Oregon state employees sue over missing, incorrect wages under new payroll system

A proposed class-action lawsuit claims thousands of state of Oregon employees have been incorrectly paid since the state implemented a new payroll system in December.

“We still have many missing or late paychecks. This has led to people not being able to pay rent, or daycare,” said Andrea Kennedy-Smith, a paralegal for the state’s Child Welfare Services and president of SEIU Local 503, OPEU Local 200, which represents Department of Human Services and Oregon Health Authority employees.

“It’s beyond frustrating, especially for our lower-wage workers that already are not making a livable wage,” she said.

According to the lawsuit, employees have experienced:

• Missing or late paychecks.

• Incorrect pay rates, including incorrect overtime rates.

• Incorrect and excess deductions for retirement, deferred compensation, health and dental benefits and charitable contributions.

• Inadequate wage statements.

• Misreporting of wages to the Oregon Public Employees Retirement System.

• Incorrect accrual and deductions from vacation and leave banks.

• Late payments to employees at retirement or end of employment.

“With the cost of groceries on the rise, gas prices, this has a very serious impact on the day-to-day lives of thousands of state workers,” David Kreisman, a spokesman for Oregon AFSCME, said.

The union, which is not a party to the lawsuit, represents some state workers.

The state’s new payroll system, called Workday, went live Dec. 1, serving about 45,000 employees. The previous system was built in the 1980s.

The first paychecks under the new system were issued Jan. 3.

The lawsuit claims tens of thousands of employees have been affected by the errors. It claims the state should have known before implementing the system that employees would be systemically underpaid.

“Defendant activated Workday for all employees in December 2022 without first verifying that all employees would be paid accurately,” the lawsuit states. “Defendant also did not conduct adequate testing of Workday before it went live.”

The Oregon Department of Administrative Services declined to answer specific questions about the situation, including how many employees have been impacted, how many have outstanding payroll issues, and the status of any fixes.

“With any new system upgrade there can be some challenges in implementation, especially when switching from such a dated system,” DAS communications director Andrea Chiapella said in an email.

“We understand how important it is for employees to be paid accurately and on time, which is why the Department of Administrative Services payroll team and agency payroll teams have been working tirelessly to resolve those issues as quickly as possible,” she said.

State employees are paid monthly. It’s unclear whether the state expects similar issues when next month’s checks are issued. That will happen around March 1, depending on which agency the employee works for.

“I am confident that it will continue to be a mess,” Kennedy-Smith said.

The lawsuit, filed Jan. 30 in Multnomah County Circuit Court, seeks a court order requiring the state to fix its payroll system so it accurately pays its employees, to suspend unauthorized deductions from wages, to re-report wages to PERS, and to conduct an accounting of wages to ensure employees have been accurately compensated.

The suit was filed by Multnomah County resident Michael Kennedy and Marion County resident Laurie Frasco, both state workers.

The Oregon Department of Justice, which defends state agencies against lawsuits, cannot comment on pending litigation, said Kristina Edmunson, communications director.

In December, Multnomah County paid $2 million to settle a 2019 wage lawsuit brought by employees following problems with its switch to the Workday system.

Tracy Loew covers the environment at the Statesman Journal. Send comments, questions and tips to tloew@statesmanjournal.com, 503-399-6779. Follow her on Twitter at @Tracy_Loew

This article originally appeared on Salem Statesman Journal: Lawsuit claims Oregon incorrectly paid thousands of employees