Pennsylvania Budget Impasse 2009: Part 3

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

Pennsylvania’s annual budget impasse (2009 edition) is well underway.  Today, June 30th, is the deadline for a budget to be passed as per state law.  Naturally, our legislature and governor are all too busy having a pissing match to be bothered to actually do their jobs.  But they’ve all found plenty of time to spread a lot of misinformation.  Despite what Governor Rendell might suggest, AFSCME’s 2008 lawsuit did not declare that state employees must not be paid.  Here’s why:

Before I go any further, let me remind everyone that I am not a lawyer.  What follows is merely my opinion.  My assumptions are just that — assumptions.  You should  consult with a legal professional before making any plans.

First, here’s a link to the case.  Read it yourself and come to your own conclusions.  There are three points that I find very interesting:

  • Pennsylvania’s Secretary of Administration asked all agency heads to categorize employees into one of four categories using her descriptions:  “FLSA Covered Critical”, “FLSA Covered Non-Critical”, “FLSA Exempt” (typically “executives, employees in policy positions, attorneys, and employees in similar positions”), and “Special Funded” (whose paychecks are funded outside of normal sources).  Note that the state’s own classification descriptions include the phrase “FLSA Covered”.  So, Pennsylvania recognizes that its employees are covered under the FLSA.
  • The union did not challenge Rendell’s authority to furlough state employees.  Rather, they want to court to verify or disprove Rendell’s statement that the FLSA requires him to furlough employees.  The union says that the FLSA supersedes the state constitution — remember this, as it’s important later.
  • The governor counter-sued, asking the court to confirm that under the Pennsylvania constitution, he is required to furlough state employees if no funds have been appropriated for salary.

Bear with me, because it’s going to get a little hairy.  The court’s decision discusses the interaction between federal law and a state’s constitution.  It talks about the current judicial climate in regard to “…State sovereignty, inherent to our system of federalism…” and how past cases (such as AFSCME v Casey) might be viewed today.  The court speaks at great length on their (rightful) belief that federal laws, such as the FLSA, were never intended to override the state’s constitution.  If you were to stop reading the court’s decision halfway through page 11 — as, presumably, our governor has — you would be left with the mistaken impression that the court said that the FLSA does not apply to state employees because it does not override Pennsylvania’s constitution.

And this is where it goes from “hairy” to “ugly”, because that’s not what the court says at all.  While the court makes it clear that the FLSA does not trump the state constitution, they quickly point out that this doesn’t really matter, because the article in question has nothing to do with the FLSA:

In any case, applying the FLSA to Pennsylvania State employees does not lead, inexorably, to the conclusion that Congress intended the FLSA to preempt Pennsylvania’s constitutional requirement that only funds in the treasury that have been appropriated by the General Assembly may be spent. The language of the FLSA does not support such a conclusion.

The court is saying that no, the FLSA does not trump Article III, Section 24 of the Pennsylvania Constitution, largely because the FLSA has nothing to do with that section of the constitution.  The FLSA talks about things like minimum wage, overtime requirements, and recordkeeping.  And by way of court cases, it also talks about timely payment of wages.  The referenced section of the PA Constitution talks about where the money needs to come from:

No money shall be paid out of the treasury, except on appropriations made by law and on warrant issued by the proper officers; but cash refunds of taxes, licenses, fees and other charges paid or collected, but not legally due, may be paid, as provided by law, without appropriation from the fund into which they were paid on warrant of the proper officer.

To put it another way, the FLSA says “I don’t care where the money comes from; you must pay your employees, and you must pay them on time.”  The PA Constitution says nothing about on-time payment or even required payment, but says “The money must first be appropriated”.  Put simply, the constitution talks about where the money comes from, and the FLSA tells you what to do with that money.  The two laws do not overlap, and this is the opinion held by the court:

Assuming that the FLSA requires the payment of wages on time … it does not follow that Article III, Section 24 of the Constitution has been nullified with respect to FLSA-covered employees.  First, the FLSA does not contain any instructions to employers that lack the funds to make payroll on time.  It simply increases their liability by giving employees the right to seek liquidated damages.  Accordingly, there is no basis for inferring that Congress intended to countenance, let alone require, a raid upon a State treasury for monies that do not belong to any agency or public official until the day they are actually appropriated.

