section B, 40412, entitled Limitations of Eligibility: Service members separated under the following circumstances are not eligible for separation pay: .... 1. A determination is made by the secretary concerned in an extraordinary case that the conditions under which the member is separated do not warrant separation payment. This authority is not to be delegated. It is intended that this discretionary authority to deny payment will be used sparingly. The State then argues that nothing in the DMVA's regulatory scheme vests Bowen with a right to separation pay. Bowen maintains that DMVA's determination that he committed acts of misconduct without affording him the opportunity to challenge that accusation, resulting in a loss of $37,030 in separation pay, was a deprivation of a property interest without due process of law. In our view the fact that separation pay is payable only upon involuntary separation and that there are certain defined situations, such as Bowen's, where it can be reduced or in an extraordinary case eliminated does not diminish an employee's legitimate expectation of separation pay upon involuntary termination. Separation pay is a concept defined in DoDPM, Chapter 4, Section B, and the DoDPM rules define the amount of separation pay due an employee. Simply because some involuntarily separated employees may receive less than full separation pay based on a specific finding by the DMVA warranting the decrease under the DoDPM rules, it does not follow that such employees did not have a legitimate expectation of a certain amount of separation pay upon involuntary termination. Nor does it support the conclusion that the pay may be diminished or eliminated in an unfair manner. As to the process which was provided to Bowen, his request for a pre-termination hearing was denied, as was his request for reconsideration. Thus, Bowen was provided no opportunity for a hearing before his separation pay was reduced. We conclude, as the superior court did, that Bowen was deprived of a vested property interest in full severance pay and was entitled to a full adversarial hearing consistent with this court's holdings in City of Homer, 566 P.2d at 1319-20 and Nichols, 504 P.2d at 1365. Bowen was not afforded such a hearing before the deprivation of his severance pay, and thus Bowen was not provided due process under the Alaska Constitution. We therefore affirm this legal conclusion of the superior court and hold that Bowen has a property interest in full separation pay entitled to due process protection.