Mallano v. Chiang

Click here to view the judgment, which sets out the pay rates

Retroactive pay was calculated by taking the difference between the new pay rates and historical pay rates for each pay period, beginning with July 1, 2008 ending with June 30, 2017. Below is the formula used to calculate retroactive pay per pay period:

New Pay Rate per Pay Period (from the order) – Historical Pay Rate per Pay Period = Retroactive Pay per Pay Period 

As a simple example, the court’s order provides that a superior court judge should have received a salary of $180,523 in 2008/2009.  With 12 pay periods per year, this results in a New Pay Rate per Pay Period of $15,043.58.   The Historical Pay Rate per Pay Period for 2008/2009 was $14,899.08. $15,043.58 - $14,899.08 = $144.50

In this example, the Retroactive Pay per Pay Period would be $144.50 for each pay period in 2008/2009.

Interest was calculated by multiplying retroactive pay per pay period by 10 percent, and then by a factor based on the difference (in years) from the 1st of the month of the historical pay and the estimated settlement date of retroactive payments. Below is the formula used to calculate interest:

Retroactive Pay per Pay Period x 10 percent x Difference (in Years) from the 1st of the month of the historical pay = Interest Earned on Retroactive Pay per Pay Period

In the example above:

The Retroactive Pay per Pay Period is $144.50

The Difference (in Years) from July 2008 (the pay period in question), to July 31, 2019 (the date the retroactive payment will be made) is 133 months/12 months per year.

Therefore, the calculation for interest for this pay period is:

$144.50 (Retroactive Pay per Pay Period) x 0.10 (10 percent interest) x 133 months/12 (Difference in Years from the 1st of the month of the historical pay) = $160.15 (the Interest Earned on Retroactive Pay for the July 2008 Pay Period).

The interest for each pay period is calculated separately.  

• All JRS and JRS II Retirement Benefits –The Judges’ Retirement System will provide a letter with information regarding the adjusted benefit amount and interest prior to the benefit payment issue date.  
• ESIP/JRS II Monetary Credit – The Judges’ Retirement System will contact you regarding disbursement and payments.
• Back Wages – The State Controller’s Office or (if in LA County, Ventura County or Riverside County) your HR Office will provide a letter with information regarding the adjusted back pay and interest amounts prior to the back pay issue date.
• Assigned Judges Program - The State Controller’s Office will provide a letter with information regarding the adjusted back pay and interest amounts prior to the back pay issue date.

• If you are entitled to payments for more than one category of back wages or benefits, you will likely receive several payments, as follows:
  • If you are entitled to back wages as an active judge or justice and interest for the back wages, you will receive two separate payments.
  • If you are entitled to back wages for participation in AJP and interest for the back wages, you will receive two separate payments.
  • If you are entitled to an adjustment to a JRS benefit and interest on that adjustment, you will receive one payment combining the benefit adjustment and interest.
  • If you are entitled to an adjustment in an ESIP payment, JRS will contact you prior to issuing payment to determine whether you want to be paid in a lump sum or to roll the money into a qualified plan.
  • If you are entitled to a JRS II Monetary Credits, JRS will contact you prior to issuing payment to determine whether you want to be paid in a lump sum or to roll the money into a qualified plan.

• If you are currently an active judge or justice:
  • Back Pay – the same mechanism as your current wages, with the exception of Los Angeles County Superior Court judges, who will receive a back pay check by mail. 
  • Interest for Back Pay – paper check from the SCO or if in Ventura County or Riverside County your HR Office.  Los Angeles County Superior Court judges will receive an interest check by mail.
• If you are participating in AJP:
  • Back Pay – the same mechanism as your current wages
  • Interest for AJP– paper check from SCO
• If you are now retired
  • Back Pay – if applicable, a paper check from the SCO or if in LA County, Ventura County or Riverside County your previous HR Office
  • Interest for Back Pay – paper check from the SCO or if in LA County, Ventura County or Riverside County your previous HR or Finance Office
  • AJP – if active in the AJP right now, the same mechanism as your current wages.  If no longer active, you will receive a paper check from the SCO.-
  • Interest for AJP–  you will receive a paper check.
  • JRS and JRS II monthly retirement benefit adjustments will be paid in the same manner as your current monthly retirement allowance.
  • For JRS ESIP and JRS II Monetary Credit, JRS will contact you prior to issuing payment to determine whether you want to be paid in a lump sum or to roll the money into a qualified plan.    
• JRS Beneficiaries
  • JRS and JRS II monthly retirement benefit adjustments will be paid in the same manner as your current monthly retirement allowance. 
  • JRS ESIP and JRS II Monetary Credit lump sum benefits will be paid by a paper check from the JRS or JRS II.  
• Deceased judges and justices
  • Paper checks will be mailed for back pay and interest on back pay and AJP

