California to pay $47 million for state payroll lawsuits filed in Jerry Brown era

Gov. Gavin Newsom’s budget proposal requests about $47 million to settle two state payroll disputes he inherited from his predecessor.

The state Supreme Court ruled in October that Gov. Jerry Brown’s administration owed judges about $40 million for raises they should have received during the recession, but Brown’s administration didn’t make the payment before he left office in January.

The first judge to rule against Brown in the case in 2016 set a 10 percent interest rate on the payments, pushing the bill up by about $4 million per year as the administration went through the appeals process.

Retired appeals court Justice Robert Mallano filed the lawsuit in 2014, alleging the state failed to give mandatory raises to judges between 2008 and 2013.

By law, judges receive raises based on average wage increases that go to other state employees. If the average wage increase for all state workers is 3 percent, judges also would get a 3 percent raise.

From 2008 to 2013, most state workers’ wages dropped due to furloughs. Some weren’t furloughed and received raises during the recession. Mallano argued in his lawsuit that judges should have received raises in line with those wage increases, not factoring in the decreases.

Newsom’s request for money to pay the judges is outlined in a letter from his Finance Department to legislative leaders.

Also outlined is a request for about $6.8 million to close out a class-action lawsuit related to slow payments from the state to former deputy attorney general Janis McLean, who retired from the Department of Justice in November 2010.

State law requires employers to pay workers quickly after they quit or are fired. The labor code says employers must pay workers immediately if firing them, and within 72 hours if they quit unexpectedly.

McLean said she wasn’t paid within that time frame after her retirement. The state argued the law didn’t apply to retirements.

She also said she didn’t receive compensation for her unused leave and vacation time within 45 days as required by state law, and the state didn’t pay her the deferred income she requested under state law by a deadline of February 2011. She filed a lawsuit in 2012 in Sacramento County Superior Court.

The state took the case to the Supreme Court, which ruled in McLean’s favor in 2016.

State Controller Betty Yee’s office confirmed state law currently requires departments to submit proper documentation to the office to make sure retiring employees as well as those leaving for other reasons are paid within 72 hours. Yee said her efforts to overhaul the state’s legacy payroll systems could help make the process more efficient.

“Scenarios like this highlight one of the many reasons Controller Yee has been so focused on getting the state payroll modernization project off the ground,” spokeswoman Taryn Kinney said in an email. “The legacy payroll system is about 50 years old and its cumbersome manual work-arounds and system limitations make even seemingly simple processes needlessly complex.”

Related stories from San Luis Obispo Tribune