The court has explicitly stated that the Fair Labor Standards Act not only does not pre-empt Pennsylvania’s constitution, but one has nothing to do with the other.  I tried to think of analogy for what’s going on here, and the best I can come up with — and it’s pretty weak, sorry — is that Rendell is declaring that because he signed up for a $40-a-month cell phone plan with T-Mobile, he is no longer required to pay his garbage bill.  If there’s any doubt on the court’s stance, it becomes crystal clear on page 14:

This Court concludes that there exists no conflict between the FLSA and Article III, Section 24; the two provisions address different concerns.  In sum, the Court holds that the FLSA does not preempt Article III, Section 24 of the Pennsylvania Constitution.

This case is being twisted and turned into something that it is not.  The sheer volume of FUD coming from our government on this is simply disgusting.

MYTH: The court said Rendell was prohibited from paying state workers without a budget.  REALITY: The court said no such thing.  In fact, the court explicitly stated that the federal law called into question — the Fair Labor Standards Act — has nothing to do with a state’s budget or where payroll money comes from.

MYTH: The court ordered Rendell to require state workers to work without pay.  REALITY: No way.  Not even close.  Read through the decision; the court specifically states that the law does not dictate how employees are to be paid (or not).

MYTH: The court said furloughs are illegal.  REALITY: Again, nothing of the sort.  They did not say furloughs were illegal, nor did they say they were legal.  In fact, they did not address the subject at all.  Courts do not offer their opinions; they answer questions.

MYTH: By giving us back pay, the state has met its obligations under the law.  REALITY: False.  In United States v Klinghoffer Bros. Realty Corp (285 F.2d 487, 491 (2d Cir. 1960)), the US Supreme Court stated that even after overdue wages were paid, an employer is still liable for damages.

MYTH: The court said that the FLSA does not supersede the PA Constitution.  Therefore, the FLSA does not apply to state employees.  REALITY: The first part is true, but misleading.  The court said that the FLSA does not supersede a specific part of the state constitution because it does not cover the same subject matter.  The FLSA talks about on-time payments, minimum wage, and overtime, while that section of the state constitution talks about where the money must come from.  The second part is completely false.  Numerous court cases have upheld that the FLSA does cover government employees (Garcia v San Antonio Transit Authority, 469 U.S. 528 (1985) is one of the best-known).

MYTH: AFSCME is protecting my interests.  REALITY: If they are, they’ve done a pretty terrible job of it.  Don’t get me started on the “You don’t have to be a member, but you have to pay dues” mentality and how it correlates with AFSCME’s deafening silence on this issue.

In short, contrary to what you might be hearing from Governor Rendell, the court case was a massive victory for state employees.  The court has held that the FLSA and the Pennsylvania Constitution do not conflict because they cover two different areas.  The FLSA doesn’t care where an employer gets their payroll money from, and that section of the Pennsylvania Constitution doesn’t care what happens with that money after it gets appropriated.

Governor Rendell argues that because the state constitution requires employees to be paid with appropriated funds, and because the funds have not yet been appropriated, then the FLSA can not possibly apply.  After all, how can you pay employees with money you don’t have?

The answer is simple:  That’s the employer’s problem, not the employees’.

I urge every state taxpayer — state employee or otherwise — to read through the decision.  It’s in plain English and very easy to follow.

40 thoughts on “Pennsylvania Budget Impasse 2009: Part 3”

  1. It was plain to me when I read it. Plain to me when I talked to DOL and remains plain to me today. Further, I reject the idea that the intervention of the Secretary of the DOL precludes and obviates my rights to sue for liquidated damages. It’s his job to intervene if the employer pays late…and it is my right to sue for damages I incur as a result of the employers failure to deliver on their obligations.

    But I don’t think we should fool ourselves here folks. Ed is a lawyer..and even criminal lawyers learned of Federal Acts in law school. Beyond that, he is married to a Federal Judge. Ed’s doing his political posturing. He and the legislature are like little boys standing in a row trying to see who’s goes farther.

    All that is necessary is for them to sign an interim spending bill. The suppliers of the State are not going to supply goods and services if they know they can’t get paid. If, indeed, the pay does NOT come on the 17th and the Governor gets a ringading from the Secretary of Labor of the United States and/or is served with papers suing the state for damages on behalf of several thousand employees I suspect it will catch somebody’s attention. I think we are once again simply seeing Ed cavalierly holding the legislature hostage in a game of liars poker and using the the employees to ante up.

    Thanks for your interpretation.

    Start emailing local news reporters for the papers and tv stations and tell them of your outrage and FLSA and its implications to the budget if Ed goes on as planned. Let some noise be made about it. Lord knows, Ed is not one to shy away from free PR…why should we be?

  2. I just read through that whole case, and basically what I understand is this:

    1. The Governor CANNOT violate the Commonwealth’s Constitution. Or at least the court this lawsuit was settled in cannot tell him that he can.

