COMPTROLLER'S SEAL STATE OF CONNECTICUT

STATE OF CONNECTICUT

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

INTERDEPARTMENTAL MEMORANDUM

February 20, 2009

The Honorable Theresa C. Lantz, Commissioner
Department of Correction
24 Wolcott Hill Road
Wethersfield, CT 06109

Subject: Interest Penalty for American Federation of State County and Municipal Employees (AFSCME) NP-4 bargaining unit for the period July 1, 2008 through June 30, 2011

I. AUTHORITY

The Interest Arbitration Award between the State of Connecticut and the American Federation of State County and Municipal Employees (AFSCME) NP-4 bargaining unit for the period July 1, 2008 through June 30, 2011 which took effect on February 13, 2009 by operation of CGS Section 5-278(b).

II. RETROACTIVE PAYMENTS

As stated in Comptroller's Interdepartmental Memorandum dated February 11, 2009, the retroactive payments that are effective July 1, 2008, July 4, 2008 and January 1, 2009 must be calculated by agency staff and processed in the check dated February 27, 2009. If a later check date is used, interest will be due.

III. INTEREST PENALTY

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-4 interest arbitration award issued January 5, 2009. Whenever payments called for in an interest arbitration award are not paid within sixty days of the date the award was issued, the agency will have an obligation to pay interest on late payments.

IV. CALCULATION OF INTEREST PENALTY

An interest penalty of 5% is payable for the period January 5, 2009 until the date the eligible employee receives all retroactive amounts due him/her under the arbitration award.
In the examples below, the check date of *March 13, 2009 is being used. The agency must calculate to the actual check date of the payment.
66 days/360 days multiplied by 5% multiplied by the retroactive payment:

Example: If the amount owed is $300:

66 days/360 days x .05 x $300 = $2.75
Multiply the retroactive amount paid by the number of days between January 5, 2009 and the date of the payment,*March 13, 2009 (which is 66 days) divided by 360; then the product multiplied by 5%.

V. PAYROLL PROCEDURES FOR INTEREST ARBITRATION AWARD

On the Additional Pay Page: Amount; Earnings Code INT.

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.

VI. PAYROLL PROCEDURES FOR RETROACTIVE SALARY INCREASE

On the Additional Pay Page: Amount; Earnings Code RTR.

VII. GENERAL

Questions may be directed as follows:
Payroll Procedures: Office of the State Comptroller, Payroll Services Division, (860) 702-3463;
Memorandum Interpretation: Office of the State Comptroller, Fiscal Policy Division, (860) 702-3440.

NANCY WYMAN
STATE COMPTROLLER

NW:ED

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