Kaye Scholer Represents California State Controller in Protecting State Employees' Salaries

On July 16, 2010, Sacramento County Superior Court Judge Patrick Marlette declined to require the California State Controller John Chiang to comply with Governor Arnold Schwarzenegger’s order to decrease all state employees salary to the federal minimum of $7.25 per hour until the budget is enacted. Kaye Scholer Partners Steven S. Rosenthal, Marc S. Cohen and Jay W. Waks successfully represented the State Controller with valuable assistance from Alan Palmer, Bryant Delgadillo, Jonathan Rotter, Darya Pollak Laufer, Susanna Chu and Jackie Sumer.

“Today’s decision affects over 300,000 California state workers and denies Governor Schwarzenegger’s attempt to force the Controller to pay all state workers either the minimum wage or no wage at all,” said Mr. Rosenthal, Chair of Kaye Scholer’s Complex Litigation Department in Washington, DC.

“These issues are likely to recur elsewhere as state and city governments grapple with their inability to adopt budgets given looming revenue shortfalls,” said Mr. Cohen, Chair of Kaye Scholer’s Business Reorganization and Creditors’ Rights Practice in Los Angeles.

"This decision in favor of our client, the State Controller, reflects the impossibility of the Governor's direction, which we demonstrated, and the principles of fairness that we impressed upon the Court," commented Mr. Waks, Chair of Kaye Scholer’s Employment and Labor Law Group.

Mr. Chiang has argued that the state’s computer system could not handle the minimum-wage request, and dramatically lowering pay for state employees could create legal problems for California. The outcome of the case was featured on ABC7 Los Angeles. Mr. Rosenthal was featured in his oral argument, stating, “as to where we are today, we are in impossible country, it’s not as if we can throw a huge amount of resources and a huge amount of money and come into compliance.”