Hawaii Court Affirms That Paid Leave Pending Investigation is Not Discipline

The Intermediate Court of Appeals of Hawaii has concluded that the placement of firefighters on paid administrative leave pending the outcome of an internal investigation is not disciplinary.

The case involved Hawaii Fire Department Battalion Chiefs Steve Loyola and Ty Medeiros, who were placed on paid leave in November 2014 following their open calls for the fire chief’s resignation. Both chiefs sent memos to County officials accusing the chief of mismanagement and calling for his removal. In response, the fire chief placed them on leave with pay pending an investigation into possible insubordination and rule violations.

A retired police chief was hired to investigate the allegations brought by the battalion chiefs, as well as the fire chief’s allegations against them. The report found the battalion chiefs’ allegations against the fire chief to be unsubstantiated, while concluding that both appellants had likely violated departmental rules—though the extent of those violations was “arguable.”

At the end of the proceedings the battalion chiefs faced no further penalties, and were returned to duty. They sought to challenge the County’s actions, arguing that being placed on administrative leave, being denied overtime during that period, and what they characterized as “peer humiliation” (i.e., being stripped of insignia) constituted unlawful discipline.

Their claims were first rejected by the County’s Merit Appeals Board, then by the Circuit Court, and now by the Intermediate Court of Appeals.

The appellate court rejected all three arguments concluding:

Paid Leave Is Not Discipline: The Court noted that the leave was time-limited (from November 2014 to June 2015) and reasonably tailored to allow the investigation to proceed. The chiefs retained full pay, benefits, and rank, and no corrective action was ever entered in their files.
No Right to Overtime While on Leave: The appellants argued that denial of regularly scheduled overtime constituted discipline. The Court disagreed, holding that there was no entitlement to overtime under the circumstances, particularly while on leave and under investigation.
Alleged Peer Humiliation Not Actionable: The removal of insignia and badges in the presence of others did not constitute an “adverse employment action.” The Court found no legal authority supporting the idea that such acts, absent a tangible loss in rank or benefits, rise to the level of discipline.

Quoting from the decision [quotation marks and footnotes removed to facilitate reading]:

Appellants argue they were subjected to disciplinary or adverse employment action through three (3) distinct, separate acts of unlawful discipline: (1) peer humiliation for being stripped of their rank . . . in front of peers that was recorded; (2) denial of regularly scheduled overtime; and (3) indefinite leave with pay.
The County responds that such an action (paid administrative leave pending investigation) does not mean Appellants were subjected to discipline because their compensation, benefits, and terms of employment were not adversely impacted or affected.
Regarding the claim that peer humiliation constituted discipline, Appellants do not point to any authority to support their argument that the circumstances under which Appellants’ badges and insignias were removed, constituted an adverse employment action. Appellants’ peer humiliation challenge lacks merit.
Regarding the claim that denial of overtime constituted discipline, Appellants rely on a singled unreported out-of-state case… to support their contention that where overtime is an accepted practice, the loss of overtime opportunities can be considered disciplinary because it affects the employee’s compensation and privileges of employment.
Appellants do not explain how [that out-of-state-case] supports their claim that the lack of scheduled overtime in this case constituted discipline, where Appellants were on paid administrative leave without a change in pay or benefits, and suffered no demotion. Appellants’ denial of overtime challenge lacks merit.
Regarding the claim that indefinite leave with pay constituted discipline, Appellants’ use of the term indefinite is not accurate, where the paid leave began and ended on certain dates.
Appellants acknowledge that legal authorities have held that placing an employee on administrative leave with pay does not constitute an adverse employment action.
Appellants nevertheless argue, however, that this general principle should be limited to a short period of time not to “exceed three (3) months. Appellants’ “indefinite leave with pay” challenge lacks merit.
For the foregoing reasons, we affirm the Circuit Court of the Third Circuit’s December 7, 2021 Circuit Court Order and the October 6, 2022 Final Judgment.