City orders audit after pay mix-up for hundreds of laborers

The city of Chicago has initiated a payroll audit after widespread miscalculations in pay for laborers working on city garbage trucks, trimming trees, and fixing sidewalks and roads, an ongoing problem that prompted a union official to rip Mayor Brandon Johnson for not dealing with it.

The issue sprung up in January when workers represented by LiUNA Local 1001 discovered miscalculations in back pay checks.

Since then, the city and the union had been in a back-and-forth over how to address discrepancies resulting in over- and under-pay for retroactive checks and problems issuing separate payments to “hundreds of others” who work alone as drivers on city garbage trucks. In all, the union represents about 1900 city workers.

Union leadership went public with the “fiasco” on June 10. In a fiery update to members posted online, Bob Chianelli, the business manager for LiUNA Local 1001, said after weeks of requesting the city turn over pay registers and correct the errors worth tens of thousands for some members, officials had still failed to fix the situation.

Approximately 125 members were underpaid, Chianelli told the Tribune, while around 800 were overpaid. The overpayments, he estimated, cost somewhere between $2.7 and $2.9 million.

“It appears to everyone that not only did they underpay people but they grossly overpaid people,” Chianelli told the Tribune, including one member overpaid close to $31,000. “The mistakes were so apparent that I finally lost it… I had a guy who worked one hour. He was supposed to get $1.03 in retro. They paid him $1,125. I’m a good negotiator, but I’m not that good.”

In a news update to members, Chianelli criticized Johnson for not prioritizing correcting the mistakes.

“The Mayor can spend 30k on haircuts and makeup, throw away millions of dollars on developing a toxic site for migrant housing and use almost $300 million dollars of taxpayer money to service them, yet the men and women that keep this City running, pick up the trash, fix the streets and sidewalks, trim the trees, keep the airports safe and clean, and so much more, are being punished because the City cannot do 2nd grade math,” he said.

The city acknowledged the payroll problem, said retroactive pay issues are not uncommon and that the laborers’ calculations were a large undertaking. There are more than 340 different rates across 220 titles and several city departments, and inputs could have been mishandled at one of several stages in the payroll process before reaching the comptroller’s office, which cuts employees’ checks.

City labor and finance officials told the Tribune they were working diligently to fix the issue while staying true to their fiduciary duty to taxpayers to get it right.

The laborers’ new agreement, ratified in October, “set out to recognize the hard work of those laborers over the years and bring their pay to the right standard,” LaKesha Gage-Woodard, a spokesperson for the city’s fiscal offices, said in a written statement. That new deal included a boosted rate for general laborers who had their starting pay reduced amid budget cuts undertaken early in Mayor Rahm Emanuel’s administration.

The Johnson administration was surprised at the tenor of Chianelli’s post. Officials said they had been working with the union “hand in glove” since January to resolve the situation.

The city believed it had reached a solution in April, only to discover other errors. Along the way, they discovered a similar issue affecting a slice of the COUPE trades. In all, there are more than 8,000 city workers represented by COUPE.

The comptroller’s office ordered a pair of outside reviews: a forensic audit by the firm KPMG to get to the bottom of the Laborers’ payroll issue, and a separate one to recommend fixes to the city’s overall payroll scheme, which will take a few months, city officials said.

“We have worked with our internal auditor to ensure the conversations between the City and 1001 were verified,” Gage-Woodard said, adding the city “has a responsibility to both the taxpayers, especially these City workers, to get everything right.”

The issue of overpayment, Chianelli said, is a complex one, given withholdings for state and local taxes, health insurance and pensions. He said workers should not have to work to recoup overpayments for insurance, for one, and that it would be a financial hardship for workers to have significant draw-downs on their paychecks to correct the error.

The city is awaiting data from KPMG before it makes any changes to payroll.

That’s problematic, Chianelli said, since that means shorted workers still have to wait for pay they have been owed since January. “Honestly, it’s been a nightmare for me, I’ve been doing this for a very very very long time, through a lot of administrations, I’ve never seen anything like this,” he said. “This is a total disaster.”

The union representing rank and file officers, the Fraternal Order of Police Lodge 7, also went public with complaints earlier this month about mistakes involving pension withholdings for some employees, also related to retroactive pay. City officials said they are awaiting a legal opinion on the tax implications to determine the correct withholding. Changes must also be recorded in the city’s public financial statements.

aquig@chicagotribune.com