• For all judges and justices except those paid by Ventura County, the back wages for active Judges and Justices and those who retired in 2018 or 2019, will be subject to withholding at the supplemental flat tax rate of 22 percent for federal taxes (based on the Internal Revenue Service Regulations Section 31.3402(g)-1(a)(7)(i)(C), and Revenue Ruling 2008-29), 6.6% for California taxes, and the otherwise applicable withholding for other employment and withholding taxes (e.g., Medicare). 
• For all judges and justices who retired prior to 2018, the back wages will be subject to federal and state withholding using the aggregate method (based upon the most recent W-4 on file), and the otherwise applicable withholding for other employment and withholding taxes (e.g., Social Security and Medicare). 
• For all active and retired judges in Ventura County, the back wages will be subject to federal and state withholding using the aggregate method (based upon the current W-4 on file), and the otherwise applicable withholding for other employment and withholding taxes (e.g., Social Security and Medicare). 
• For back pay, retirement contributions will be withheld and reported to CalPERS.
• Interest payments will not be subject to withholding.
• JRS benefits - Taxes will be withheld based on the current tax election on file, for all monthly benefit payments.  There will not be separate tax withholding on Interest payments. 
• ESIP/Monetary Credit – Taxes will be withheld based on distribution type. 

• Back Wages:
  • Active, Retired and AJP – Back pay will be reported on a 2019 Form W-2.
  • Deceased – Back pay will be reported on a Form 1099-MISC
• Interest on back wages:
  • Active, retired and AJP – Interest payments will be reported on a Form 1099-MISC
• JRS benefits
  • ESIP/Monetary Credit – Interest will be reported on a Form 1099-R.
  • Judges/Survivors/Beneficiaries – Retroactive benefits will be reported on a Form 1099-R.

• For Back Pay – all active judges, except those in Ventura County, will be taxed at the supplemental (flat) tax rate, so a change in withholdings would have no effect.  Back pay for retired judges will be based on the last W-4 on file.
• For Monthly Retirement Benefits - taxes will be withheld based on your current tax withholding.  Tax withholdings cannot be changed for the June 30, 2019 dated warrant.
• Adjusted Lump Sum retirement benefits - taxes will be withheld based on the distribution type, cash payment or roll over.  

• Retirement contributions will be withheld from back wages and reported to the Judges’ Retirement System.  All member contributions are credited to the individual member accounts.  There is no additional service credit earned for these retro-active salary increase adjustments.

• Yes, a judge or justice could be entitled to back pay issued by the employer and interest depending on their last day on the bench.
• If a judge or justice retired during the timeframe of the lawsuit, the judge or justice may also be entitled to a retirement benefit adjustment and interest.

• If you normally receive direct deposit, please check your account to see if the payment has been made.  If you normally receive a check by mail, please check your mail.  If you are retired, please check your mail.  If you have not received a payment by direct deposit or by check within a week after the latest target date specified in the letter to class members, please contact us by filling out the form below.
   
• Los Angeles County Superior Court judges will receive both back pay and interest checks by mail.  If you have not received a payment within a week after the latest target date specified in the letter to class members, please contact us through the Court’s Judicial Benefits Office, at TBurke@LACourt.org.

A person in your situation may be entitled to receive retirement benefits from JRS or JRS II and another plan with which JRS and JRS II have limited reciprocity.  You will need to contact the reciprocal retirement system and notify that reciprocal retirement system that there has been a change in your final compensation as a judge.  The reciprocal retirement system will then contact JRS for verification.  The reciprocal retirement system will be able to tell you if there is any impact on the retirement benefits from the reciprocal retirement system.

As noted in the schedule of payments in the letters to class members, the Judges’ Retirement System (JRS) issued payments to JRS retirees, beneficiaries and survivors on June 30, 2019.  Judges in Riverside County should have received a payment for back pay and interest on or around July 13, 2019.  Additional payments (including back wages and interest on back wages) will be made to active and retired judges according to the schedule in the letters to class members.

As a beneficiary, you can submit the documents identified in the letter dated June 19, 2019 to SCO either by emailing scanned documents to mallano@sco.ca.gov or sending hardcopies to:

The back pay payments are considered wages for services performed by you as an employee in California.  Wages for such services are taxable in California and subject to California income and payroll tax wage withholding, even if you were not resident in California at the time the services were performed or at the time of payment.  There is no minimum threshold of such wages for wage withholding to apply.  

As a result of the court’s decision in Mallano v. Chiang, you should have received an interest payment dated between July 24 and July 31, 2019.  Due to a mailing error, some people received a check payable to the wrong name.  In order to swiftly resolve the error, we are requesting one simple action on your part.

If you recently received a check from the State Controller’s Office (SCO) that is made payable to someone other than you, please return the check to the following address so that we may process a check with the correct name for you.

If you received a check that is made payable to you, please email https://sco.ca.gov/scocontactus/contactmallanoinquiries.aspx with confirmation that includes your full name and, if available, the check number.

Please contact us by filling out the form.