    2. Therefore, he is not allowed to pay us unless our legislators authorize the spending.

    3. We have all right to sue for damages.

    I see nowhere in here that says that we cannot sue for damages, just that we cannot file the suit in federal court. I assume that if we exhaust all options in PA, we could then appeal to the federal court system, BUT IANAL!!! (I Am Not A Lawyer!)

    Now, the real question is, is does fast eddie believe that we’re just going to lie back and take it, or is he just trying to play fast and loose with thousands of people’s paychecks? Only time will tell, I guess. Just keep calling your Rep’s and Senators in Congress (state congress….) and tell them to get working.

  3. I heard on the news first thing this morning that they are not meeting to negiotiate today. They failed to pass a budget; they failed to do their job. You and I went to work today. They failed to secure a budget. We may go without pay because of them, but they aren’t going to work today to hammer out a budget resolution. You know very well they won’t be working tomorrow or Friday either. It’s okay for us to honor our obligations and responsibilities and go to work with the knowledge we may have no pay on the 17th. Through no fault of ours I might add. But God forbid they should miss out on their long holiday weekend even when they are the ones responsible for our upcoming hardships. And not one word from AFSCME today. A march on Harrisburg would be great. Too bad those of us not from around Harrisburg area won’t have the money to make the trip. Disgust, with this State Government, doesn’t even begin to describe my feelings. In a right world, Rendell and the legislators would be thrown out of office on their ears, now, not at the end of their term.

  4. I was wrong. This just in from AFSCME. (You know, the union that is working for us.) They have provided “cards” on their website (under the title “Budget Update”)for us to hand out to any merchants we patronize. The cards essentially ask the merchants to contact their representatives and ask for a speedy budget resolution. Yea, that’ll work. Thanks AFSCME. That will pay my bills and feed my family. Thank God my hard earned dues money is being spent in my best interest.

  5. Charlene, I just saw the cards myself. What a laugh. Eat out at lunch? That’s already trimmed from my budget! LOL

    I used their contact us form and advised them they probably should consider publishing the numbers for the DOL district offices and advising their members to call and lodge a complaint on July 17 if the paycheck is short. Let’s see if they do it.

  6. After being unemployed for 4 months I started working for the state in April 2009. The governments suggestion of working with our creditors during this impasse is ridiculous. My creditors just delt with me for 4 months of being unemployed, they don’t want to hear from me again so soon. I thought the whole point of working is to be able to pay your bills. I wish I had known before hand that not getting paid was a possibility. I certainly would not have taken the job since I had other offers. I just thought of job security and good benefits.

    I realized from the beginning that the union is a joke. I have been calling the state reps and senators and I have been offered food vouchers and empathy since they say they are not getting paid either. Since I must come to work can I get gas vouchers? If I wasn’t still on probation I would be sick everyday during the impasse.

    The news is reporting on this like it is totally legal for us not to get paid. Well first thing in the morning I am calling a labor lawyer and finding out the real deal! I HATE politicans.

  7. I was watching PCN today and caught a news conference from the senate republican caucus. they were asked if they were getting paid. no. they were asked if their staff was getting paid. yes, with discretionary funds they set aside for that purpose. they went on to say that if you work, you should get paid, and as far as they’re concerned uncle ed should be paying all of us. that’s nice fellas, how about 1) do your damn job and pass a budget, and 2) if you can’t do that then at least pass a stop gap so i don’t lose my home and everything else i’ve worked for.
    i’ve been reading your site for a while now, but this is the first time i’ve been so PO’d i felt compelled to write. I don’t belong to AFSCME, but another “silent” union on this issue. they tell us they’re “waiting to see if we miss a paycheck” before they take any action. I don’t want to mention which union, as they might be a tad vengeful to a member who criticizes them. I’ve seen that before and don’t need that headache on top of everything else going on. Pretty sad when I have to worry about our governor screwing us and then worry about my union screwing me for speaking my mind. Thanks for all the insight here and good luck to all

  8. To “Yet Another State Employee”, that is incorrect. The court did not say that Rendell is prohibited from paying us; rather, the court said that since the FLSA and the state constitution do not overlap, there is no conflict and therefore neither trumps the other. They also point out that by not paying us, Rendell is exposing the state to liquidated damages. The court does agree that payroll funds need to be appropriated first; however, the court has also previously held that “not having any money” is not a valid excuse for not paying your employees.

