Council 13, American Federation of State, County & Municipal Employees ex rel. Fillman v. Commonwealth

986 A.2d 63, 604 Pa. 352, 15 Wage & Hour Cas.2d (BNA) 1270, 2009 Pa. LEXIS 2771
CourtSupreme Court of Pennsylvania
DecidedDecember 28, 2009
StatusPublished
Cited by30 cases

This text of 986 A.2d 63 (Council 13, American Federation of State, County & Municipal Employees ex rel. Fillman v. Commonwealth) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Council 13, American Federation of State, County & Municipal Employees ex rel. Fillman v. Commonwealth, 986 A.2d 63, 604 Pa. 352, 15 Wage & Hour Cas.2d (BNA) 1270, 2009 Pa. LEXIS 2771 (Pa. 2009).

Opinions

[67]*67 OPINION

Chief Justice CASTILLE.

We consider here whether the Commonwealth Court correctly declared that Article III, Section 24 of the Pennsylvania Constitution (“Section 24”), Pa. Const. art. III, § 24, is not preempted by the Fair Labor Standards Act of 1938 (“FLSA” or “Act”),1 and that accordingly, Section 24 prohibits the Governor of the Commonwealth from paying the wages of state employees who are covered by FLSA and required to work from monies in the Commonwealth’s Treasury, but not yet appropriated by the General Assembly. For the following reasons, we conclude that this matter is justiciable; that under the Supremacy Clause of the United States Constitution, U.S. Const art. VI, cl. 2, Section 6 of FLSA preempts Section 24; and that Appellants/Cross-Appellees are entitled to the declaratory judgment they requested. Therefore, in the appeal at No. 60 MAP 2008, we reverse the Commonwealth Court’s Order. In the cross-appeal at No. 66 MAP 2008, we affirm the Commonwealth Court’s Order in part and dismiss the cross-appeal in part as moot.

I

By way of background, these cross-appeals arise from the process by which the Commonwealth’s yearly budget and budget appropriations are adopted and the consequences of a failure to timely discharge those duties. The Commonwealth’s fiscal year begins on July 1st of each calendar year and ends on June 30th of the next calendar year. 71 P.S. § 237(a). Article VIII, Section 12 of our Constitution directs the Governor to submit an annual budget for the General Assembly’s consideration at a time set by law; Article VIII, Section 13 requires the General Assembly to adopt the budget for the ensuing fiscal year and to make operating budget appropriations. Pa. Const. art. VIII, §§ 12, 13. Under Section 24, the General Assembly’s budget appropriations are an essential prerequisite to expending money from the Commonwealth’s Treasury; that is, without such appropriations, state monies, for the most part, may not be spent. Section 24 provides:

No money shall be paid out of the treasury, except on appropriations made by law and on warrant issued by the proper officers; but cash refunds of taxes, licenses, fees, and other charges paid or collected, but not legally due, may be paid, as provided by law, without appropriation from the fund into which they were paid on warrant of the proper officer.

Pa. Const. art. III, § 24.

For each fiscal year, the General Assembly enacts a general appropriations act, so that state funds are available to the Executive, Legislative, and Judicial branches of the Commonwealth for the payment of, inter alia, the salaries and wages of state employees. See Pa. Const. art. III, § 11 (“The general appropriations bill shall embrace nothing but appropriations for the executive, legislative and judicial departments of the Commonwealth, for the public debt and for public schools. All other appropriations shall be made by separate bills, each embracing but one subject.”). See, e.g., General Appropriation Act of 2007 (“GAA 2007”) § 104(a) (“The following sums set forth in this act ... are specifically appropriated from the General Fund to the several hereinafter named agencies of the Executive, Legislative and [68]*68Judicial Departments of the Commonwealth for the payment of salaries, wages or other compensation and travel expenses ... and for payment of any other expenses as provided by law or by this act, necessary for the proper conduct of the duties, functions and activities ... set forth for the fiscal year beginning July 1, 2007... .”)•

At the end of each fiscal year on June 30, except in limited circumstances, money that was appropriated, but not spent, committed or encumbered, lapses back to the fund from which it came. See, e.g., GAA 2007 § 1906 (“[E]xeept as otherwise provided by law ... that part of all appropriations [made in this act] ... unexpended, uncommitted or unencumbered as of June 30, 2008, shall automatically lapse as of that date.”). Accordingly, if the General Assembly does not enact a general appropriations act by July 1 of each year, except for those funds that have not lapsed, Section 24 prohibits money from being paid out of the State Treasury to the Commonwealth’s Executive, Legislative, and Judicial branches, which consequently prevents the payment of wages to state employees.

In this case, the salient facts are undisputed. The Commonwealth’s 2007-2008 fiscal year began on July 1, 2007, and was to end on June 30, 2008. On February 5, 2008, Governor Edward G. Rendell submitted a proposed budget for fiscal year 2008-2009 for the General Assembly’s consideration. The Governor also devised a plan as to what payments of wages and salaries to Commonwealth employees the State Treasury would or would not make in the event that the General Assembly did not enact a general appropriations act by June 30, 2008.

The plan was reflected in an Inter-agency Agreement entered by the Office of the Governor and the State Treasury Department on May 22, 2008. In relevant part, the Interagency Agreement stated that because FLSA “requires that employers, including the Commonwealth, pay certain employees wages and salaries in a timely manner” and Section 24 “requires that ‘[n]o money shall be paid out of the treasury, except on appropriations made by law and on warrant issued by the proper officers[,]’ ”

the Administration has concluded that without the enactment of an Operating Budget, (1) employees covered by the FLSA whose duties are not necessary to insure the health, safety and welfare of the citizens, cannot be permitted to perform their duties since the Commonwealth has no authority to make payments to those employees; (2) employees whose duties are necessary to insure the health, safety and welfare of the citizens must continue to perform their duties and, notwithstanding the Constitutional prohibition against payments, those employees who are covered by the FLSA must be paid in a timely manner; (3) employees not covered by the FLSA may continue to perform their duties and may be paid in arrears when an Operating Budget is enacted; and (4) employees paid from sources other than an Operating Budget may continue to perform their duties and may be paid in a timely manner.

Petition for Review in the Nature of a Declaratory Judgment (“Petition”), Exhibit D, Interagency Agreement at 2-3. Therefore, as to the payment of payroll obligations in the event that no budget was enacted by June 30, the Interagency Agreement provided:

From and after July 1, Treasury shall make timely payments for wages and salaries to (a) Commonwealth employees necessary to insure the health, safety and welfare of the citizens of Pennsylva[69]*69nia who are covered by the FLSA, and (b) Commonwealth employees paid from sources other than an Operating Budget. Commonwealth employees not covered by the FLSA and not paid from sources other than the Operating Budget shall be paid in due course, in arrears, following the enactment of an Operating Budget.

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Bluebook (online)
986 A.2d 63, 604 Pa. 352, 15 Wage & Hour Cas.2d (BNA) 1270, 2009 Pa. LEXIS 2771, Counsel Stack Legal Research, https://law.counselstack.com/opinion/council-13-american-federation-of-state-county-municipal-employees-ex-pa-2009.