House committee substitute makes the following changes. Deletes the provisions of the 1st edition and provides for the following.

Organizational and Administrative Changes.

Amends GS 126-3 to move the Office of State Personnel (OSP) to the Office of the Governor (was, in the Department of Administration). Amends GS 126-3(a)(8) to add to the OSP's duties developing standards to measure compliance with procedures and standards for performance management, development, and evaluation. Amends GS 126-4 to provide that the State Personnel Commission may not provide for more than 12 (was, 11) paid holidays per year, with three paid holidays given at Christmas (was, 11 days, with 12 given in years where Christmas falls on a Tuesday, Wednesday, or Thursday).

State Personnel Commission Changes.

Amends GS 126-2 to amend the appointment of members of the State Personnel Commission. Specifies that each member is to be appointed to a four-year term. Specifies dates on which the terms of members serving as of January 1, 2013, will expire.

Probationary and Career State Employees.

Amends GS 126-1.1 to provide that for the purposes of GS Chapter 126, probationary state employee means one who is in a probationary appointment and is exempt from the provisions of the State Personnel Act only because the employee has not been continuously employed by the state for the required time period. Provides that for the purposes of GS Chapter 126, a career state employee is a state or local entity employee covered by the chapter who (1) is in a permanent position and permanent appointment (was, permanent position and appointment) and (2) has been continuously employed by the state or local entity in a position subject to the State Personnel Act for the immediate 12 (was, 24) preceding months. Repeals GS 126-15.1 (Probationary State employee defined).

Exempt Position Modifications.

Amends GS 126-5 to allow the Governor to designate 1,500 (was, 1,000) positions as exempt from the State Personnel Act. Adds the Office of Information Technology Services, the Office of State Budget and Management, and OSP to those departments and offices from which the exempt positions are designated. Makes conforming changes to GS 147-33.77(a). Repeals GS 126-5(e) (allowing exempt employee to be transferred, demoted, or separated from his or her position by the department head authorized to designate the exempt position, with exceptions) and (f) (allowing a department head to use existing budgeted positions within his department to carry out the provisions of subsection (e)).

Reduction in Force.

Amends GS 126-7.1 to provide that if a state employee who has been separated due to reduction in force or who has been given notice of imminent separation because of such reduction accepts or rejects an offer of a state employee position equal to or lower in salary grade position, then the acceptance or denial satisfies and terminates the one-time 12-month priority consideration provided for in the statute.

Applies to reductions in force implemented on or after the date that the act becomes law.

Employee Grievances.

Amends Article 8, Employee Appeals of Grievances and Disciplinary Action, of GS Chapter 126. Enacts new GS 126-34.01 and GS 126-34.02 as follows. Requires any state employee that has an employment grievance to first discuss it with his or her supervisor (unless the problem is with the supervisor), then the employee must follow the procedure that has been established by the employee's agency and approved by the State Personnel Commission (Commission). Allows applicants for state employment, state employees, and former state employees to file a grievance with the Commission if the individual has followed the agency grievance procedure. States the duties of the Office of State Personnel in administering the grievance hearing process.Requies a decision be recommended to the Commission within 60 days of the hearing. If the recommended decision is rejected, the Commission must issue its own decision within 90 days. The Commission's decision is subject to review of the Office of Administrative Hearings (OAH), which must make a decision within 60 days. If no order is entered by OAH, the Commission's decision is final and subject to judicial review. The OAH decision is also subjected to judicial review. Specifies issues that may be grieved to the Commission after completing the agency grievance procedure, concerning discrimination or harassment, retaliation, just cause for dismissal, demotion, suspensions, veteran's preference, failure to post a position, and whistleblower. Provides that any issue for which appeal to the Commission has not been specifically authorized is not grounds for a grievance to the Commission or any other state forum. Places the burden of showing an employee was discharged, demoted, or suspended for just cause on the employer; with all other appeals, the burden of proof rests on the employee. Provides that a Commission decision is advisory for covered local government employees. Allows awarding attorneys' fees to an employee where reinstatement or back pay is ordered or when an employee prevails in a whistleblower grievance. Makes conforming changes to GS 126-7.2.

Amends GS 126-34.2 by deleting existing provisions and allowing the Commission to adopt alternative dispute resolution procedures for matters constituting and not constituting grounds for a grievance.

Enacts new GS 126-34.3 to allow a reviewing court to reverse or modify the Commission's decision if the decision is unreasonable or the award of witness or attorneys' fees is inadequate.

