Impact of Budget Delay on Paychecks

The Schwarzenegger administration has put together a fact-sheet on the impacts of the state budget impasse. It was written three weeks ago and updated this week with the latest developments. We've included information from Capitol Weekly in the text.
Here is a synopsis of key issues and how they affect state employees' paychecks.

Minimum Wage:

Until there's a State budget in place, most employees are subject to a California Supreme Court ruling that was issued in May 2003 (called "White vs. Davis"). That ruling said without a budget, the State cannot issue paychecks except to comply with minimum wage and overtime protections under federal law (Fair Labor Standards Act, or FLSA).

However, the issues remain uncertain pending a Sept. 12 hearing in federal court.

The Governor's executive order directs the Department of Personnel Administration and the Department of Finance to work with the State Controller to implement that court ruling. Therefore, DPA has authorized payments to State employees consistent with federal labor law as follows:

–$6.55 per hour for employees eligible for overtime.

–$455 per week for employees ineligible for overtime (most supervisors and managers).

–No pay for employees who the FLSA exempts from any minimum salary requirement based on their occupation (mainly attorneys and doctors).

These payments would be effective with paychecks issued at the end of August. Following enactment of a state budget, employees will receive all back pay due. Thus far, state Controller John Chiang has refused to implement the governor's executive order. A legal dispute has ensued.

The DPA's pay letter contains a list of 14 departments and offices where all employees eligible for overtime would be authorized to receive normal paychecks for the August pay period, regardless of whether they actually work overtime. Agency secretaries may identify additional exemptions based on a review of operational needs and the exemption criteria described in the executive order (relating to public health and safety, emergency response, and revenue generation).

Overtime, Hiring Freeze:

Departments may not authorize overtime, or hire or transfer employees, except under the same limited exceptions that apply to the executive order's overtime prohibition.

Temporary Employees:

If you're a temporary State employee, you may have received a notice from your Personnel Office terminating your services. In the case of "permanent-intermittent" employees who received such a notice, your work schedule will be suspended until further notice. You should talk with your personnel office if you have questions about your employment status.

Will I receive any financial assistance if my paycheck is reduced?

In the past, many credit unions and banks have offered special assistance to State employees whose paychecks were affected by delays in passing a budget. This year, the following institutions have indicated they would make such assistance available to members:

–Golden 1 Credit Union

–Schools Credit Union

–Arrowhead Credit Union

–First U.S. Community Credit Union

–California Community Credit Union

–California Bear Credit Union

–Ocean Crest Credit Union

We encourage you to contact your own financial institution for details on their assistance programs.
What other resources are available?

The Employee Assistance Program (EAP) offers financial counseling, as well as counseling on a range of other issues, if you would like to take advantage of this benefit. Contact your personnel office for details, review DPA's EAP web page, and read How EAP Can Help PDF.

If I'm terminated, will I be eligible for unemployment benefits?

Each employee's situation is different, so you should contact the Employment Development Department directly regarding your eligibility for unemployment benefits. In general, eligibility depends on such factors as prior work, earnings, and the current reason for unemployment.

Are my benefits affected if I don't receive my normal paycheck?

Savings Plus contributions: SPP contributions will not be credited to your account for any month that your paycheck is delayed or reduced to minimum wage. Once the budget is signed and paychecks are issued for your missed pay, SPP contributions will be deducted from those paychecks and credited to your account, effective on the date your paycheck is issued.

Service credit: A delay in your normal paycheck does not affect retirement, sick leave, vacation, etc. You continue to accrue your normal service credit.

Health, dental and vision benefits: You will continue to be covered by the same health, dental and vision benefits regardless of your paycheck status.

Mortgage or other loan payments: If your payments are normally paid via paycheck deduction you should discuss the situation directly with your lender. (This does not apply to automatic payments from your own bank account.) Keep in mind that once there's a budget and your paycheck is issued, including missed pay, your normal deductions will be made retroactively. This could result in duplicate loan payments unless you make special arrangements with your lender.