Gov. Arnold Schwarzenegger officials have used a 2003 California Supreme Court case, White v. Davis, to determine that they can pay only the federal minimum wage to state workers without a budget.
But Controller John Chiang told The Bee's Kevin Yamamura he believes the governor's order could put the state at risk for legal damages under federal law.
"I don't want to subject the state of California to legal liability," Chiang said. "Under the Fair Labor Standards Act, if we do not pay full wage, we may be subject to treble damages that would only exacerbate an already difficult financial situation."
Chiang said the state came into this fiscal year with $12 billion in cash available, and he said he believes the state will have sufficient cash through the end of September.
Chiang said he doesn't think White v. Davis is as clear as the Governor's Office believes on the minimum wage issue.
"I believe that it is potentially illegal," Chiang said. "The court did not decide as to the proper amount to be paid. So why would we want to test it when there is very little upside and significant downside at risk?"
Chiang also said he is uncertain his office can logistically set up its computer system to pay minimum wage to its employees by the August pay period.
"All of these government agencies would have to be involved more extensively in payroll calculations, and it could easily create errors subjecting us to legal liability under federal law," Chiang said.