Pennsylvania Budget Impasse ’09: Part II

Note:  This is part of a series of posts detailing the 2009 Pennsylvania budget impasse.  To see all posts in this series, click here.

An anonymous source just forwarded me a very interesting email concerning Pennsylvania’s threat to require its employees to work with delayed pay.  While it’s already been fairly well established that federal labor law will apply, our Governor and our legislature seem to think that it does not.  I can not fathom why they would put Pennsylvania taxpayers on the hook for hundreds of millions of dollars in civil damages by breaking the law.

At any rate, the US Department of Labor — the federal agency tasked with enforcing the Fair Labor Standards Act — seems to disagree with them.  And Garcia v. San Antonio Metropolitan Transit Authority (469 U.S. 528 (1985)), decided almost a quarter century ago, says that government workers are, in fact, protected by the FLSA.

(The precedent used to state that government workers who performed “traditional” duties were not covered.  However, Garcia rightfully asserted that defining “traditional” government duties in this day and age becomes far too complex of an issue.)

Here’s an excerpt from the email I received, which comes from the US Department of Labor:

While employers have the right to change the pay period, recordkeeping laws under the Fair Labor Standards Act (FLSA) require employees to be paid on the established payday in relation to a specified workweek used to determine when overtime pay is due.  This issue is handled by the Wage and Hour
Division (WHD).

Employers can change the paydate, and it’s not necessarily a violation for a company to delay your pay when they move your date back one half period.  But the law could not possibly be clearer:

If you work, you must be paid, and you must be paid on time.

There’s been talk about whether or not federal law even applies due to interstate commerce concerns.  I have to admit I’m staring into a gaping maw when I try to figure that one out.  I am not a lawyer, and given my lack of any legal experience or training, I can’t begin to cover all the ins and outs of what constitutes “interstate commerce” or if it’s even relevant in this matter to begin with.  But I can tell you that Pennsylvania absolutely, positively engages in interstate transactions with other states, other companies, and other persons.  At the risk of sounding naive, how is that not interstate commerce?

There’s one loophole that the state can apply to get out of damages.  The FLSA only requires an employer to pay minimum wage.  So, Pennsylvania can temporarily drop every state employee’s wage to $7.15 an hour. The discrepancy between this and our agreed-upon pay rate would be a civil matter for the courts to take up.  Nonetheless, I think I speak for every Pennsylvania state employee when I say we’d rather get a $536 paycheck (before taxes, pension, benefits, and AFSCME; for myself, I’d take home about $381) every two weeks than no paycheck at all.

No matter what happens, no enforcement action can begin until the first missed payday comes and goes — at the earliest.  Until then, no laws have been broken and no damages have occured.  And there are still possibilities for a successful budget resolution.  We still have two weeks until SAP goes into hibernation.  An actual budget could be passed, or a stopgap funding measure could be enacted.  AFSCME could … do something.  Someone could point out to the legislature that they’ll all have to go home and explain to their constituents why the spending power of 90,000 state employees vanished overnight.

19 thoughts on “Pennsylvania Budget Impasse ’09: Part II”

  1. It definitely would. Quick primer for those who aren’t aware: Pennsylvania is an at-will state, which means that an employer and and employee can part ways at any time, without reason, unless a mutually agreed-upon contract is in place. Your boss can fire you because s/he doesn’t like your favorite football team, and you can quit your job without giving any advance notice. But Pennsylvania civil servants are covered under a collective bargaining agreement with their respective unions (in my case, AFSCME). This establishes a comprehensive employment contract between the employees and the state.

    If they dropped everyone to minimum wage, I would expect that Pennsylvania would then be on the hook for civil damages arising from a breach of contract. But it is technically a loophole that would allow them to do something other than pay us our normal wages without violating the Fair Labor Standards Act.

  2. I’d expect that they’d also be in violation of their labor agreements…and that would fall under the purview of the NLRB. Who might view it rather dimly.

  3. The fact is…it is against the law not to pay workers, and pay on time. This is outrageous and a form of slavery. Shame on the legislature but futher shame on those who put them back in for another term. It is appauling.

  4. Yes, I would rather get something rather than nothing, but I would still like for a competent governing body that doesn’t run around like a chicken with it’s head cut off when our annual budget is due. I’m sick of being used as a poker chip in a political game.

  5. You know the unions fought to stop furloughs and lay offs. I would be much better off had I been furloughed or laid off. I could at least collect unemployment. BTW – I checked. My UC would not be too much different from my current net income. With the OES Stimulus (extra $100/mo), on UC I would only be shy about $125/mo. I could find a way to tighten things up to make up that.

  6. Something I’ve been wondering lately: if it’s the law that PA must have a balanced budget, then what are the consequences for those that don’t bring it in in time?

    Can we throw the Exec Office and the Legislators in jail until they finish the budget? What a pleasant thought.

  7. I am a welfare caseworker, and if we do not receive wages as expected, I fully plan to apply for food stamp and TANF benefits. It’s a sad situation when I can authorize cash and food for my clients, but am not being paid so that I can eat myself. The governor was nice enough to give us a phone number for food banks, wasn’t he?

  8. Putting legislators in jail for not doing their law-required job? Preposterous! We can’t even put them in jail for drunk driving….why would you expect other laws to be enforced?

    Either which way, it is official COB (Close of business) on Tuesday, June 30th, and we still have no freaking budget. God I love working in this state.

  9. Bart, good question. In publishing the decision on AFSCME v Rendell, the court talked about criminal liability for failure to uphold state law.

