No Budget Could Mean Minimum Wage for State Workers

Most state employees should be paid only federal minimum wage as of July 1, if no state budget or appropriations bill is passed, the California Supreme Court ruled unanimously Thursday.

The decision was made as lawmakers wrestled with a giant financial shortfall that could lead to another prolonged budget stalemate this summer.

The ruling, written by Chief Justice Ronald M. George, said workers who fall under a federal labor law -- most of the state’s 200,000 employees, must get at least minimum wage; the federal minimum is $5 an hour. The same law requires that workers who earn overtime must get their full regular pay plus the overtime amount.

But state Controller Steve Westly said he plans to pay full wages even if there is a budget impasse, pointing to language in the court’s opinion that said the money could be paid if it was not feasible to do otherwise.

It would be impossible to determine in the next two months which workers should be paid minimum wage, which should get full wages and which should not be paid at all, Westly said.

“The court suggested most employees be paid minimum wage when a budget has not been passed, but left the door open for the controller to determine whether this is feasible,” he said after studying the decision. .

“We will not put state employees on the minimum wage plan,” he said, a position that state employees unions hailed.

The court ruling also allows the state to pay bills for Medi-Cal, debt service and other essential state and federal programs even if a budget is not in place, the controller said.

Richard Fine -- who on behalf of the Howard Jarvis Taxpayers Assn. brought the lawsuit that produced the ruling -- insisted that Westly had misinterpreted the court decision.

Fine said that only hourly employees who work overtime should receive their usual pay if an appropriations bill has not been passed.

“The minute he makes that payment” of full wages, Westly “may find himself subject to a lawsuit,” warned Fine.

The details of federal labor law could lead to an unusual situation in which workers would get only minimum wage if they put in 40 hours per week but would automatically go back to full wages as soon as they crossed the overtime threshold.

The court suggested the state could pay workers regular wages if it was anticipated they would be working overtime, and pay minimum wage to employees for whom overtime was not anticipated. If the anticipation proved incorrect, the state could provide workers with extra money in the next pay period, the opinion suggested. State officials had told the court it would be impossible to determine which workers were likely to earn overtime and adjust paychecks to match.

But, George wrote, that “claim of infeasibility” had not been argued in lower courts, so “we do not believe it would be appropriate to definitively resolve this claim at this junction.”

That was apparently what prompted Westly to say he could pay everyone their full wages.

A small portion of state workers not covered by the federal law -- professional staff and highly paid executives -- can’t get salaries in an impasse without a special appropriation, the court said, but would be entitled to full back pay after the budget was resolved.

The high court decision stemmed from an injunction the Jarvis group won in 1998 ordering the state to stop paying bills until a budget or appropriations bill passed. A Court of Appeal upheld the injunction but said most state employees could still get federal minimum wage in an impasse. Thursday’s ruling rejected the injunction but agreed with the rest of the appellate decision.