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'You made the mistake': Louisville Metro employees frustrated about premium pay deduction

Louisville's CFO sent a letter to employees saying the city mistakenly thought the bonuses would be exempt from County Employees Retirement System withholdings.

LOUISVILLE, Ky. — Many of Louisville Metro's essential employees are frustrated after learning chunks of their 'premium pay' bonuses will be deducted in the weeks to come.

This week, Metro's Chief Financial Officer Monica Harmon sent a letter to city employees and worker unions. She said the Office of Management and Budget, along with the Human Resources department, made an error in how the payments were filed. This will lead to deductions ranging from $12.50 to $200.00 over two payment periods for each employee who received the bonus prior to Jan. 13, 2022.

Harmon writes they "believed based on past practice that premium pay would be exempt from County Employees Retirement System (CERS) withholdings. Unfortunately, CERS has notified Louisville Metro Government that these payments are considered wages and, for that reason, are subject to CERS withholdings."

Metro Government says the first half will be drawn from the Feb. 25 paycheck, it will skip withholding on March 11, and then collect the final amount on March 25. 

Mayor's Office spokesperson Jessica Wethington tells WHAS11 the deduction amount is based on the employee’s tier level within CERS, and however much premium pay they have received to date.

"We regret this inconvenience to employees, but the city is obligated to collect and pay these deductions to the state. By completing this adjustment over two pay cycles, the city hopes to minimize any burden on employees," Wethington said in a statement.

Late last year, the city decided to allocate more than $28 million in ARP dollars to give extra support to those working hands-on through COVID, leading to a bonus of anywhere from several hundred to a few thousand dollars depending on the job description. WHAS11 is told the first portion was paid out in Dec. 2021, with the second part of the bonus to be deposited in summer 2022.

Metro Corrections Officers say they're among those affected. 

"Very last minute acknowledgment of the situation, saying 'Hey, we messed up, but we're also going to fix this immediately... On your next paycheck.' That's six days away," said Corrections Officer Benjamin Bowman, who recalls originally receiving around $1,200 of the bonus after taxes. "It's essentially your first of the month paycheck, which everybody knows is your rent check or your mortgage payment -- your power bill, your water bill."

A couple of members of the Corrections Union -- FOP Lodge 77 -- believe the city should do more to make up for their mistake.

"You made the mistake, we shouldn't have to pay for it," said Corrections Officer Michelle Sogan, who says she saw about a $900 difference in her paycheck when she received the premium pay bonus in December.

While the overall amount may seem small, worker unions like the Corrections FOP say the deductions could be a hardship for some.

"I know people who are going to be looking at hundreds of dollars out of this next paycheck that they haven't budgeted for," Bowman said.

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