  10. I still don’t see the obvious question raised. What is the point of holding our pay? It’s not like revenue came to a halt because of this budget impasse. The money is there, they WILL pay us eventually. WHY is he withholding our paychecks?

  11. He has leverage. Most of the house is up for re-election (or not) next election I believe. He’s banking on the fact that they will be nervous nelly about angering so many voters in an election year so he figured if he said BLINK they would BLINK and he would get his own way. Employee salaries are BARGAINING CHIPS in his game of poker. HB 1771…with an interim spending plan so salaries COULD get paid is out there…though you don’t hear much about it…and I would like to know if it has been put up for a vote and if not, why not!

  12. Update – as of July 16, we do not have a state budget. I am receiving a pay tomorrow that’s short 24 hours, marked as “Budget related LWOP (Leave Without Pay). Unfortunately I don’t qualify for a PSECU loan. There is talk of a budget being signed on Monday – but if it goes for a while longer, who knows how I’ll manage. Now, do I pay anything on my utilities, or do I save my net and use it for gas and food until the budget is passed and we receive our pay?

    I say, it’s illegal to not pay us; our legislators and Uncle Eddie should also go without pay; we should throw the bums out at the next election.

    I’m union (AFSCME) but disagree with the stance of “no layoffs whatsoever” – every organization has to adjust its staffing now and then. But the Governor’s wrong at how many he wants to lay off…

    And I’m against the union’s suggestion of “new revenue streams” which strikes me as simply being another tax grab – out of the pockets of the union members, and all state taxpayers.

  13. I just emailed the deferred compensation rep asking if I can draw on those moneys during the impasse. He said “no” that the state budget impasse doesn’t constitute an emergency. I cannot believe that. I don’t want my credit score messed up because of the inability of the people who are supposed to make major govt decisions on my behalf can’t do their jobs. I’ve been to work every day (except for one when I took annual leave to spend time with a visiting family member). I say we ALL march on the capitol. We need to hold them responsible for their indescressions. I am betting if we were a bunch of wealthy people, wanting a bill to be passed, it would have been passed within minutes….. I nee dto quote the Army creed
    “We the willing, lead by the unknowing, are doing the impossible for the ungreatful. We have been doing so much for so long with so little, we are now qualified to do anything with NOTHING”

    Didn’t know it was going to transcend into my civilian life.

  14. So Sandman, here’s a primer on 401k hardship withdrawals from about.com. Arguably, this is severe financial hardship but you would need to demonstrate the hardship vis a vis denial of a loan, no other income etc. I reckon. If your home goes to foreclosure the “good news” relative to hardship withdrawal is then you qualify for enough to get your home out of foreclosure.

    401k Hardship Withdrawal
    What if your employer doesn’t offer 401k loans or you are not eligible? It may still be possible for you to access cash if the following four conditions are met (note that the government does not require employers to provide 401k hardship withdrawals, so you must check with your plan administrator):

    1.The withdrawal is necessary due to an immediate and severe financial need
    2.The withdrawal is necessary to satisfy that need (i.e., you can’t get the money elsewhere)
    3.The amount of the loan does not exceed the amount of the need
    4.You have already obtained all distributable or non-taxable loans available under your 401k plan
    If these conditions are met, the funds can be withdrawn and used for one of the following five purposes:

    1.A primary home purchase
    2.Higher education tuition, room and board and fees for the next twelve months for you, your spouse, your dependents or children (even if they are no longer dependent upon you)
    3.To prevent eviction from your home or foreclosure on your primary residence
    4.Severe financial hardship
    5.Tax-deductible medical expenses that are not reimbursed for you, your spouse or your dependents
    All 401k hardship withdrawals are subject to taxes and the ten-percent penalty. This means that a $10,000 withdrawal can result in not only significantly less cash in your pocket (possibly as little as $6,500 or $7,500), but causes you to forgo forever the tax-deferred growth that could have been generated by those assets. 401k hardship withdrawal proceeds cannot be returned to the account once the disbursement has been made.

  15. the unions,,,even the gutless afscme, who seems to be in bed with the gov. should civilily sue the state house, senate, and the governor…we have to show them that they just can’t use the law when they want to and ignore it when they want to….term limits is another idea that needs put on the ballot, for all the state voters, reps, and dems to vote on….if we keep sending these smucks back to harrisburg, they will do the same thing–over and over

  16. Has anyone thought about pitching tents in your facility’s front yard? What about setting up a camp in the areas where the senators and other congressional deadbeats pass on a daily basis? News could be made with a PEACEFUL campout and no mess left behind!

  17. I also am a state employee under afscme contract or should i say void contract due to it has been broken.Back in may when we were told to go along with our healthcare fund raid and we would keep working this really puts a stick in me.AFSCME has done nothing but lie and mislead us on this whole deal.They say our contract is still good how can it be good when it has been broken.I know my contract says i am to be paid biweekly.I also still have the papers from our healthcare fund raid and it says our pay and wage will NOT be affected IF we go along with it .I personally think this union needs to go and i know i can get the 30 persent of people in my county to sighn.After reading artickles on unions and corruption this almost fits the rackateering laws violations,Not only has this governor lied to us and the people of the commonwealth he has lied to the federal government.I think what really pisses me off the most is ALL of these agencies and elected officials will walk away with a slap on the hand .

  18. IF there is even a slap…that remains to be seen. And frankly, I doubt there will be slap if they get the payroll running next week. Just the embarassment…which is truly temporary.

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