Anne Arundel County unintentionally underpaid overtime possible for two decades, meaning the county could owe up to $5 million to current and former employees, County Executive Steve Schuh said Friday.
“This problem has been ongoing for 10 to 20 years over successive administrations and internal auditors and outside auditors,” Schuh said. “It wasn’t caught until a new payroll vendor saw the error. We are going to identify each person and reimburse them fully.”
The scope and cost of the payments have not been determined. An investigation is underway but will take months as forensic auditors track down each person who was underpaid.
In an email to county employees, the Office of Personnel said the issue had been corrected going forward and the county could seek legal action against the payroll company, Points North.
“The county plans to conduct a payroll forensic audit utilizing an outside, independent auditor in the coming months to ensure employees receive the pay to which they are entitled,” according to the email. “We will keep affected employees updated as to the audit results, and all eligible employees will be reimbursed accordingly.”
The overtime issue was discovered by the new county payroll vendor, ADP, a widely used payroll software company. The county switched from Points North about a week and a half ago, said Owen McEvoy, a spokesman for Schuh.
Officials with Points North, a Minnesota-based company, could not be reached for comment Friday.
Schuh said the incident is unlike anything he has seen in government or private business.
“I’ve seen malfeasance and fraud and mistakes, and I’ve seen payroll errors … they happen, mistakes happen,” he said. “I’ve never seen a miscalculation for such a protracted period of time.”
The number of employees impacted by the error has not been determined. Those most likely to be affected are public safety employees. Police and fire departments have large overtime budgets as officers and firefighters put in extra hours regularly. The fire department has 930 budgeted positions with the majority of those firefighters. The police department has 745 budgeted positions for sworn officers.
The county’s firefighter union, International Association Firefighters Local 1563, sent an email to firefighters alerting them of the payroll issue. That email — obtained by The Capital — states the issue goes back years and could total millions. Those numbers have not been verified.
“This is important for everyone to check their overtime rate for this week and every other week afterwards,” according to the email. “This problem was found for workers to be underpaid overtime rate.”
A representative from the Local 1563 did not respond to a request for comment Friday.
County Auditor Jodee Dickinson said her office was not aware of the issue until the personnel office sent out the email. In reviewing reports that focused on overtime pay, Dickinson said those reports never looked at the system’s rate calculations.
“It all has got to do with resources and time,” Dickinson said. “There are probably a 1,000 things to do here … when we have a staff this size we focus on issues that come before us.”
Former auditor Teresa Sutherland — who serves as Annapolis’ city manager — did not return a request for comment Friday. Sutherland served as county auditor for more than two decades.
Democratic county executive candidate Steuart Pittman said the underpayments were a “serious issue and need to be investigated immediately.”
“I would (pay them back) as soon as possible,” Pittman said. “We are under a legal obligation to pay overtime, and this is the county’s mistake and the county needs to fix this.”