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Tuesday, August 19, 2008

Ind. Gov't. - Indiana OKs $8.5 million payout to some state workers

The ILB has a lot of additional information on this settlement. First, the news reports. Christine Won of the Indianapolis Star writes:

For 20 years, the state required some of its employees to work more hours than those in other state agencies yet paid them the same.

Now it appears the state is going to pay for that decision -- as much as $8.5 million.

The state reached a tentative agreement Monday on a class-action lawsuit that could affect an estimated 15,000 state employees who, from 1973 to 1993, worked 40-hour weeks but received the same pay as others in similar jobs who worked 37.5 hours a week.

The lawsuit was filed 15 years ago but was delayed repeatedly. The suit was scheduled to go to trial today. * * *

John Kautzman, the attorney representing the plaintiffs, said the state would fully compensate the affected employees up to $8.5 million, including compensation pay for those extra 2.5 hours per week, fees and expenses. Attempts to reach the state attorney general's office for comment were unsuccessful.

Claim forms will be available to potentially affected current and former state employees in the next month, and they will have 45 days to file them. A judge will determine who is entitled and what requirements have to be met. For example, it's not clear whether families of employees who have died during the past 15 years will be compensated.

According to Kautzman, if the calculated total amount exceeds $8.5 million, the state can back out of the settlement and resume trial or pay off the remainder. A tentative hearing is scheduled for mid-October.

"We're thrilled we have brought 100 percent relief to all potentially affected claimants," Kautzman said on behalf of his Downtown law firm, Ruckelshaus Kautzman Blackwell Bemis & Hasbrook. * * *

The unequal pay system ended two months after the lawsuit was filed in 1993, when the state mandated 37.5-hour weeks across the board.

"I guess the state woke up to the problem when we filed the lawsuit," Kautzman said. "It was a widespread issue in the state."

The 1993 lawsuit was the second of its kind. In 1991, 35 state employees sued after they learned about the discrepancy.

That suit received a boost when an appellate court affirmed an existing state regulation guaranteeing equal pay for equal work. The Indiana Supreme Court agreed in 1992, and the state stopped the practice in 1993.

But that still left all the state employees who worked without compensatory pay for the additional 2.5 hours a week during the period from 1973 to 1993. That led to the second lawsuit, filed in 1993.

Patrick Guinane of the NWI Times reports:
Indiana agreed Monday to pay up to $8.5 million to settle a class-action lawsuit brought on behalf of thousands of state employees who worked longer work weeks than similarly paid peers.

The preliminary settlement, which calls for the state to pay another $4 million in plaintiff legal fees, was reached a day before the case was scheduled for trial in Marion County. The dispute, dating to 1993, covers an estimated 15,000 workers who toiled 40 hours a week while state employees in comparable positions received the same pay for 37.5-hour weeks. * * *

John Kautzman, one of the Indianapolis attorneys who represented the workers, said settlement negotiations began last week, continued through the weekend and a judge approved the agreement on Monday.

"It is essentially calling for each claimant that has been affected by this situation to be paid 100 cents on the dollar for the full amount of their back pay claim," Kautzman said.

But the deal allows the state to walk away from the settlement and proceed to trial if the total claims exceed $8.5 million.

"It's simply based on the fact that no on knows on a case this old how many claimants are going to come forward," Kautzman said.

The work-week discrepancy covers employees who were on the state payroll between 1973 and 1993. The dispute was caused by conflicting state law and personnel directives.

The General Assembly passed a 1953 law establishing a 37.5-hour week for state office workers. Fourteen years later, a state personnel board set a 40-hour week for employees of state hospitals and other institutions. In 1993, the state personnel director established a standard 37.5-hour week for all state workers.

A spokeswoman for Indiana Attorney General Steve Carter confirmed the details of the settlement but declined further comment Monday. An Oct. 20 court hearing has been scheduled to consider final approval of the settlement.

This story from Reuters, dated August 15th gives necessary background information, such as the name of the case and the court involved. Some quotes:
A lawsuit brought by Indiana state employees who worked longer hours than comparable employees without additional pay is scheduled to go to trial on Tuesday, August 19, in Marion Superior Court.

The $42 million class action suit, Paula Brattain et al v. Richmond State Hospital et al, (cause no. 49D11-0108-CP-1309) represents an estimated 15,000 state employees at state institutions and offices who were required to work a 40-hour week while employees in similar positions at other state institutions and offices were receiving comparable pay for a 37.5-hour week. * * *

The State of Indiana corrected the pay disparity in 1993 after an appeals court ruled in favor of 35 employees that challenged the State's policy. Following that decision, a new state directive based all salaries for full-time employees on a 37.5-hour week. This class action suit followed. But the State has long resisted compensating employees who worked for years at an effective hourly rate lower than that earned by other state employees in comparable positions.

John F. Kautzman of Ruckelshaus Kautzman Blackwell Bemis and Hasbrook, an attorney for the employees, said, "For two decades the State of Indiana failed to meet the most basic standard of fairness -- equal pay for equal work -- and short-changed thousands of employees. Now the State continues to fight tooth and nail to avoid compensating employees who worked for years at a lower rate than peers with the same job description and pay grade. If the State won't rectify this plain injustice, we're confident that the Court will."

The ILB talked with Mr. Kautzman this morning to fill in some details. The 1991 Court of Appeals decision involving 35 employees was Arden & Coulter v. State Employees' Appeals Commission (578 N.E.2d 769). Transfer was denied by the Supreme Court in 1992. Early in 1993 the present suit was filed as a class action. Two months later, the State changed all state employee hours to 37.5.

Why 15 years? A litany of factors including slow discovery, a number of interlocutory appeals, a summary judgment in the 90s that the State tried to appeal.

The reported $4 million in attorney fees (on top of the $8.5 for the workers) includes expenses - $3.5 million plus expenses - and part of it goes to a specialty class action firm out of Houston, Susman Godfrey.

What about interest? By law, the State is not liable for prejudgment interest.

Who is in the class? No easy answers. It is a subset of the people who worked 40 hours a week during the period from 1973 to 1993, those in a split job classification, where part of the members worked 37.5 hours and part worked 40 hours, but both received the same compensation. An example would be a clerk-typist who was forced to work 40 hours per week at one of the state institutions, while other clerk-typists in the same job classification at the Statehouse worked only 37.5 hours for the same pay.

Posted by Marcia Oddi on August 19, 2008 08:50 AM
Posted to Indiana Government