STATE OF CONNECTICUT
NANCY WYMAN COMPTROLLER	OFFICE OF THE STATE COMPTROLLER 55 ELM STREET HARTFORD, CONNECTICUT 06106-1775	MARK OJAKIAN DEPUTY COMPTROLLER

MEMORANDUM NO. 2001-50

August 20, 2001

TO THE HEADS OF ALL STATE AGENCIES

I. AUTHORITY

Pursuant to Section 5-276b of the Connecticut General Statutes, an interest penalty of 5% per annum is to be paid for late implementation of the provisions of the NP-2 Interest Arbitration dated June 15, 2001. The 5% is payable for the period June 15, 2001 until the date an employee receives all the retroactive amounts due him/her under the award.

II. CALCULATION OF INTEREST PENALTY

Comptroller's Memoranda No. 2001-42 and 2001-44 directed agencies to pay the retroactive amounts due on the Arbitrated Award between the State of Connecticut and NP-2 bargaining unit in the pay check dated August 24, 2001.

 

How the interest penalty is calculated depends upon in which pay check the award was implemented, the pay check dated August 24, 2001 or the pay check dated September 7, 2001. Regardless of the check date, two separate interest penalty calculations must be performed to comply with the retroactive amounts due on the Arbitrated Award between the State of Connecticut and the NP-2 bargaining unit.

 

A. Agencies that implement the award in the pay check dated August 24, 2001 should calculate the interest penalty as follows:

 

1. Retroactive Payments from July 1, 1999 through June 30, 2001

 

70 days/360 days multiplied by 5% multiplied by the retroactive lump sum payment.

Example: If retroactive amount was $1,000:

70 days/360 days x .05 x $1,000 = $9.72

Multiply the retroactive lump sum amount paid by the number of days between June 15, 2001 and the date of payment of the retroactive amount, August 24, 2001 (which is 70 days) divided by 360; then the product multiplied by 5%.

 

2. Retroactive Payments from July 1, 2001 through July 26, 2001 and the scheduled payment of July 27, 2001 through August 24, 2001

 

54 days/360 days multiplied by 5% multiplied by the lump sum payment.

Example: If the lump sum amount was $300:

54 days/360 days x .05 x $300 = $2.25

Multiply the lump sum amount paid by the number of days between July 1, 2001 and the date of the payment, August 24, 2001 (which is 54 days) divided by 360; then the product multiplied by 5%.

 

B. Agencies that implement the award in the pay check dated September 7, 2001 should calculate the interest penalty as follows:

 

1. Retroactive Payments from July 1, 1999 through June 30, 2001

 

84 days/360 days multiplied by 5% multiplied by the retroactive lump sum payment.

Example: If retroactive amount was $1,200: 

84 days/360 days x .05 x $1200 = $14.00

Multiply the retroactive lump sum amount paid by the number of days between June 15, 2001 and the date of payment of the retroactive amount, September 7, 2001 (which is 84 days) divided by 360; then the product multiplied by 5%.

 

2. Retroactive Payments from July 1, 2001 through August 23, 2001 and the scheduled payment of August 24, 2001 through September 7, 2001

 

68 days/360 days multiplied by 5% multiplied by the lump sum payment.

Example: If the lump sum amount was $400:

 68 days/360 days x .05 x $400 = $3.77

Multiply the lump sum amount paid by the number of days between July 1, 2001 and the date of the payment, September 7, 2001 (which is 68 days) divided by 360; then the product multiplied by 5%.

 

Agencies that do not implement the award in the August 24, 2001 pay check or the September 7, 2001 pay check must calculate to the check date the payment is made.

 

Agencies should refer to Office of Labor Relations General Notice No. 96-23 - Payment of Interest Payments for Interest Arbitration Awards dated May 10, 1996.

III. PAYROLL PROCEDURES

Agencies that will be implementing the award in the pay check dated August 24, 2001 should pay the interest penalty in the pay check dated September 7, 2001.

 

Agencies that implement the award in the pay check dated September 7, 2001 should also pay the interest penalty in the pay check dated September 7, 2001.

 

Interest Arbitration Award

 

1. On-Line: Screen 047 or 190; R-3; Amount; D/OE Code 1U.

 

2. Remote Job Entry: ZT Transaction; Same as above.

 

Agencies should use Major/Minor 01-920, Interest Penalty - Payroll Awards as the expenditure object code.

 

Interest paid on a wage award is not considered wages (IRS Revenue Ruling 72-268). Therefore, the subject interest penalty would not be subject to withholding for income taxes, employment taxes, and retirement contributions.

IV. GENERAL

Questions may be directed as follows:

 

Payroll Procedures: Office of the State Comptroller, Payroll Services Division, (860) 702-3463;

 

Remote Job Entry: Office of the State Comptroller, Payroll Services Division, (860) 702-3458;

 

Memorandum Interpretation: Office of the State Comptroller, Policy Services Division, (860) 702-3440;

 

Contract Issues: Agency Personnel Officer.

 

NANCY WYMAN
STATE COMPTROLLER

NW:CH

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