Rouse v. Forsyth Cty. Dep't Soc. Servs., 373 N.C. 400

Background

Teressa Rouse, a Senior Social Worker at Forsyth County DSS for 19 years, handled a June 2016 child-abuse allegation and concluded there was no basis to believe sexual abuse occurred.
Rouse was terminated on September 22, 2016 for alleged mishandling of the allegation (grossly inefficient performance/unacceptable conduct).
Rouse filed a contested case with the Office of Administrative Hearings; the ALJ reversed the termination, ordered reinstatement, awarded back pay and attorneys’ fees.
On appeal the Court of Appeals affirmed the wrongful-discharge ruling but vacated the ALJ’s awards of back pay and attorneys’ fees, relying on Watlington and the absence of Subchapter I regulations authorizing those remedies for local employees.
The North Carolina Supreme Court granted discretionary review limited to whether an ALJ has authority to award back pay and attorneys’ fees to protected local government employees under the NC Human Resources Act.
The Supreme Court held §126-34.02(a)(3) and (e) expressly authorize an ALJ to award back pay and attorneys’ fees to protected state and local employees, reversed the Court of Appeals on that point, and overruled the relevant holding in Watlington.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Authority to award back pay to a wrongfully discharged local government employee	Rouse: §126-34.02(a)(3) authorizes ALJs to require payment for loss of salary to protected local employees.	Forsyth DSS: Subchapter I (applicable to local employees) contains no back-pay rule; prior decisions limit remedies to regulatory text.	The Court: Statute (§126-34.02(a)(3)) itself authorizes back pay; absence of a regulation does not negate the statutory remedy.
Authority to award attorneys’ fees to a wrongfully discharged local government employee	Rouse: §126-34.02(e) permits awarding attorneys’ fees when reinstatement or back pay is ordered for all employees covered by the Act.	Forsyth DSS: §150B-33(b)(11) mentions fees only as to State agencies and does not authorize fees for local employees; regulations likewise lack explicit authorization.	The Court: §126-34.02(e) independently authorizes attorneys’ fees for protected local employees where reinstatement or back pay is ordered; §150B-33 omission and regulatory gaps do not preclude the statutory award.
Effect of absent administrative regulations or §150B-33(b)(11) silence on statutory remedies	Rouse: Statute controls; regulations cannot add to or limit statutory remedies.	Forsyth DSS: Regulatory framework and §150B-33 silence mean those remedies were unavailable to local employees.	The Court: Statutes prevail; administrative regulations cannot expand or curtail statutory mandates—absence of regulations or §150B-33 language does not bar §126-34.02 relief.

Key Cases Cited

Rouse v. Forsyth Cty. Dep’t of Soc. Servs., 822 S.E.2d 100 (N.C. Ct. App. 2018) (Court of Appeals decision reviewed — vacated ALJ’s back pay/fee awards)
Watlington v. Dep’t of Soc. Servs., Rockingham Cty., 799 S.E.2d 396 (N.C. Ct. App. 2017) (Court of Appeals holding that Subchapter I’s lack of a back-pay provision barred such awards for local employees)
Swaney v. Peden Steel Co., 131 S.E.2d 601 (N.C. 1963) (administrative rules derive force from statute)
State ex rel. Comm’r of Ins. v. Integon Life Ins. Co., 220 S.E.2d 409 (N.C. Ct. App. 1975) (agencies cannot enact rules that alter or add to the law they administer)
Higgins v. Simmons, 376 S.E.2d 449 (N.C. 1989) (procedural-default principle applied to appellate contentions)