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In September 2024, the City of Seattle began a massive digital transformation of the city’s payroll, benefits and other human resources functions. (Photo by Seattle City Council, via Flickr, Creative Commons)
A class action lawsuit filed against the City of Seattle last week alleges that a new payroll system implemented last fall has resulted in widespread payroll errors, affecting thousands of employees across various city departments.
According to the complaint, the system, from business cloud software giant Workday, has caused problems related to underpayments, incorrect paycheck deductions, missing leave accruals, and excessive overpayment deductions.
The suit, filed Feb. 7 in King County Superior Court, claims that the payroll issues violate Seattle’s Wage Theft Ordinance, Paid Sick and Safe Time Ordinance and other Washington state laws.
The City of Seattle, which employs more than 13,000 people, switched to the Workday-powered software system on Sept. 3, according to the suit, in what amounted to a massive digital transformation of the city’s payroll, benefits and other human resources functions. The move replaced an outdated EV5 system, which had been in place for over 30 years, according to the city.
While the City of Seattle said that it can’t comment on an active case, it did concede that large-scale transitions like the Workday switch are challenging, and that the city remains committed to resolving issues as quickly as possible. Several critical and large-scale issues have been dealt with, according to the city, and teams are focused on the resolution of remaining issues.
The suit (see below) was filed on behalf of three plaintiffs representing themselves and other similarly affected employees. Nathaniel Hunter is a senior engineering specialist supervisor with the Drainage and Wastewater Department, employed by the City of Seattle for 12 years; Travis Stanley is a firefighter with the Seattle Fire Department, employed by the city for close to 28 years; and Aaron Dalan is a sergeant with the Seattle Police Department, employed by the city for 15 years.
Among the issues cited in the lawsuit, the plaintiffs claim:
Employees did not receive their full compensation on established paydays.
Overtime wages were unpaid or miscalculated.
Incorrect pay rates and deductions from wages.
Failure to credit sick leave and other benefits properly.
Improper withholding of deferred compensation and other benefit-related errors.
The city made unauthorized deductions exceeding the legal 5% limit of disposable earnings per pay period.
Employees did not receive written notice before these deductions.
Major IT system swap-outs can be “incredibly difficult,” according to one expert who previously spoke to GeekWire, who cited two reasons why such migrations can run into problems: the integration with dozens of other related legacy IT systems, and customization required for existing workflow within individual departments.
In 2023, the University of Washington ran into problems during a $340 million IT upgrade as it replaced legacy software systems with cloud-based infrastructure from Pleasanton, Calif.-based Workday. The UW said at the time that vendor payments and some research grant processes were impacted.
The complaint against the City of Seattle alleges that the city “knew or should have known” that Workday’s payroll system could cause issues, citing similar disruptions in Maine and Oregon and in the cities of Baltimore and Los Angeles.
“The City of Seattle implemented Workday despite the repeated issues that Workday has caused to other governmental entities and without first testing and verifying that all employees would receive accurate paychecks and pay statements under the new system,” the complaint states.
A Workday spokesperson referred GeekWire to the City of Seattle for any comment on the lawsuit or the success of the city’s system migration.
Since the new system launch, the city said it has been actively working with employees and departments to support widespread adoption, address concerns, refine processes, and enhance the experience. Key efforts include:
Establishing dedicated teams and resources to fix issues and enhance system performance.
Expanding employee training, listening sessions, and tailored resources.
Strengthening communication to ensure employees and departments stay informed and supported.
The suit seeks certification for a class of all City of Seattle employees affected since the payroll system launch and a subclass that includes employees subjected to excessive overpayment deductions.
The plaintiffs seek relief that includes fixing or replacing the payroll system; an accounting of wages and leave accruals; suspension of unauthorized deductions; reinstatement of lost wages and leave; and compensation for unpaid wages, liquidated damages (up to twice the unpaid wages), and attorneys’ fees.
Read the full text of the lawsuit:
Payroll system class action lawsuit by Kurt Schlosser on Scribd
