CHARLESTON – A circuit judge has signed an order allowing every state agency to be listed as a defendant in a potential class action about wage payment for salaried state employees.
Senior Status Judge Thomas C. Evans III signed the order June 3 continuing the case, which was filed last year in Kanawha Circuit Court, to give the plaintiffs’ attorneys time to provide notice to any additional state agency.
The case could include up to 40,000 public employees.
The case currently includes the state auditor’s office, the state treasurer’s office and outside vendors that handle payroll for the state. The case focuses on the state auditor’s office alleged failure to properly calculate and pay the wages of up to 40,000 public employees. The alleged incidents started before current Auditor J.B. McCuskey took office.
According to an amended complaint, the case involves both salaried and hourly public employees who were not fully paid in the 2017 calendar year because of the state’s switch from twice monthly pay to biweekly. The claims against the auditor’s office seek recovery for all employees who were underpaid, and the claims are made under the West Virginia Wage Payment and Collection Act, which applies to state government the same as it applies to private industry. Additionally, West Virginia law does not allow state employees to be paid in arrears beyond one pay period, which is the only arrears authorized by the state.
"West Virginia elected officials paid themselves a one-time payment that was mistakenly withheld when the state changed payroll from 24 to 26 paychecks per year," Teresa Toriseva, one of the attorneys representing the plaintiffs, told The West Virginia Record. "But they did not and will not pay the up to 30,000 non-elected state employees who were also shortchanged. Elected officials paid themselves and now fight us in court to avoid paying all other non-elected employees.
"Now, because those elected officials at the highest level of our government won’t just acknowledge the mistake and pay non-elected employees what is due, we must expand the lost wage litigation to include every state agency in West Virginia. The reality is, this is a problem at the very top affecting everyone else."
During a March 25 hearing, plaintiffs’ attorneys also said Evans needs to file a court order to make it possible for them to add plaintiffs to the case. Evans agreed to do so, and he scheduled the next hearing for July 17.
“Our position is that the auditor’s office is blocking these payments that should be made to these employees,” said Michael Ranson, one of the attorneys representing the plaintiffs in the case. “It all seems to flow back to the auditor’s office. We believe the state agencies would have paid the employees if they hadn’t been told not to do so by the auditor’s office.”
During a January status hearing, Ranson told Evans the auditor’s office can block a requested payment once it is submitted. But, he said none have been submitted except for one by the state Department of Agriculture. That submission came before the current auditor took office, and that request was paid.
“Does the auditor have the legal right to do that?” Evans asked. “Can the auditor stop the payment? That’s why we’re here, I guess.”
Lisa Hopkins, general counsel for the auditor’s office, argued in January that the case isn’t the proper vehicle to make a claim against the office.
“The auditor’s sole role here is to approve or deny payment using state funds,” Hopkins told Evans. “The auditor can’t just reach into an agency’s account and get the funds. That would make him king of West Virginia.
“For example, the court can make a ruling can tell the auditor to make these payments. But we can’t legally do that unless the payments are requested by the agencies.”
When Evans suggested that a state agency could request the payments in question, Hopkins said that would work.
“We would welcome someone to submit a claim,” she said. “He (McCuskey) is required to examine the claim and make a determination if it should be paid based on the law.”
At that January hearing, Evans suggested the plaintiff’s attorneys do just that: have one or more state agencies submit these claims to be paid to see what the auditor’s office does.
They did so, choosing to work with the state Supreme Court to have them make the request. During the March 25 hearing, the attorneys said they had been in contact with the state Supreme Court in a variety of ways. The court responded, saying it would address the matter promptly. But as of March 22, it hadn’t taken any action.
That lack of action is what is prompting the attorneys to take the step to add all state agencies as defendants. They told Evans they could either add just the Supreme Court as a test agency, or they could add all agencies. After discussing the matter, the parties decided to go ahead and add every agency as defendants.
Evans was recalled to handle the case because all of the judges in Kanawha Circuit Court have a conflict on interest in the case, namely that they received a one-time payment that is at the crux of the lawsuit.
A letter notifying the state of the pending lawsuit said the changeover in pay periods was “a fiasco” and was halted, changed and criticized for failing to properly anticipate problems. It says the changeover happened in three waves. “Wave 3” occurred in Spring 2017 and included court employees, DHHR employees and State Police employees.
