Indiana Supreme Court Cuts Employee’s Wage and Hour $18M Damages

The Indiana Supreme Court on Friday said that the $18 million back pay recovery of non-merit employees in a long-running class action over hourly wages with the state should be cut because of their “unreasonable” delay in seeking recovery.

The almost 19-yearlong dispute involved claims by merit and non-merit employees of Indiana state who said that they had worked 40-hour weeks for the same pay as state employees in similar positions who worked only 37 1/2-hour weeks, according to the court, which noted the non-merit employees had waited until 1993 to bring the claims.

The ruling reversed a finding by the Indiana Court of Appeals in 2010 that non-merit employees were owed back pay for the entire class period from 1973 until 1993, when the state ended its split-pay system.

For more than 25 years until 1993, Indiana state employees who worked 40-hour weeks received a lower hourly pay than other employees who worked only 37 1/2-hour weeks because of the split-pay system, according to the order.

“The delay in bringing non-merit employee claims was unreasonably long,” the state Supreme Court said. “While there may have been no case law recognizing a clearly defined, actionable claim during these decades, nothing barred the non-merit plaintiffs from seeking redress under the just compensation or equal privileges clauses of the Indiana Constitution.”

Stating that the back pay recovery for non-merit employees should be restricted in the same way that the Indiana Court of Appeals had previously indicated for merit employees in 2010, the state Supreme Court remanded the case to recalculate the non-merit employees’ back pay.

The Indiana Court of Appeals had decided in 2010 to limit the back pay recovery of merit employees from a period originally spanning 20 years from 1973 to 1993, to roughly two months, from 10 days before they filed their complaint in July 1993 to September of that year when the state ended the pay practice in dispute, according to that order.

The finding, that a provision in the Indiana Administrative Code limited the amount of back pay the merit employees could receive, had the effect of slashing their recovery by roughly $23 million, according to court documents. The merit and non-merit employees had originally been given an award of $42.4 million.

The case is Richmond State Hospital et al. v. Brattain et al., case number 49S02-1106-cv-327, in the Indiana Supreme Court.

View the original Law360 article here.