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As reported earlier, Governor Arnold Schwarzenegger today (July 1st) ordered federal minimum wage pay for most state employees until a spending plan is enacted. The federal minimum wage is $7.25 per hour.

State employees will be paid their full pay retroactively once a State budget is passed by the Legislature and signed into law by the Governor – something at this point in time many do not expect to happen anytime soon.

A spokesman for the Governor expected the temporary pay reduction to take effect in the next State employee paychecks. Or maybe not.

The director of the Department of Personnel Administration sent a letter with the Governor’s order to State Controller John Chiang Thursday afternoon, but Chiang, who is the statewide elected official in charge of paying the state’s bills, including issuing paychecks to state employees, said today he would refuse to implement the order unless a court ordered him to do so. [see below for official statement from Chiang issued today – July 1st]

Some State Employees Exempt From Governor’s Order

About 37,000 state employees who are members of six bargaining units (unions) are exempt from the Governor’s order because they have reached agreement on new union contracts with the Governor in recent days.

However members of the largest of the State worker unions – SEIU (Service Employee International Union) Local 1000, has not yet reached an agreement with the Governor on a new contract – and are not exempt from the temporary wage reduction order.

State employees who are managers or supervisors would receive $455 per week instead of their normal pay. Other State employees who are doctors and attorneys would receive no minimum pay because federal law exempts those professionals from any minimum wage requirement.

In-Home Supportive Services (IHSS) workers or providers are not state employees and are not impacted by this order.

Statement by State Controller Chiang on Governor’s Order:

The following statement was released by State Controller John Chiang late on Thursday in response to the Governor’s order to temporarily reduce state employee wages to the federal minimum wage, with the exception of 6 state bargaining units (unions) that have reached tentative agreement with the Governor on new contracts:

“I am not surprised that the Governor would issue yet another demand that we cut pay for more 250,000 state employees even while the issue of whether it is feasible to do so has not yet been resolved by the courts. I have made it clear that once the courts hand down a final resolution, I will abide by that ruling.

“In the absence of the leadership needed to bring the Legislature to an agreement on his budget, the governor again resorts to political tricks. Because of the limits of the state’s current payroll system, there is no way that his order can be accomplished without violating the State Constitution and the federal Fair Labor Standards Act. In short, his demands will do nothing to solve the budget deficit, but will hurt taxpayers by exposing the state to billions of dollars in penalties for those violations.

“Unfortunately, the DPA [Department of Personnel Administration] also is mistaken about the position of the previous State Controller about the ability of the state payroll system to make reductions to more than 250,000 paychecks. In a letter written in July 2004, my predecessor notified legislators that his office ‘had conducted a study and concluded it is not feasible to pay some employees full salary and others minimum wage under the state’s current payroll system.’

“Notwithstanding necessary changes to the State’s labor laws, we continue to work with the Governor on building a system capable of legally reducing wages in the manner sought by his Administration. This system modernization is slated for roll-out in 2012. If the DPA [Department of Personnel Administration] has a problem with that schedule, they should consult the steering committee, of which four of the six members are the governor’s appointees, including DPA Director Debbie Endsley.

“Again, absent a final court ruling, I will continue to protect the State’s finances and pay full wages earned by state employees.”