Court sides with governor on minimum wage

SACRAMENTO — A state appellate court today sided with the Schwarzenegger administration in its attempt to temporarily impose the federal minimum wage on tens of thousands of state workers.

It was not immediately clear how the ruling would affect Gov. Arnold Schwarzenegger's order a day earlier to pay 200,000 state workers the federal minimum of $7.25 an hour as the state wrestles with a budget crisis.

The state controller, who cuts state paychecks, has refused to comply with the order. The office declined to comment because it is still reviewing the ruling.

Today's ruling affirms a lower-court decision in favor of the administration in a lawsuit filed two years ago after the governor's first attempt to impose the minimum wage.

The latest ruling from the California 3rd District Court of Appeal in Sacramento concludes that state Controller John Chiang cannot ignore the minimum wage order from the state Department of Personnel Administration.

It says, " ... the DPA has the authority to direct the controller to defer salary payments in excess of federally mandated minimum wages when appropriations for the salaries are lacking due to a budget impasse ..."

But Chiang said in a news release that he interpreted the court ruling to mean that his office would not have to comply with the executive order if it was practically infeasible to do so.

"I will move quickly to ask the courts to definitively resolve the issue of whether our current payroll system is capable of complying with the minimum wage order in a way that protects taxpayers from billions of dollars in fines and penalties," Chiang said in the statement.

The Republican governor issued the order this week on the first day of the new fiscal year because the state remains without a budget, as lawmakers remain far apart on ways to close California's $19 billion deficit.

Lynelle Jolley, spokeswoman for Schwarzenegger's personnel department, said the ruling means the controller's office must follow the administration's minimum wage order.

"This underscores the fact that everyone loses when we have a budget impasse. Every day the Legislature fails to deliver a budget costs the state $50 million," Schwarzenegger spokesman Aaron McLear said.

Workers will receive full back pay once a budget is passed. Representatives of several state employee unions did not immediately respond to a request for comment.

Schwarzenegger's minimum wage order will not affect all of California's 250,000 government employees. The 37,000 state workers represented by unions that recently negotiated new contracts with the administration will continue to receive their full pay. The contracts, including one with California Highway Patrol officers, contain pay cuts and pension reforms.

Salaried managers who are not paid on an hourly basis would see their pay cut to $455 a week. Doctors and attorneys who work for the state will not be paid at all until a budget is signed because minimum wage laws do not apply to those professions.

The governor issued a similar order during a budget impasse two years ago, but it never took effect because Chiang refused to go along with it. That refusal prompted Schwarzenegger to sue the controller, leading to today's ruling.

It was not immediately clear whether Chiang will appeal the latest ruling to the California Supreme Court.