Minimum wages and furloughs: Will UC go its own way?

The furlough and minimum wage issues are getting closer. The governor can't order UC to pay minimum wage or impose new furloughs. But - as noted in prior posts - the issue is whether UC will be politically able to go its own way when other state workers (including those at CSU) are subject to furloughs and minimum wages. As also noted previously, the imposition of the min wage does not depend on whether cash is available to pay full salaries. It depends only on whether a budget is in place on July 1, which seems unlikely.

PolitiCal (LA Times)

On politics in the Golden State

Memo: Schwarzenegger ready to slash workers to minimum wage

June 23, 2010 | am

Gov. Arnold Schwarzenegger plans to cut the pay of state workers to minimum wage if a timely budget accord is not reached, according to a memo sent Wednesday from the director of the governor's Department of Personnel Administration to state agency and department heads.

The memo, written by DPA director Debbie Endsley, also warned that Schwarzenegger could order more controversial furloughs, even though the state's final scheduled furlough day for tens of thousands of employees was last Friday.

"The Governor retains the right and authority to order furloughs if necessary to address a fiscal and cash crisis," Endsley wrote.

The new fiscal year begins July 1, but lawmakers and Schwarzenegger remain far from an agreement on a spending plan. Democratic lawmakers in the Senate and Assembly still have not unified behind one budget plan, while Schwarzenegger and legislative Republicans have stood behind the governor’s May proposal to eliminate welfare and trim billions from state spending.

Schwarzenegger tried in 2008 to pay workers minimum wage when the budget talks stalemated, but state Controller John Chiang, a Democrat, refused. A lower court judge ruled against Chiang and the issue is now before the 3rd District Court of Appeals.

In the Wednesday memo, Endsley wrote that "absent a state budget, we will send instructions to the Controller to pay [minimum] wages ... for the July pay period." The paychecks for that pay period are issued at the end of July. Once a budget is signed, workers would be entitled to their full back pay.

The threat is intended both to speed up budget negotiations in the Legislature and to push union leaders to the collective bargaining table. Last week, Schwarzenegger announced tentative deals with four labor unions. If ratified, those workers would be exempt from the minimum wage order, as Endsley noted in the memo.

-- Shane Goldmacher in Sacramento

The full memo is after the jump

Here’s an update on the furlough and minimum wage situations.

With respect to furloughs, the current program ends June 30, and the Administration expects the State to resume normal hours of operation in July. The Governor’s budget proposal includes four proposals to reduce employee compensation costs: a wage cut, one day per month of unpaid leave, increased employee contributions to pensions, and the workforce cap. The Governor retains the right and authority to order furloughs if necessary to address a fiscal and cash crisis.

As for the prospect of state workers receiving minimum wage in lieu of full wages, it will depend on when the Legislature and the Governor reach a budget agreement. The California Supreme Court ruled in 2003 (White v. Davis) that absent an appropriation, which for most of the payroll comes through the annual state budget, the Controller is prohibited from paying state workers beyond what is required by the federal Fair Labor Standards Act (FLSA). Absent a state budget, we will send instructions to the Controller to pay wages in accordance with the FLSA for the July pay period.

The four unions that recently reached tentative agreements on new contracts (CHP officers, firefighters, psychiatric technicians, and some medical professionals) would not be subject to any new furlough program or minimum wage payments, assuming their contracts are ratified in a timely manner.

Debbie Endsley