Deletes provisions in GS 126-34 (grievance appeal for career state employees), GS 126-34.1 (grounds for contested case under the State Personnel Act), GS 126-36 (appeal of unlawful state employment practice), GS 126-36.2 (appeal to OAH by career state employee denied notice of vacancy or priority consideration), GS 126-37 (ALJ's final decision), GS 126-38 (time limit for appeals), GS 126-39 (scope of the article), and GS 126-41 (attorney and witness fees).

Other Modernizing and Conforming Changes.

Amends GS 126-16 to extend the statute's provisions to state institutions as well as agencies and departments and local political subdivisions. Requires that equal opportunity for employment and compensation also be given without regard to disability or genetic information and removes references to creed.

Amends GS 126-60.1 to require all state agencies, departments, institutions, and UNC to enroll new supervisors or managers in the Equal Employment Opportunity training within one year of appointment.

Amends GS 126-19 to require Equal Employment Opportunity plans be submitted annually. Deletes the required Commission report to the General Assembly on the status of the Equal Employment Opportunity plans and programs. Requires the State Personnel Director to provide (was, maintain current) services related to Equal Employment Opportunity, including training and evaluation. Requires the services to be provided by qualified personnel and deletes further personnel requirements.

Amends GS 126-25 to remove the provision allowing appeal of an objection to materials in employee's file because it is inaccurate or misleading to the State Personnel Commission (SPC) and deletes provisions related to destroying the material. Makes language gender neutral. Amends GS 126-26 to refer to rules and policies instead of rules and regulations.

Amends GS 126-6.2 to add to the reporting requirement reporting on any other human resources functions or actions as may be required in order for the Office of State Personnel to evaluate efficiency, productivity, and compliance with policies . Deletes required reporting on the modification of position descriptions resulting in changes in position qualifications. Requires the Commission to report to the Joint Legislative Commission on Governmental Operations on the costs associated with the defense or settlement of lawsuits, and upon request, on the results of any other reports regarding human resources actions or functions (was, also on the use of position qualification equivalencies). Deletes the requirement that the Commission report on the outcomes concerning hirings, promotions, disciplinary actions, and compensation based on demographics.

Repeals the following: GS 126-14.4 (remedies) and GS 126-79 (report on the status of the Work Options Program).

Amends GS 126-8.3 to add state agencies and departments to those that must report on the voluntary shared leave program and requires that the report now be made to the OSP. Deletes the Commission reporting requirement.

Repeals GS 126-7(b) (requiring the Commission to conduct annual compensation surveys) and enacts new GS 126-7.3 requiring the Commission to conduct annual compensation surveys. The survey results must be presented to the House and Senate Appropriations Committees no later than two weeks after the convening of the legislature in odd-numbered years and May 1 of even-numbered years.

Reorganization Through Reduction Program.

Allows the Governor to: (1) restructure and reorganize in the executive branch in a manner defined by the number of positions, employee skills, and employee qualifications; (2) direct that reorganization must be led by the units being reorganized; and (3) direct that organizations collaborate in planning and executing reorganization and restructuring across executive branch agencies and departments. Allows OSP, in conjunction with OSBM, to develop the Reorganization Through Reduction (RTR) Program, which is to be one option available for reorganization and restructuring. Specifies requirements of the SPC policy. Provides that if not enough employees volunteer for RTR, then selections for reduction in force from the current incumbent employees are authorized based on skills and qualifications for the positions needed. Employees separated from employment in a reduction in force conducted as part of the RTR are to be paid severance in accordance with the approved policy.

This part expires December 31, 2014.

Renaming/State Human Resources Commission and Office of State Human Resources.

Renames GS Chapter 126, the State Personnel Act, as the North Carolina Human Resources Act. Renames the: (1) State Personnel Commission as the North Carolina Human Resources Commission, (2) the Office of State Personnel as the North Carolina Office of State Human Resources, and (3) the State Personnel Director as the Director of the North Carolina Office of State Human Resources.

Requires the Revisor of Statutes to replace references to the State Personnel Act, State Personnel Commission, State Personnel Director, or the Office of State Personnel with the updated terms. Specifies a list of statutes that are affected.

Provides that actions or proceedings pending on the effective date of the act brought by or against the State Human Resources Commission, the Director of the Office of State Human Resources, or the Office of State Human Resources are not affected by the act and provides for the necessary party substitutions. Allows business and other matters to be conducted and completed by the new entities in the same manner and under the same terms and conditions and with the same effect as if under the former entities.

Update the act's title.