MEMORANDUM NO. 99-41
October 14, 1999
TO THE HEADS OF ALL STATE AGENCIES
|ATTENTION:||Chief Administrative and Fiscal Officers, Business Managers, and Payroll and Personnel Officers|
|SUBJECT:||Lump sum Grievance Settlement and Interest Penalty for Administrative and Residual Retiree's (P-5)|
P-5 employees who are at maximum receive a lump sum payment in lieu of an annual increment; however, the State did not issue a lump sum payment to those employees who retired between July 1, 1997 and October 1, 1997 because these employees left state employment before the October 1, 1997 payment became due.
Also, pursuant to Section 5-276b (b) of the Connecticut General Statutes, an interest penalty of 5% per annum is to be paid for late implementation of the provisions of the P-5 Arbitration Award dated July 6, 1999.
II. PAYROLL PROVISIONS: Effective immediately, P-5 employees who were at the maximum salary step and who retired between July 1, 1997 and October 1, 1997 are eligible for a lump sum payment. The amounts are dependent upon the employee's salary grade. Payment must be made in accordance with the following schedule:
|Salary Grade||Bonus||Salary Grade||Bonus||Salary Grade||Bonus||Salary Grade||Bonus|
III.CALCULATION OF INTEREST PENALTY
A. Agencies should calculate the interest penalty as follows:135/360 multiplied by 5% multiplied by the employee's salary grade bonus amount.
B. Agencies that already made the lump sum payment after August 5, 1999, should calculate the interest penalty as follows:
IV. PAYROLL PROCEDURES:A. Lump Sum: If the payment has not been made, the lump sum payment should be entered by the appropriate agencies effective with the pay period October 22, 1999 through November 4, 1999 (check date November 19, 1999) using D/OE 18 Merit Bonus and Major-Minor 01-010. The agency payroll staff must review the Employee's Masterfile to ensure an employee's eligibility for the lump sum.
These lump sums are subject to mandatory deductions: i.e., federal withholding and state income tax annualized, social security tax, retirement contributions, and garnishments (if applicable).
Employees who were deleted from the masterfile must be set up as a new employee. You must enter a pay code 1, 2, or 3 for these individuals to avoid generating a regular pay check in the system. In lieu of 301 documentation, a memo must be submitted to the Comptroller's Payroll Services Division listing the employees added to the payroll system for the purposes of making this payment.B. Interest Penalty: Interest payments will be identified as INTRST ARB AWD. This interest penalty should be paid by the check date November 19, 1999 (pay period October 22, 1999 through November 4, 1999) using D/OE Code 1U and Major-Minor 01-920.
Interest paid on a wage award is not considered wages (IRS Revenue Ruling 72-268). Therefore, the subject interest penalty paid would not be subject to withholding for income taxes, employment taxes and retirement contributions.
V. GENERAL: Questions may be directed as follows:
|Policy and Procedure:||Agency Human Resource Officer;|
|Arbitration Agreement Interpretation:||Office of Labor Relations, (860) 418-6217;|
|Memorandum Interpretation:||Office of the State Comptroller,|
|Policy Services Division, (860) 702-3440;|
|Payroll Procedures:||Office of the State Comptroller,|
|Payroll Services Division, (860) 702-3463.|
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