Spillovers to UC from the SEIU Deal with the Governor?

Are there any spillover effects for UC from the deal between SEIU Local 1000 and the governor as part of the budget enactment? There had been prior deals with some other state unions but Local 1000 was the biggie. The contract has yet to be ratified by union members. Directly, the contract has no effect on UC employees since none are covered by the agreement. Other unions represent UC employees. But indirectly there might be some effects, either positive or negative. Let’s look at the terms as described by the union on its website – actual contract language is not on the website as of today – followed by some comments below the italicized excerpt:

1) We won a 3 percent wage increase that will be added to the top of each pay range; this is up from the state’s no raise proposal; annual step increases are maintained for all employees below the top step.

2) We reduced the governor’s demand for a 5 percent increase in employee pension contributions to a 3 percent increase.

3) We won a guarantee of no additional furloughs during the first year of the contract and, because of the Supreme Court’s recent decision, no furloughs in the second and third years unless the Legislature authorizes them in budget legislation.

4) We won a continuous appropriation guarantee, which protects our members from minimum wage in case of budget delays.

5) Our members will receive 12 personal leave days in exchange for a one-time,12-month, 4.62 percent decrease in pay.

6) Our members will receive two professional development days.

7) We renewed more than 95 percent of the guarantees from our last contract.

Note: The items above appear on http://seiu1000.org/2010/10/tentative-agreement-ends-furloughs-and-t.php

Comments:

Item 5 more than cancels item 1 for the first year. But thereafter, there is a pay increase. That might make a pay freeze or reduction next year more difficult for UC to implement since it would be a deviation from other state workers.

Item 3 continues the furloughs (and according to the Sacramento Bee actually extends them to certain groups that had not had them before; see http://blogs.sacbee.com/the_state_worker/2010/10/more-qa-about-the-seiu-contrac.html). However, it appears that UC is willing to live with a situation with no furloughs for its employees while state workers continue to have them.

Item 4 ends the minimum wage threat if no budget is in place next July 1. UC employees were never directly affected by the minimum wage. But the minimum wage never went into effect, despite the governor’s efforts, due to litigation which is still continuing. (So we don’t know what UC would have done if state workers were at the minimum but its employees were not.) To the extent that the issue might have ever arisen again in the future, it appears now to be dead.

Item 2 is an increase in pension contributions by employees to 8%. It is likely that UCOP and the Regents will cite that development in considering pension policy at UC.

[youtube http://www.youtube.com/watch?v=2AAa0gd7ClM&fs=1&hl=en_US]

Minimum Wage Threat to State Workers Removed for 2 Months

The governor’s attempt to impose the federal minimum wage of $7.25/hour on state workers has been on temporary hold. The Sacramento Bee reports that the hold is effectively at least 2 months.
http://www.sacbee.com/2010/07/17/2896268/judges-order-buys-california-state.html
The threat of paying the minimum wage did not apply to UC employees but had it actually gone into effect, it might have put UC in a difficult position. UC would be in the position of ending furloughs at the same time other state employees were at the minimum.

The minimum wage issue arises because there is no state budget in place and, hence, no authorization to pay most state employees. It has nothing to do with whether there is cash on hand to meet the payroll. There have been legal decisions that support the governor’s position over a period of years, including quite recently. However, the state controller argues that the state’s antiquated computers cannot be programmed to pay the minimum wage and then pay back wages owed when a budget is passed, without putting the state in violation of federal labor law.

The latest court decision will require a full hearing on this technical issue – which takes time. What the governor wanted was an immediate order pending such a hearing to pay the minimum. However, the decision noted that the requirement for an immediate order was based on “irreparable injury” to the state. However, because the state would eventually have to pay back wages to make workers whole, the court did not see such injury:

Paying prematurely what must be paid in the end anyway does not result in irreparable injury unless the premature payment causes other serious consequences.

Legal beagles can find the full opinion at:
http://blogs.sacbee.com/the_state_worker/100716%20Marlette%20TRO%20ruling.pdf

UPDATE: With the minimum wage off the table for the governor as a bargaining chip on the budget, the governor announced renewed furloughs for state workers until a budget is enacted. Note that UC furloughs – which are outside this order – go through August anyway. So a disparity between UC and other state workers on furloughs would not appear until September – if the budget stalemate lasts into that month. On the furlough order, see http://bit.ly/8XEQrK

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