A new payroll system that has given the University of California years of trouble just uncovered another problem: UC has routinely underpaid thousands of its employees by small dollar amounts on each paycheck.
In a Dec. 1 letter to the U.S. Department of Labor, the university asked for assistance in resolving what it deemed a “compliance issue.” While working to switch over to the new payroll system, a lawyer for the Board of Regents wrote, UC discovered that there have been regular issues in calculating extra pay, such as overtime.
“The reasons for these failures are complex,” the letter stated, pointing to a variety of incompatible timekeeping methods across its 10 campuses. “We would like to reach a suitable resolution that would provide retroactive payments to affected employees.”
The extent of the issue is unclear. UC declined to specify a number of employees affected, but a “frequently asked questions” list on the university’s website said “less than 20% of UC’s workforce,” which could mean up to nearly 40,000 people.
Spokeswoman Dianne Klein said the “vast majority” of cases were less than $5 per biweekly paycheck and more than half were less than $1. Some employees were also slightly overpaid, she added.
The matter is now under investigation by the Department of Labor’s Wage and Hour Division. A spokesman said the agency could not provide further information on an open, active case.
In its FAQ, UC said it is working to address up to three years of past underpayments, the statute of limitations under federal law. Klein would not say whether the problem stretched back beyond that.
“Because it’s come to light relatively recently, there’s no way to know how long it’s been going on,” she said.
The small underpayments can add up: An employee who missed out on $1 per paycheck for three years would be owed $78. If every affected worker were due that amount, it comes out to more than $3 million.
Wary that UC was trying to strike a deal with the Department of Labor, the university’s largest labor unions sent their own letter on Dec. 15 requesting a waiver on the three-year statute of limitations and a full repayment of wages owed, plus interest and an equal amount in damages.
“Unfortunately, each of our unions is all-too-familiar with the University’s ability to understate the scope and severity of a problem for which they are responsible, and its heavy reliance on delay,” the letter stated. “Even ‘very small’ underpayments result in our employees being shorted millions of hard-earned overtime dollars.”