Minn. City Attempting to Fix Firefighter Overtime Pay Error

June 15--While St. Paul officials say they are closer to collecting $275,000 from firefighters they inadvertently overpaid last year, the city also has agreed to pay out about $50,000 to half of the firefighters in exchange for them not suing.

The agreement took more than a year to reach.

Fire Chief Tim Butler said the overpayment, and the fact that it wasn't resolved in 2015, was a significant contributing factor for him needing to close a salary budget gap last year. That led him to reduce the number of firefighters on the streets by one or two per day for about one-third of October, November and December.

RECOUPING OVERPAYMENT

Collecting the overpayment became complicated because the city tried to recoup some of it by withdrawing from half of the affected firefighters' paychecks. The union representing rank-and-file firefighters said doing so without permission violated state law.

"The issue was never about the city being repaid because we knew they would be," said Mike Smith, International Association of Fire Fighters Local 21 president. "It was about the city not having any safety checks in place when they started this payroll system. ... Let's not forget it was my members that reported the problems to the city. They started calling the city and saying something's wrong. ... How does $275,000 get through the system and nobody notices it?"

Meanwhile, 11 members of a smaller union in the fire department, the Fire Supervisory Association, were overpaid. They were not among those whose subsequent paychecks were deducted.

"The city offered the F.S.A. a 'monetary incentive' to repay the overpayment," said Stuart Bestland, the association's president, in an email. "I declined their offer. It was an honest mistake and it wasn't our money to keep. It's the taxpayers' money. All of our members have paid back the overpayment."

NEW PAYROLL SYSTEM

The problem occurred after St. Paul put a new payroll system in place in January 2015.

A system setting, which St. Paul Human Resources was initially unaware of, resulted in many firefighters' overtime pay being compounded during three pay periods in January, February and May 2015, said Angie Nalezny, St. Paul HR director. Firefighters were the only city employees affected and there have been no problems since May 2015, Nalezny said.

She said 344 firefighters were overpaid, ranging from about $1 to $3,500; the average was $653.

In February 2015, the city took $366 from the paychecks of 172 Local 21 members to begin recouping the money, but restored the funds in the next pay period, Nalezny said.

"They basically said, 'no harm, no foul,' ... but we said, 'When you did it, you broke the law,' " said Jeramiah Melquist, Local 21 treasurer.

Local 21 points to a Minnesota law that states "no employer shall make any deduction ... from the wages due or earned by any employee" without written permission. The statute also says employers who do "shall be liable in a civil action brought by the employee for twice the amount of the deduction."

NEGOTIATING A RESOLUTION

The firefighters did not take legal action, but Local 21 and St. Paul have been negotiating a resolution on and off since it happened.

Nalezny said the city has a legal argument against Local 21's claim that the city violated the state law, though she said "we are trying to settle this as amicably as possible" and avoid the city having to go to court to collect the money that individual firefighters owe the city.

Because of the initial payroll problems, firefighters were concerned whether the system was accurate and if the amount that the city was asking them to repay was accurate, Smith said. The city conducted an internal audit and recently sent firefighters letters with the amounts they owed, as confirmed by the audit.

The affected firefighters have until June 29 to tell the city whether they'll pay the money back in a lump sum or over five or 10 paychecks. The 170 firefighters who had $366 withdrawn from the city (two had smaller amounts taken out) will be eligible for $300 each when they sign a settlement agreement saying they would not sue the city.

FRUSTRATION OVER SITUATION

The city will take a firefighter to court to collect the money if he or she does not pay it back, according to the letter. Local 21 officers said they expect the majority of the firefighters will repay the money, but they won't be surprised if some "are willing to battle the city in court" because they're frustrated by the situation, Smith said.

City administration plans to recommend to the City Council that the $225,000, the net after the settlement is paid, be returned to the fire department budget when it is collected, said Todd Hurley, St. Paul finance director.

The fire department ended last year under budget because, although it was $764,000 over its salary budget (including the $275,000 that had been overpaid to firefighters), the department under spent $1.1 million in services and materials, according to Hurley.

Copyright 2016 - Pioneer Press, St. Paul, Minn.