Oregon reaches $15M settlement with state workers for bungled rollout of payroll system

The

state of Oregon

has agreed to pay $15 million to thousands of former and current state employees who experienced issues with their paychecks after the state switched to a new payroll system in 2022.

Per the settlement, nearly every hourly worker and some salaried employees who worked for the state at any point between December 2022 and June 23 of this year are eligible for payments ranging from $100 to roughly $3,100, depending on their employment status and the damages they incurred as a

result of the payroll errors

.

Multnomah County Circuit Court Judge Eric Dahlin preliminarily approved the settlement on May 5, more than two years after a pair of state employees first sued the state, alleging widespread payment errors and asking Oregon to immediately correct the issues.

“We’re pleased with this result,” Whitney Stark, an attorney with Albies & Stark, one of the law firms representing the plaintiffs, told The Oregonian/OregonLive. “Of course, a settlement is necessarily a compromise, but that compromise, in this case, is reflective of our sincere and diligent efforts to obtain the best results for our class members.”

As part of the agreement, the state Department of Administrative Services acknowledged in an apology letter that it “failed to fulfill” the responsibility of paying all employees accurately and on time after launching the Workday payroll system. It also acknowledged that the state is still addressing issues in the system.

“DAS apologizes for and acknowledges these errors and the frustration, anxiety, and impacts those errors have caused for employees,” the state said in the letter. “In no uncertain terms, DAS sincerely apologizes to all employees for the adverse impacts they have suffered as a result of the Workday payroll transition.”

Per the settlement agreement, all non-exempt state employees, which typically include hourly workers, will receive minimum payments of $100. Non-exempt employees who no longer work for the state will receive at least $112.50. All employees can also submit additional claims up to $500 if they incurred personal expenses because of the payroll issues, such as extra bank fees, and up to $2,500 if they lost their housing, car or underwent a “significant life-altering event” because of the errors.

After the state switched to the Workday payroll system in December 2022, thousands of state employees reported

significant payment issues

, such as missed or inaccurate paychecks, for months. Some turned to food banks or rent assistance programs to continue paying their bills, with some workers even becoming homeless after not receiving paychecks for multiple months, the

Oregon Capital Chronicle

reported at the time.

Per the agreement, every type of state employee except for judges and lawmakers are eligible to participate in the settlement and submit payment claims. The state currently employs about 49,000 full-time workers.

Affected individuals have until Aug. 25 to submit claims, object to the settlement or opt out of it entirely,

according to notices

sent to thousands of former and current state employees in the past week.

It’s unknown exactly how many individuals will ultimately receive payments, but the settlement states that the class is not expected to exceed 60,000 members. About three-quarters of the expected class members are non-exempt and will receive the minimum payments, according to Richard Myers, attorney with Bennett Harman, a second law firm representing the plaintiffs.

A final hearing to approve the settlement is scheduled for Oct. 3.

The total settlement amount is less than the $25 million that plaintiffs initially sought, court records show. The eight state employees who brought the challenge forward will receive extra payments of $7,500 each, according to the settlement agreement.

Any leftover funds that are not sent to members or used to reimburse attorneys will be split between Legal Aid Services of Oregon and various Oregon nonprofits focused on economic justice and workers’ rights, per the agreement.

The settlement also prevents any member of the class from bringing or joining class action lawsuits for similar Workday payroll issues until July 2027, when the state expects to finish addressing errors in the system, according to Bryanna Duke, spokesperson for the Department of Administrative Services.

That process will include shifting to a biweekly pay period and transitioning to hourly pay for employees who are eligible for overtime pay, according to an informational document.

“We anticipate it will continue to take time until Workday payroll is fully working effectively and without any system errors,” the state’s apology letter said. “We appreciate your patience, trust, and willingness to report concerns as DAS continues to work on the system to make it work more effectively.”

— Carlos Fuentes covers state politics and government. Reach him at 503-221-5386 or

cfuentes@oregonian.com

.

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