STATE OF CONNECTICUT
THE STATE COMPTROLLER
55 ELM STREET
HARTFORD, CONNECTICUT 06106-1775
MEMORANDUM NO. 2009-14
May 6, 2009
TO THE HEADS OF ALL STATE AGENCIES
|Attention:||Chief Administrative and Fiscal Officers, Business Managers, and Payroll and Personnel Officers|
||Retroactive Salary Increases, Retroactive Annual Increments and Lump Sum Payments for Retired and Separated Maintenance and Service (NP-2) Bargaining Unit Employees|
The interest arbitration award between the State of Connecticut and the Connecticut Employees Union Independent concerning the Maintenance and Service (NP-2) bargaining unit for the period July 1, 2008 through June 30, 2011, which took effect on April 25, 2009 by operation of CGS Section 5-278(b).
II. ELIGIBLE EMPLOYEES
Maintenance and Service bargaining unit (NP-2) employees who were actively employed on July 1, 2008 but have since retired or separated from State service.
III. INSTRUCTIONS TO ACTIVATE RETIRED OR SEPARATED
Core-CT has created a job aid titled "Check List for Retroactive Payments to Terminated Employees" which is posted on the Core-CT website. Agencies should refer to this job aid for assistance in activating terminated and retired employees for the purpose of making retroactive payments.
IV. PAYROLL PROCEDURES FOR RETROACTIVE PAYMENTS FOR
RETIRED AND SEPARATED EMPLOYEES
Payroll procedures for processing retroactive payments are contained in Office of the State Comptroller's Memorandum 2009-11, issued April 24, 2009. Please refer to that memorandum for retroactive compensation information.
V. RETROACTIVE PAYMENTS FOR RETIRED AND SEPARATED
When calculating the retroactive payments, calculate to the date of retirement or separation from state service. For the period July 1, 2008 through date of separation, agency staff must calculate and process the following retroactive payments manually. The retroactive payments should reflect the additional compensation due as a result of the manual calculation of the retroactive difference due on the biweekly and overtime payments made to impacted former employees during the aforementioned dates and lump sums as applicable.
Such payments are subject to mandatory deductions: federal withholding tax and state income tax annualized, social security tax and retirement contributions.
An interest penalty of 5% is payable if all the retroactive amounts due the employee under the arbitration award are not paid in the check dated May 8, 2009.
A. Retroactive Annual Increments and
Retroactive Lump Sum Payment at Maximum
Step for Retired and Separated Employees
Employees are eligible to receive annual increments and lump sum payments for July 2008 or January 2009 in accordance with existing practice.
|Annual Increment and
Lump Sum Date
|July 1, 2008||07/01/08 - date of separation||05/08/09|
|January 1, 2009||12/19/08 - date of separation||05/08/09|
B. Retirement Procedures
The additional retroactive compensation must be reported to the Retirement Services Division in the manner described below as such additional payments may have an impact for retirement benefit purposes.
Each agency must provide the Retirement Services Division Audit Unit with a list of affected retirees by name, employee number and retirement date accompanied by the worksheet detailing the calculations utilized for these adjustment payments. Worksheets for separated employees must also be provided with a clear notation on each worksheet indicating such status.
VI. 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-2 interest arbitration award issued March 14, 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.
VII. CALCULATION OF INTEREST PENALTY
An interest penalty of 5% is payable for the period March 14, 2009 until the date the eligible employee receives all retroactive amounts due him/her under the arbitration award.
In the example below, the check date of *May 22, 2009 is being used. The agency must calculate to the actual check date of the payment.
69 days/360 days multiplied by 5% multiplied by the retroactive payment:
Example: If the amount owed is $300:
69 days/360 days x .05 x $300 = $2.83
Multiply the retroactive amount paid by the number of days between March 14, 2009 and the date of the payment,*May 22, 2009 (which is 69 days) divided by 360; then the product multiplied by 5%.
VIII. PAYROLL PROCEDURES
A. Payroll Procedures for Retroactive Annual Increments and
Retroactive Lump Sums
On the Additional Pay Page: Amount; Earnings Code RTR.
B. Payroll Procedures for Interest
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.
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.
Direct the list of retirees and separated employees with a copy
of the calculation worksheet to:
Office of the State Comptroller
Retirement Services Division, Audit Unit
55 Elm Street
Hartford, CT 06106
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