State Workers Ordered to Receive Minimum Wage Per Governor’s Orders

statecat.pngController John Chiang Refuses to Implement Pending Court Ruling on Legality –

In a move that will have stark implications for the city of Davis if it gets enacted Governor Arnold Schwarzenegger has order Controller John Chiang to pay most state employees a minimum wage – the federal minimum wage – $7.25 an hour.  Controller Chiang has already said that he will not follow that directive unless a court tells him to.

In a letter from the Department of Personnel Administration Director Debbie Endsley, Controller Chiang is told, “Today is July 1,2010, and there is no state budget. Regrettably, we must take the steps outlined in the attached pay letter to adjust wages and salaries during this budget impasse. The six Bargaining Units with tentative agreements are not included because we are seeking and expect the Legislature to approve a continuous appropriation for these six units. We anticipate passage of a continuous appropriation for these bargaining units before the end of the month.”

However, there still is no clear legal authority as to whether the Governor can issue such an order.  In the letter they cite Mr. Chiang’s previous refusal to pay minimum wage during the 2008 budget impasse.  At that time, the DPA sued and won in trial court.  The case was appealed to the appellate court but there has been no decision rendered as of yet.

As they write, “In 2008, the Department of the Personnel Administration (DPA) issued a pay letter directing the payment of wages and salaries in compliance with White v. Davis. You did not implement that pay letter. You cited your computer system as one of the reasons you could not pay minimum wage for state employees during a budget impasse. Based on your refusal, the DPA sued and won in the trial court. You appealed to the appellate court and we are waiting for a decision.”

According to published reports in the Sacramento Bee, “The minimum-wage order exempts roughly 37,000 state workers in the six bargaining units that have tentatively agreed to labor deals.”

Controller Chiang issued a terse response on Thursday stating, “I am not surprised that the Governor would issue yet another demand that we cut pay for more 250,000 state employees even while the issue of whether it is feasible to do so has not yet been resolved by the courts. I have made it clear that once the courts hand down a final resolution, I will abide by that ruling.”

“In the absence of the leadership needed to bring the Legislature to an agreement on his budget, the governor again resorts to political tricks,” he continued.  “Because of the limits of the state’s current payroll system, there is no way that his order can be accomplished without violating the State Constitution and the federal Fair Labor Standards Act. In short, his demands will do nothing to solve the budget deficit, but will hurt taxpayers by exposing the state to billions of dollars in penalties for those violations.”

According to the letter from Ms. Endsley from DPA, “in June 2003, your predecessor, Steve Westly, stated that the “technical tasks involving changing pay for more than 200,000 employees can be accomplished.” Based on this statement, it appears that there is a way to implement changes to your computer system to comply with White v. Davis and the Fair Labor Standards Act (FLSA)”

She concluded the letter, “I urge you to take the necessary steps to make changes to your computer system to comply with state law. My staff is prepared to work with you to develop and implement the necessary mechanisms to comply with the California Constitution, White v. Davis, and the Fair Labor Standards Act.”

Mr. Chiang disputed this contention, “Unfortunately, the DPA also is mistaken about the position of the previous State Controller about the ability of the state payroll system to make reductions to more than 250,000 paychecks. In a letter  written in July 2004, my predecessor notified legislators that his office ‘had conducted a study and concluded it is not feasible to pay some employees full salary and others minimum wage under the state’s current payroll system.’”

“Notwithstanding necessary changes to the State’s labor laws, we continue to work with the Governor on building a system capable of legally reducing wages in the manner sought by his Administration,” he continued.  “This system modernization is slated for roll-out in 2012. If the DPA has a problem with that schedule, they should consult the steering committee, of which four of the six members are the governor’s appointees, including DPA Director Debbie Endsley.”

“Again, absent a final court ruling, I will continue to protect the State’s finances and pay full wages earned by state employees,” Controller Chiang concluded.

In short, while the Governor can issue the order and gain headlines he knows that minimum wage is not going to be implemented any time in the near future.  It would seem like the Governor would have better things to do in terms of moving the process along.

The impact of such cuts would be devastating to a city like Davis that is reliant on state paychecks whether it for people working directly in state government or those working at the university.  The impact on Davis’ economy would be enormous as it has been with the cuts and furloughs already experienced at the state level and the university.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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6 Comments

  1. E Roberts Musser

    So much political posturing, instead of working together to come up with a reasonable budget under the current economic conditions… Us plain folk are tired of politics as usual…

  2. Rich Rifkin

    [i]”… there still is no clear legal authority as to whether the Governor can issue such an order.”[/i]

    Where can I find the language in the state code which concerns this?

  3. David M. Greenwald

    Looks like the Court has ruled in the Governor’s favor, if the minimum wage gets implemented, we could be in trouble in Davis fiscally given the large number of state workers here.

  4. David M. Greenwald

    Here’s the link to the Sac Bee article ([url]http://www.sacbee.com/2010/07/02/2865871/court-backs-schwarzenegger-wage.html[/url])

  5. Rich Rifkin

    I realize that these minimum wage payments are essentially deferments of salary. That is, if someone is owed $77.25 per hour per his contract, he will get $7.25 per hour until the budget is passed and he gets backpay of $70 per hour for all of those hourse he only got $7.25. Nonetheless, I would think that this tactic by the governor will serve a good purpose (from the taxpayers’ point of view): it will strongly encourage those bargaining groups which have yet to make new deals based on the new reality come to the table. So far, I think only four unions have agreed to new contracts, including the CAHP. Because of those agreements, they will not be getting the minimum wage. It likely will take 3 more months for the legislature to pass a budget, if not longer. As such, I would think the workers in the hold-out unions will push their leaders to make a deal now, so they won’t have to lose most of their salary for the next few months.

  6. justoutsidetown

    We are entering the ‘Greatest Depression’ and it is time for the city and its inhabitants to face it and prepare.

    Denial will get us nowhere. What we are witnessing now is an exercise in rearranging the deck chairs on the Titanic.

    The truth can hurt, but it will set you free. The city should be planning a ‘ring victory garden’ around the city limits (cut deals with landholders NOW), and there needs to be a place for our ‘tent town’ where people can live with some dignity and safety with proper sanitation.

    America and the world are being taken out to the woodshed for an attitude adjustment. Too much borrowing from the future leads to debt slavery. We are now there. This is not going to go away for a long, long , time.

    But remember we have a nice town, and an educated one. We can rebuild economy but it can only work if we begin locally. Any dollar spent at a big box store gets shipped OUT of town..

    It will take a while, but eventually people will realize the future is going to be very different from the lazy dream we all had for the last 50 years. The era of instant gratification from everything from burgers to houses is finished; it is dying with a wimper..

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