Payless Payday History 6-22-09
It may be helpful in responding to members concerns on the payless paydays, to provide you with some history.
Please be assured that your union is looking in to all options regarding the possibility of payless paydays.
History on the payless paydays:
The legality of “payless paydays” was first litigated before the Commonwealth Court when then Governor Casey in 1991 ordered certain Commonwealth employees to continue working past the end of the fiscal year but withheld payment of their wages until a budget was passed. AFSCME and PSSU filed a lawsuit to compel the Commonwealth and Governor Casey to pay approximately 19,000 employees hired before 1978 for their wage payments due to be paid on July 5, 1991 and July 12, 1991. The Governor asserted that he was justified in refusing to pay these employees based on the absence of a general appropriations act and the provision of Article III, Section 24 of the Pennsylvania Constitution, which prohibits money being paid from the Treasury “except on appropriation made by law”. The Commonwealth Court, by Judge Craig, found that the Administrative Code of Pennsylvania required the Commonwealth to meet its previously scheduled payroll obligations. While these senior employees were not on the “after the fact” payroll system, there was no dispute that the pay due on July 5th pay and July 12th represented compensation for work done in June. Since monies for those weeks had been appropriated as part of the prior fiscal year budget and since there was no evidence that the appropriation had been exhausted, the Court ordered the Commonwealth to pay. This injunction in “Payless Payday 1” was issued purely as a matter of state law. It did not rely upon the federal Fair Labor Standards Act. 595 A.2d 670 (Pa. Cmwlth.1991).
Two years later, Governor Casey again announced that, as a result of the lack of a budget or any signed supplemental appropriation, employees in eight or more agencies were expected to continue working, into the new fiscal year, but would not be paid until such time funds were appropriated by the General Assembly. Again, the Governor relied upon Article III, Section 24 of the Pennsylvania Constitution. Again, PSSU and AFSCME brought suit against the Commonwealth, Governor Casey and other officials. The Treasurer intervened in the lawsuit. On May 19, 1993, the Commonwealth Court, by Judge Craig, issued an Order which granted relief to the Unions. Specifically, the Commonwealth Court held that the Fair Labor Standards Act required the payment of wages (to those employees other than those expressly exempted under the FLSA) even though the pertinent fiscal year appropriation had been exhausted. In other words, the Judge found, in this "Payless Payday 2" case, that federal preempted or law trumped the state constitutional provision. 626 A.2d 683 (Pa. Cmwlth. 1993).
In 2007, another budget impasse occurred and the Commonwealth threatened to, and did in fact, furlough employees. This furlough was done on the basis of the Commonwealth’s distinction among employees – classifying some as "critical" and others as "non-critical". Non-critical employees were to be furloughed in the event of a budget impasse. Critical employees would continue to work and would be paid based upon the decision in Payless Payday 2. (Most employees represented by 668 were considered “critical”). PSSU and AFSCME went into Commonwealth Court seeking to enjoin the furloughs of the non-critical employees. While the lawsuit was pending, a budget was passed, the furlough was rescinded, and the Commonwealth agreed to pay the non-critical employees who were furloughed for a day. As a result, the decision was made to withdraw the lawsuit without prejudice; no court decision was rendered.
Last year, 2008, the same threat occurred as in 2007. The state's plan was to continue to work three categories of employees past June 30th even without a budget. Those categories were: (1) employees covered by the FLSA who were deemed critical; (2) employees exempt under the FLSA; and (3) employees paid from sources other than an appropriated operating budget. Employees in categories 1 and 3 would be paid on time. Employees in category 2 could be paid only after a budget was enacted. Employees not in these three categories, e.g., those covered by the FLSA but deemed "non-critical", would be furloughed. Once again, the Unions filed suit in Commonwealth Court in advance of the furlough, this time asking for a declaratory judgment that there was no reason any employee covered by the FLSA has to be furloughed as the Governor had the authority to pay them by virtue of the FLSA as the Payless Payday 2 case previously held. While the Governor and Treasurer seemed to concede they had the authority under the FLSA to pay non-exempt employees deemed critical, they contested the Union's argument that all FLSA covered employees could be paid under the authority of the FLSA.
A different Judge of the Commonwealth Court issued a decision which surprised, I think, all parties. Specifically, Judge Leavitt held that, under the Pennsylvania Constitution, the Governor and Treasurer have no authority to pay, and in fact is prohibited from paying, any employee who worked without a budget in place with appropriations for wages. She found that the FLSA did not preempt or supersede state law. In that respect, she disagreed with the 1993 decision of Judge Craig in Payless Payday 2. This decision has been appealed and is pending before the Pennsylvania Supreme Court. No decision is expected this summer.
Based on the most recent 2008 Commonwealth Court decision, the Governor has now stated that, if there is no budget, there will be payless paydays for all employees. Apparently, the Governor has accepted the mandate of the Payless Payday 1 case so that employees will be paid in the month of July for work performed prior to the end of the fiscal year. But after the July 17th pay date, employees will not receive pay until a new budget or supplemental appropriation is passed.