INDIANAPOLIS (Legal Newsline) - The Indiana Supreme Court last week mostly upheld a state Court of Appeals' decision in a case over state employee pay.

For more than 25 years, the State of Indiana required certain employees to work 40-hour weeks while requiring other employees to work only 37.5-hour weeks.

Though the employees received the same biweekly paycheck, the effect of the State's policy was a disparity in actual hourly wage.

The State ended the policy in 1993, but a class action lawsuit was brought on behalf of those 40-hour employees.

The State, represented by Attorney General Greg Zoeller, raised nine issues in its appeal from a Marion Superior Court judgment.

Among them:

- Whether the trial court erred in finding that the merit employees were entitled to damages for the State's alleged breach of the "equal pay for comparable work" provision of the State Personnel Act;

- Whether the trial court erred in finding that the nonmerit employees were entitled to damages for the State's alleged breach of contract;

- Whether the trial court erred in finding that the merit employees were entitled to receive 20 years of back pay;

- Whether the trial court erred in determining which job classifications were split; and

- Whether the employees' claims are barred under the equitable doctrine of laches.

The Indiana Court of Appeals found no error with respect to most of the issues, except for whether the merit employees were entitled to receive 20 years of back pay.

On that issue, it reversed and remanded, finding that the back pay should be calculated beginning on a date 10 days prior to the filing date of the employee complaint, and concluding on the date the State ended its split-job classification system.

The appeals court also determined that the non-merit employees, both overtime-exempt and overtime-eligible, are owed back pay on their constitutional claims for a period of time ending the day the State eliminated its split-pay system and extending back some 20 years.

The court also found that the State had not proven the elements of laches.

Only four members of the state's high court heard the case on appeal. The four justices cast diverging votes.

"Cognizant of the need to conclude a case that has now lasted 19 years, we have attempted to forge a result that will prevent perpetuation of the contest," it wrote in its per curiam opinion, filed Feb. 16.

The Court affirmed the Court of Appeals' ruling with respect to the merit employees back pay.

As to the State's contention that laches should bar all claims by all claimants, the Court said that goes "a bridge too far."

However, it concluded that the doctrine should apply to those non-merit employee claims.

"By September 1993, the State had abolished its split-pay system. Also in 1994, the General Assembly amended Section 34-1-2-1.5 of the Indiana Code, providing for only a two-year statute of limitations in bringing employment suits against the State," the Court explained.

"It was not until February 2002, however, that the plaintiffs sought leave to amend their complaint to add claims of non-merit employees. We think this delay reflects an instance in which the doctrine of laches should apply."

The delay in bringing non-merit employee claims was "unreasonably long," the Court said.

"The claims were brought about 45 years after the State initiated its split-pay system, and 43 years after the named plaintiffs in the non-merit sub-classes began their employment," it wrote.

The State argued that the "unreasonable delay" caused a change in circumstances constituting prejudice -- to the extent of $42 million, of which $18.7 million is attributed to non-merit employee claims.

In agreement, the Court held that the back pay recovery of the non-merit employees should be limited in the same manner as the appeals court set forth for merit employees.

"We remand with instructions to recalculate the non-merit employees' back pay judgment based upon that time period, and summarily affirm the Court of Appeals in all other respects," the Court wrote.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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