Recursive function not working properly

I submitted a question last month regarding, as I originally stated it, a recursive JOIN. The solution was a function that returned the values I needed. It appeared to work properly, and as this is new development, the requirements changed.

Originally, I described the situation as having a Positions table and an Employees table. The Positions table have Position Number, Employee ID and ReportsTo Employee ID. There is also an indicator to show whether the position is vacant or not.

The original question I had was how to return the immediate supervisor AND that supervisor's supervisor, taking into account that I want to ignore a supervisor if his position is vacant (now that I think about it, it was kind of dumb to set it up that way originally to begin with).

It has now been chaged so that ReportsTo Employee ID is ReportsTo Position, which makes a lot more sense. However, I still have the same need to traverse UP the chain and return two supervisors, again ignoring vacant positions. I made some modifications to the original function, but get an error if I am unable to successfully retrieve two values. In other words, if a Director reports to a VP who reports to a CEO, who is at the top of the hierarchy (in other words, does not have a ReportsTo Position), and all three positions are not vacant, it works if I run the procedure for the director, but erros if I run it with the VP or CEO. If that is the case, I just want to return NULL for the values. Following is my modified function and the procedure that calls it. Following that is some sample code to build a couple of test tables and another description of what I am trying to do.

(The error I am getting is: -2147217900   [Microsoft][ODBC SQL Server Driver][SQL Server]Maximum stored procedure, function, trigger, or view nesting level exceeded (limit 32)--when two names are not being returned)

==== current function ====
CREATE function fn_supervisor (@EmpID int)
returns int
as
begin
    declare @ReportToEmpID int
    declare @ReportToPosition nvarchar(10)

    select @ReportToPosition = ReportsTo from tblPositions where TelEmpID = @EmpID
    select @ReportToEmpID = TelEmpID from tblPositions where PositionNbr = @ReportToPosition

    if nullif(@ReportToEmpID, '') is not null
        return @ReportToEmpID
    else
        if exists (select count(*) from tblPositions where Vacant = 1 and PositionNbr = @ReportToPosition)
            begin
                return dbo.fn_supervisor(@ReportToEmpID)
            end
        return @ReportToEmpID
   end

==== current procedure ====
CREATE PROCEDURE hr_employee_get_supervisors
      @TelEmpID      int,
      @Sup1ID      int             OUTPUT,
      @Sup1LName      nvarchar(20)      OUTPUT,
      @Sup1FName      nvarchar(20)       OUTPUT,
      @Sup2ID      int             OUTPUT,
      @Sup2LName      nvarchar(20)      OUTPUT,
      @Sup2FName      nvarchar(20)       OUTPUT
AS
      SET NOCOUNT ON


      SELECT      @Sup1ID = ISNULL(TelEmpID, 0),
                  @Sup1LName = ISNULL(Lname, ''),
                  @Sup1FName = ISNULL(Fname, '')
      FROM            tblEmployees
      WHERE       TelEmpID = dbo.fn_supervisor (@TelEmpID)

      SELECT      @Sup2ID = ISNULL(TelEmpID, 0),
                  @Sup2LName = ISNULL(Lname, ''),
                  @Sup2FName = ISNULL(Fname, '')
      FROM            tblEmployees
      WHERE       TelEmpID = dbo.fn_supervisor (dbo.fn_supervisor (@TelEmpID))

GO

==== test tables ====
CREATE TABLE [dbo].[tblEmployees] (
     [TelEmpID] [int] IDENTITY (1, 1) NOT NULL ,
     [Lname] [nvarchar] (50) NULL ,
     [Fname] [nvarchar] (50) NULL ,
     [MI] [nvarchar] (2) NULL ,
) ON [PRIMARY]

CREATE TABLE [dbo].[tblPositions] (
     [PositionNbr] [nvarchar] (10) NOT NULL ,
     [Classification] [nvarchar] (50) NOT NULL ,
     [TelEmpID] [int] NULL,
     [Vacant] [bit] NOT NULL ,
     [ReportTo] [nvarchar] (10) NULL
) ON [PRIMARY]

==== add data ====
tblEmployees
---------------
INSERT INTO tblEmployees (TelEmpID, Lname, Fname, MI) VALUES ('Walker', 'George', 'A')  -- TelEmpID = 1
INSERT INTO tblEmployees (TelEmpID, Lname, Fname, MI) VALUES ('Doe', 'John', 'J')  -- TelEmpID = 2
INSERT INTO tblEmployees (TelEmpID, Lname, Fname, MI) VALUES ('Doe', 'Jane', 'L')  -- TelEmpID = 3
INSERT INTO tblEmployees (TelEmpID, Lname, Fname, MI) VALUES ('Smith', 'John', NULL)  -- TelEmpID = 4
INSERT INTO tblEmployees (TelEmpID, Lname, Fname, MI) VALUES ('Jones', 'Robert', 'S')  -- TelEmpID = 5
INSERT INTO tblEmployees (TelEmpID, Lname, Fname, MI) VALUES ('Public', 'John', 'Q')  -- TelEmpID = 6
INSERT INTO tblEmployees (TelEmpID, Lname, Fname, MI) VALUES ('Wilson', 'Bob', 'W')  -- TelEmpID = 7

tblPositions
-------------
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P001', 'VP', 1, 0, NULL)
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P002', 'Janitor', 5, 0, 'P008')
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P003', 'Programmer', 6, 0, 'P005')
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P004', 'Key Punch Operator', 7, 0, 'P005')
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P005', 'Manager', 4, 0, 'P006')
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P006', 'Supervisor', NULL, 1, 'P007')
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P007', 'Director', 2, 0, 'P001')
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P008', 'Manager', NULL, 1, 'P009')
INSERT INTO tblPositions (PositionNbr, Classification, TelEmpID, Vacant, ReportTo) VALUES
            ('P009', 'Director', NULL, 1, 'P001')

=================================================================
This should be the hierarchy that the function would return, given that, if the position identified by the
field ReportTo is vacant, it is ignored, it's ReportTo position is then checked, etc.

Position    Classification         Employee                Reports To 1             Reports To 2
========    =============          ================        =================        =================
P001        VP                     Walker, George A
P002        Janitor                Jones, Robert S         Walker, George A
P003        Programmer             Public, John Q          Smith, John              Doe, John J
P004        Key Punch Operator     Wilson, Bob W           Smith, John              Doe, John J
P005        Manager                Smith, John             Doe, John J              Walker, George A  
P006        Supervisor                                     Doe, John J              Walker, George A
P007        Director               Doe, John J             Walker, George A        
P008        Manager                                        Doe, John J              Walker, George A
P009        Director                                       Walker, George A

If I execute the procedure and pass it the TelEmpID of the VP, it would return all NULLs (actually an empty string
since I'm using NULLIF(). If I pass the TelEmpID of the Director, it would return values for the first supervisor but
NULLs for the second, while the TelEmpID of the Programmer would return values in all the variables.

Notice that the name for Supervisor and the second Director is not on the report because the positions are vacant.
I want at least two upper-level managers, excluding any vacant positions, for each employee, if they exist.
Since the VP is the top level position, there would be no supervisors over him and there is only one supervisor
over the Director. Notice also in this example that, although the Janitor (P002) reports to P008, and P008
reports to P009, who then reports to P001, because P008 and P009 are vacant, the janitor reports directly to the VP.