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Controller Files Cross-Complaint Charging DPA Pay Letter is Illegal

Contact: Hallye Jordan

SACRAMENTO – State Controller John Chiang today filed a cross-complaint in Sacramento Superior Court, alleging the Pay Letter issued by the Department of Personnel Administration (DPA) ordering him to reduce state employee pay to the federal minimum wage is unlawful.

In his cross-complaint, the Controller alleges DPA’s Pay Letter forces him “to choose between violating the Pay Letter or violating various federal and state laws.”

Controller Chiang notes the DPA has not made any serious effort to work with the Controller to reach a resolution of the issues or to provide clarification to the Controller regarding his rights, duties and responsibilities” in paying salaries of state employees during a budget impasse.

In addition, the complaint states that the Pay Letter fails to exempt state employees who are covered by the Dills Act and who have chosen to be represented by a collective bargaining unit, contrary to Government Code section 19826 and state law, which give the Legislature “the exclusive and ultimate authority” over the pay of those represented employees.

The Controller argues that the Pay Letter is unlawful in that it fails to:

  • Exempt employees whose salaries are continuously appropriated and provide the Controller with lawful instructions regarding how to pay those employees, contrary to state law;
  • Identify and exempt employees of the California Department of Corrections and Rehabilitation, who are under the authority of the federal Receiver and the U.S. District Court;
  • Provide the Controller with lawful instructions on how to handle deductions such as federal income tax, state income tax, state disability insurance and state retirement contributions;
  • Provide a way to accurately determine which state employees have worked overtime during a pay period and thus, under the federal Fair Labor Standards Act (FLSA), are entitled to full wages, plus time-and-a-half for those hours worked overtime;
  • Take into account the state’s “negative pay system,” which can only be altered by legislation and collective bargaining; and
  • Take into account the antiquated legacy payroll system’s inability to immediately reduce, and once a budget is enacted, timely restore state employee’s pay, as required by the FLSA.

The Controller filed his cross-complaint based on a ruling by the Third District Court of Appeal ruling in Gilb v. Chiang, in which the appellate panel declined to rule on either the legality of a similar pay letter issued in 2008 or the feasibility of implementing such a pay letter in light of the State’s outdated payroll system. However, the court noted that “unfeasibility would arguably excuse the Controller from the declaratory judgment to comply with (the California Supreme Court’s ruling in) White v. Davis.”

The Controller’s cross-complaint for declaratory relief can be viewed here.