  9. I think its funny to hear all these LIBERALS crying about not getting paid, this is what you get for voting DUMBOCRAT, well enjoy your pay morons, oh wait your not getting paid because FAT FAST EDDIT THE LIAR has to pay all the welfar queens first

  10. I am a recent hire of the state. I also belong to one of the silent unions. When questioning my rep on the impasse, I was blown off with a condescending comment. I am tired of all the bulls**t surrounding this issue. I am responsible to pay for products and services that I consume at appropriate intervals, so should the state. I believe that the legislature and the Governor should be forced to work on the budget until a resolution is reached,to hell with their holidays and their recesses.

  11. wait and see, while my wife has a fit and i am paying for two children in college. wait till the 17th when i can call psecu and get 1000 loan, opps only certain people will qualify,you have to have at least 1000 in your account. i have been employed with the commonwealth for twenty years, why is it that rank and file employees have to do their jobs but no one else does, i have had it. sue for damages how?

  12. @ Not “the One” I am not a liberal and I did not vote for Rendell, either time. But, so what if I did? Regardless of views or political affliation, a day’s wages for a day’s work. To be joyful over someone else’s misfortune is evil, and bad karma for you. Regardless of your posted comment, I hope you never find yourself in a similar situation. But, I suspect your words will come back to haunt you at some point. Shame on you.

  13. Do you think the budget impasse has anything to do with the shortfalls caused by the imploding economy? Said imploding economy having been caused by eight years of Republican rule? Try to limit your comments to something constructive and or intelligent.

  14. Is anyone out there as upset as i am about the poor quality of service we receive from the new Hollwood casino. They just dont have the staffing. and i dont understand why? Someone please explain why they have such piss poor cutomer service!

  15. Probably because the only state employee working there is to make sure you don’t get screwed by a shoddy slot machine. We don’t staff the rest of the casino, fast eddie just makes his money off of them.

  16. Now he wants to lay 800 employees off. I am willing to bet if he were to sever ties with Delloite, IBM, and other consulting firms, that the state would be in MUCH better shape.

  17. Are you all aware that the commissary for state inmates is run by his wife. Whatever profits are made go into her pocket. Quite a lucrative business they’ve made, considering how he has his fingers in a lot of things that he shouldn’t.

  18. My wife is a state employee DOC. She works in Human Services and has spent most of June trying to get employees’ membership in PSECU to be eligable for loan program. Much time was spent doing this. Time that could be spent doing important and necessary work for the Department, instead of loading the PSECU membership. For those who will be approved for the loans this is great. But many have been and will be denied.

    Also Gov.’s PCN broadcast the Banking Secretarty state if any expect difficult with the PSECU loan should call them for help “the Banking Dept. helps many people, and will be available for help” My called and was told that they could not help and she could try other financial Inst. If you can’t get help from the place were you belonged for 32 years wont help who will.

  19. I am so sick of the slime in Harrisburg…and the union does NOTHING. I will make sure I vote against every member in any upcoming elections. Of all the times to pull this stunt. The government gives away billions and the banks sit back and lower credit limits and raise your rates.

  20. being a state employee without a paycheck is rough. but what alot of people do not know is this fact. back in ’91 when this happened lawmakers passed a bill that no matter what even with an impass lawmakers will still earn their paycheck. i thought lawmakers worked for the ones who pay their salary every year. The taxpayers. They need to lock these corrupt people in a room until they get this straight.

    The only reason fast eddie isn’t in a federal prison is because his wife is a fedearl judge. Ain’t it something….

  21. To those of you who are upset with your unions for their slow or complete lack of a response – They are also playing politics. They didn’t want to speak out against the Fat Cat DEMOCRAT they told you all to vote for.
    Call the governor and legislators – tell them to pass the GOP budget because Rendell has spent enough of your hard earned money – unless you want higher taxes.

    Also – Crookhater raises an interesting point!

  22. Who said you have to have $1,000. in your account at PSECU to qualify for the 0% interest loan??
    PSECU approved me and said nothing about having to have money in the account.

  23. Every state employee should not report to work until the budget is passed!If you want to make a point,take action against inaction.Otherwise all the pissing and moaning won’t add up to bull.

  24. czeck I guess it depends on your point of view. If you hope to assert damages and violation of the law under FLSA you must actually BE at work. No work, you are not entitled to pay, therefore no violation has taken place. If you stay home from work, yes, enough people will doing so would, in effect, shut down the state. But it still won’t get you your paycheck any sooner.

  25. The very worst thing anyone can do is not go to work. Abandoning your job will make the claim of unfair treatment much harder.

  26. I contacted my attorney today. We meet July 27th if there is a smaller than normal paycheck. He said that the state would be in violation of it’s own laws, as well as federal laws.

