Friday, May 2, 2003
Budget Impasse No Bar to Pay for State Employees, S.C. Rules
But Justices Say Most Workers Will Have to Wait to for Legislative Action Before Being Paid
By KENNETH OFGANG, Staff Writer/Appellate Courts
The California Constitution guarantees that state employees will be paid for the work they do during a budget impasse, but gives them no right to receive their checks in the absence of legislative appropriations, the state Supreme Court ruled yesterday.
In a unanimous decision, the court delivered a mixed verdict on the perplexing question of how the state should handle employee pay when lawmakers have been unable to garner the necessary two-thirds majority to pass a budget by the beginning of the fiscal year.
The justices agreed with state Controller Steve Westly that Los Angeles Superior Court Judge Robert H. O’Brien, now retired, should not have issued a 1998 injunction barring Westley’s predecessor, Kathleen Connell, from paying any employees more than minimum wage.
Balance of Harms
The taxpayer who brought the suit and requested the injunction, Chief Justice Ronald M. George explained yesterday, failed to meet the balancing test required for the issuance of a preliminary injunction. While the plaintiff may have satisfied the requirement of showing a probability of success on the merits, the chief justice explained, the balance of harms tipped “dramatically” in favor of the employees.
But the court rejected arguments by Westly and state employee unions that all employees must be paid their wages and salaries, in full and on time, during an impasse. Instead, the court, resolving contentious issues of constitutional and contractual law, as well as federal preemption, held that:
•All employees are guaranteed eventual payment for work performed;
•Employees who are covered by the Fair Labor Standards Act, which includes many but not all state workers, and who work overtime, are entitled to be paid their full salaries plus the 50 percent overtime increment on time;
•Employees covered by the FLSA who do not work overtime are entitled to be paid a portion of their pay, corresponding to the federal minimum wage, on time;
•Non-FLSA employees cannot receive their pay, and FLSA employees who do not work overtime cannot receive the portion of their pay that exceeds minimum wage, unless and until an appropriations bill has been passed.
•If the Controller’s office, due to the technological limitations of its payroll system, is unable to separate employees who have worked overtime from those who have not, it may pay all FSLA-covered employees whom it “reasonably anticipates” will work overtime and make necessary adjustments in the next pay period.
Westly commented in a statement:
“Based on the court’s ruling, it is not feasible to implement a multi-tiered pay system for 4500 job classifications within the next two months. It is also unfair to ask fire, police, and other public employees to work at minimum wage. Nearly 300,000 State employees come to work every day, and they should get paid. State employees should not be the victims of a political budget stalemate.
“The right thing to do is for the Legislature to pass a budget on time so we ensure that the State continues to provide essential services to the public.”
The alternative, attorneys said, is for the Legislature to pass a bill making continuing appropriations for employee pay, similar to the legislation guaranteeing judges’ salaries, or an emergency pay bill for the upcoming fiscal year.
A continuing appropriations bill, AB 1535 by Assemblyman Rudy Bermudez, D-Bellflower, is pending in committee.
Lawyer Sees Partial Victory
Beverly Hills attorney Richard I. Fine, who represented the plaintiff in the taxpayer action, declared a partial victory. “We clearly won on the issue that they can’t pay anything [under state law] without an appropriation,” he told the MetNews.
If there is an impasse this year, he expects an emergency appropriations bill for employee pay based on the ruling, he said. But he expressed disappointment with the court’s handling of the preliminary injunction issue.
“The court has placed the Constitution in a secondary position and without the Constitution being [the] paramount authority, organized civilization cannot exist,” Fine commented.
Anne Giese, counsel for the California State Employees Association, said the decision was, overall, a victory for workers.
The court’s handling of the FLSA and constitutional issues, she said, leaves “no incentive for the state to convert employees to minimum wage workers,” since they would have to pay everyone eventually and would also have to pay the cost of creating a new payroll system.
Her organization, she said, would continue to lobby for the Bermudez bill, or, as a fallback, for an emergency bill.
In addition to its ruling on the pay issues, the court ordered publication of the opinion of this district’s Court of Appeal, Div. Four. By doing so, it allows the decision to be cited as precedent with regard to issues that the high court did not review.
Under the Court of Appeal’s ruling, the state can make the following payments during impasse:
•Continuing appropriations mandated by the Constitution or by statute;
•Surplus funds earmarked for schools because the state otherwise could not spend the money under the “Gann limitation” of Proposition 4, which limits total spending. (Prior to the passage of Proposition 98, all of the surplus funds had to be returned to the taxpayers in the form of reduced taxes or fees, but now 50 percent of the money goes to schools);
•Federally mandated spending under the Food Stamp program, Foster Care and Adoption programs; Child Support program; and Child Welfare Services program.
The case is White v. Davis, 03 S.O.S. 2244.
Copyright 2003, Metropolitan News Company