This arrearage “was widely known, understood and admitted to in writing by state employees working on the problem,” the notice stated. “For example, court employees were advised they would receive the arrearage (about 1.6 percent of each employee’s wages) at the end of calendar year 2017. That did not occur. The arrearage was never paid (or made up).”
In short, the affected employees received their regular salary in 2016, but received about 1.6 percent less in 2017 because of the changeover. And they’ll receive their regular salary again in 2018. The notice says about 1,400 court employees, 6,000 DHHR workers and 1,000 State Police employees might have these issues.
It says the shortages range from about $500 to several thousand, depending on base pay. It also says agencies involved in Wave 1 and Wave 2 did pay the arrearage created by the changeover to all elected officials.
“In other words, elected officials got a one-time payment to correct their arrearage,” the notice states. “Public employees got told they will get it back over time. This is illegal and improper.
“Wages are due when earned, except that public employees are allowed one pay in arrears (which occurs at the beginning of employment). To be clear, the payment to elected officials was proper. What is illegal is the failure to pay the public employees for the same arrearage created in their pay.”
A Sept. 13, 2015, letter from Legislative Auditor and Legislative Manager Aaron Allred addressed some “areas of concern,” including the governor’s salary.
“Code … sets the governor’s calendar year salary at $150,000,” Allred wrote. “With the conversion to a bi-weekly pay period the governor earned $150,206.04 during FY (Fiscal Year) 2015, however he would have received less than $150,000. The governor’s office verbally informed me that they forced an increase to the governor’s final paycheck in FY 2015 for the difference between his annual salary and the actual amounts paid during FY 2015. Conversely, other state employees did not receive the same consideration.”
Allred’s letter also mentions that about every 11 years, there would be a year that would have 27 pay periods instead of 26. And that in 2023, the next such year, the state would need an additional $33 million for that extra pay period.
“There are only a few universal truths in life, but one of them is you don't mess with people's paychecks,” Toriseva previously told The Record. “The West Virginia Auditor created an arrearage in pay for many, and maybe all, public employees, when payroll switched from twice monthly to every two weeks.
“However, a one-time payment to clear the arrearage was made to elected officials only. Public employees want what they have earned, too. It's calculable.
“Elected officials were paid. Why weren’t their salaries employees paid?"
By changing the pay period in which the salaried employees are paid, an underpayment to each salaried employee was created in 2017 that has not been remedied.
“This problem is so well known that hotlines were created and countless hours of time has been spent by the auditor’s office trying to convince employees that the underpayment is allowed and proper,” according to a letter sent by the plaintiff’s attorney notifying the state of the pending lawsuit.
“We know that thousands of salaried state employees did not receive their full wages in the year of the payroll changeover,” Toriseva told The Record after the Jan. 25 hearing. “The exception was elected officials. They got paid. The State of West Virginia made sure that all elected officials received a bridge payment to make up for their pay deficiency while allowing a shortfall in the payment of its salaried employees.
“It is certainly a violation of West Virginia law to not pay state employees the wages that are due. The state’s action in making sure that the Governor, Treasurer, State Auditor and other elected officials received their full pay clearly shows that the state was aware that the bridge payment needed to be made to correct the deficiency caused by the changeover.
“Despite this knowledge, they continue to this day to withhold payments that are due and forced employees to file this lawsuit.”
Despite the lawsuit, the auditor's office stands behind how it has handled the situation.
“Although it is our general policy to not publicly comment regarding potential or ongoing litigation, we have received notice from media sources of a potential claim concerning the state’s conversion to biweekly pay," Hopkins told The Record last year before the case officially was filed. "We are confident that the conversion was executed in compliance with statutory requirements and in accordance with agency directives and the law and that all State employees were paid for every hour worked."
The lawsuit seeks to gain full lost wages and benefits to all affected salaried employees plus other compensatory and general damages, interest from the date the funds should have been paid along with court costs and attorney fees.
The plaintiffs are being represented by Toriseva of Toriseva Law In Wheeling; Michael Ranson and Cynthia Ranson of Ranson Law Offices in Charleston; G. Patrick Jacobs of Jacobs Law Office in Charleston; and Robert McCoid of McCamic, Sacco & McCoid in Wheeling.
Kanawha Circuit Court case number 18-C-549