  27. I think this needs to reah a national leval. Lots of people should start contacting CNN and Fox News.

  28. floor9

    I see were you are comming from, but please expalain to us how people such as myself that travel 65 miles a day back and forth to work can put gas in our cars if we are not getting paid.

  29. I completely understand, PGM. I’ll clarify it when I do my post on Thursday. Suffice to say, if you can’t afford to come to work, you don’t have much choice. It is incredibly unfair for Pennsylvania to demand that its employees continue to work while denying them a paycheck, then further denying them the ability to seek supplementary employment.

  30. PGM, you have my deepest sympathies…I get where you’re at! Rather than just a “walkout” type stay at home till it’s over, I’d take sick leave or vacation personally…and explain that you cannot afford the transportation costs without a paycheck if you must.

    When confronted with the fact that many employees don’t qualify for the loans etc, the governor said he realized that and he hoped that maybe they could tap into friends and family for help till this passes. The only “friend” I have in Pennsylvania that is loaded enough for that is the Governor! What do you say we all ask HIM to help us out of his deep pockets??? He could be Daddy Warbucks to all of us Annies!

  31. PGM…I also think I’d pursue another avenue. In the private sector we telecommuted frequently. I’d ask my manager if it is possible to telecommute in light of no pay and the cost of transportation. I realize that won’t work in many kinds of jobs (telecommuting state police, nurses, and prison guards creates quite an image eh?) but for some job tours it might work and if yours is one it’s worth putting the challenge to management to see how creative they can get.

  32. Question:
    I heard that the staff of the legislature will be paid with money that has been “socked away”.
    During this impasse, what happens to the legislature’s expense account access, state credit cards, and WAM(walking around money) and access to their state cars?

  33. Lawmakers cannot be paid their salary during the impasse but will continue to receive per diem payments. Also, their aides will receive their full salary during the impasse. Remember the governor’s comments prior to the impasse “I don’t want to hear any whining.” I guarantee he’s not hearing any whining from them.

    Here’s a link to the story:

    Gotta love his comment when asked what he thought about lawmakers and aides getting salaries and expenses paid while the state has no budget. His response “Do a poll and see what you get.”

    Thanks for a great 7 years of service Eddie… Let’s pray you never get another opportunity to make a shambles of any other political office in this state or anywhere else.

  34. I would like for him to stop by my house and drink a beer with me. Then he would see that I am a 36 year old professional that provides a professional service to the commonwealth.

    Any other business hiring me, would BY LAW have to pay my salary in a timely fashion, on the agreed upon pay day. If they didn’t I could sue for damages.

    I want him to see that I don’t make as much as I would if were to be employed in private industry. But I offer the same kind of professional services.

    If I leave, he will have to hire an IBM or Delloite contractor at about 5 times my hourly salary. I am contemplating jumping ship with 12 years of service.

  35. Just came back from my bank. I am trying to get a loan I should not need. I have talked to my creditors, with the lovely letter the governor has given me to help make them understand my situation. They understand, they do not care. Rightly so, why should they wait for payment of services rendered anymore than we should wait for our pay. There has been talk of a mass walkout I take care of our veterans with alzheimers. Unlike our illustrious governor I could never turn my back on people who gave service to this country. I also hope we all thanked our union for making sure they took their dues out of my already diminished pay. I am sure they are putting it to good use.

  36. Beth, the Union didn’t take them, the State gave them up. The State payroll run and payroll system is set up to take deductions out and so since they are running payroll they are running it as they ordinarily would. To do otherwise would mean they would have to either manually or programatically correct all those records where it was not withheld and then apply it to a future pay. Systemically it would likely be a problem to do so.

  37. this is crazy. can we sue for 10k per paycheck? cuz ill try my hardest to gross that (being mandated EVERY SHIFT helps this at my building of work.)

  38. Given my union has failed me and pushes a political agenda that I can’t stomach anymore. I am resigning from the union and rejecting their fees. I will still have to pay the fair share, but they will have to account where it goes or I can file charges with the assistance of the Right to Work Defense League. These unions are nothing but pansies for politics. I am in the process of contacting my state representatives to endorse a bill that makes PA a right to work state so that I am not forced to pay for someone elses politics. It was obvious to me when it came to our strong armed secret ballot over furloughs and giving away the state’s contribution to my retirement that these people do not have my or any other state workers best interest at heart. My union encouraged us to wear a purple shirt to work on fridays to show solidarity. That is probably one of the most ridiculous things I have ever heard. Is that the best they can do? I hope others join me in the right to work movement. Ask yourselves, if you can’t be protected from going into financial ruin, what good are these overpaid liberal mouth pieces?

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