SEATTLE POST-INTELLIGENCER REPORTER

At a time when King County officials are scraping for scarce dollars to cover essential government services, they're about to fork over $9.2 million to settle two employee lawsuits arising from payroll screw-ups.

The biggest outlay is $7 million being paid to as many as 1,100 deputies and other hourly-wage employees of the King County Sheriff's Office, plus $557,500 for other settlement awards and the county's settlement administration costs.

The sheriff's employees sued over bureaucratic delays by the office in violation of labor laws requiring timely payment of overtime and other special pay. The $7 million represents damages in addition to the overtime, which has been paid.

"It comes at the worst possible time for the general fund," the county's main operations fund, said Larry Phillips, D-Seattle, the County Council budget chairman. Next week the council begins the 2004 budget process faced with revenue projections about $20 million less than current spending levels.

The other lawsuit settlement, approved by the County Council yesterday, will cost $1.67 million for underpaying hourly county employees who worked one or two days more per year than they were paid for.

As if officials needed a reminder of how the settlement money might have been used instead, the council yesterday also heard a chorus of leaders of county human-services agencies -- dealing with child abuse, domestic violence, homelessness, hunger and other social ills -- plead to be spared from further reductions in their bare-bones budgets.

They urged support of a hotly debated plan by County Executive Ron Sims to earmark $7 million in annual rental income from the Cedar Hills landfill for social services spending, which has been trimmed 45 percent since 1999, to $11 million in 2003. The council deferred a decision until it gets into the budget process.

The $9.2 million that the county would shell out as a result of the two Superior Court lawsuits doesn't include the value of future extra vacation time -- about $4.3 million -- that some of the groups of employees agreed to accept in lieu of cash settlements that would have stripped money from other budget needs.

If the suits go to trial, they could end up costing the county several times as much, officials have said.

"Our intent in crafting these (settlements) was very much to minimize the cash cost and minimize the burden to the county," county Budget Director Steve Call said.

"We're settling an acknowledged liability on the part of the county for very little cash. And the vacation accrual can be used over several years."

To try to minimize the impact on the budget, county officials, who have been aware of the lawsuits for several years, have set aside reserves in a risk-abatement fund since about 2001 "to have the wherewithal to pay for these settlements," Call said.

Both settlements would be paid with money appropriated from the 2003 budget and are subject to approval by the Superior Court.

These are the lawsuits facing the county:

A suit known as the Dupuis case, named after one of its plaintiffs, was the one for which the council approved a $1.67 million settlement yesterday.

It arose after workers and union representatives discovered that the county had been paying hourly employees for working 2,080 hours a year -- 40-hour work weeks for 52 weeks -- but in some years the employees actually worked eight or 16 hours more than that.

The settlement, covering the past four years, compensates current hourly-wage employees with extra vacation time and former employees with cash. It includes $651,000 being paid to the plaintiffs, $375,000 for the plaintiffs' legal fees and $642,000 for the cost to the county of defending the suit and administering the settlement.

The settlement of the other suit, known as the Covey case, is pending before the council Budget Committee and arose from illegally late payments of overtime, holiday pay and other special pay to as many as 1,100 deputies, sergeants and civilian employees of the Sheriff's Office over the past three years.

The $7 million to be paid to the plaintiffs would include their attorneys' fees. The council is being asked to appropriate a total of $7.56 million for the settlement and related costs. Like those in the Dupuis case, some of the workers covered in the Covey case also were underpaid for their number of annual work days.

Phillips, the council budget chairman, is incensed about the cost of the Covey case, which he attributed to "just flat management issues" by Sheriff Dave Reichert's staff.

"The $7 million is money that simply goes to damages," Phillips said. "It is simply a failure to follow the law and pay overtime in a timely fashion. It's like failing to pay your Visa bill on time and getting a whopping interest charge."

Sue Rahr, chief of field operations for the Sheriff's Office, said it paid most overtime on time, but "there were a couple of anomalies that occurred" while the office was switching from a manual payroll system onto an electronic system, resulting in some delays.

Chris Vick, an attorney for the plaintiffs, said, "In some cases, people went as long as six months without being paid."

In a letter to the council requesting the appropriation, Sims said practices instituted by the sheriff "to provide management oversight of such payments evolved into requiring several approval signatures along with the attendant paperwork. These practices resulted in significant time delays in employee payments."

Rahr said, "When you have a very large department with very complex labor contracts, there needs to be enough time to first determine that the overtime was appropriate, and then to calculate how much the overtime is."

To correct the problems, the operations chief said, "we're adding some staff. We have further automated a lot of the overtime processing. We've cut out some steps in the approval process so it doesn't have to go through so many levels of the chain of command to be approved. I would say a majority of the improvements have been through automation."

"The law has a very stiff penalty," she added, "and I'll have to be candid and say that there are attorneys who really like this law because they can get huge settlements" from employers with large numbers of workers.

She said the U.S. Fair Labor Standards Act allows double damages although she said the settlement is "significantly below double damages. The settlement could have been far in excess" of what it is.

Vick agreed, remarking, "If this thing goes to trial and the county loses, it'll probably cost the county two and a half times the amount" of the proposed settlement.

Seattle P-I

-- Anonymous, October 07, 2003

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Response to County to pay millions in 2 suits

WA - County spends $4M on computer upgrade

-- Anonymous, October 07, 2003