Schoolteachers in Lawton have lost another round in their legal fight to recover $234,015 that was mistakenly withheld from their paychecks when a state appeals court ruled the school district is not financially responsible for the error.
A three-judge panel of the Oklahoma Court of Civil Appeals has unanimously backed a Comanche County judge who overruled a class-action lawsuit teachers filed against Lawton Public Schools to collect payroll taxes withheld from nontaxable state retirement contributions.
A teacher who filed the lawsuit in 2005 said Wednesday that she was disappointed by the decision.
“It is a shame,” said Cynthia Nunn, a kindergarten teacher at Pioneer Park Elementary School who is among about 2,500 teachers affected by the payroll error. “It’s disappointing that they’re not stepping up and trying to help out more.”
In an eight-page decision handed down May 26, the appellate court ruled the district doesn’t have to compensate teachers because its contract with them doesn’t obligate the district to perform error-free salary computations.
“Here, there is not even a vague promise of an error-free wage computation because there is no promise at all,” according to the ruling written by appellate Judge Keith Rapp of Tulsa.
Officials estimated that the most senior teachers were owed $408 due to the payroll deductions and the least senior teacher was owed $50.
Nunn said school officials blamed the error on a computer glitch.
“There was clearly a mistake,” said the teachers’ attorney, O. Christopher Meyers. “They clearly didn’t receive as much as they were supposed to.”
Meyers said no decision had been made whether to appeal the case to the Oklahoma Supreme Court.
“I, too, thought that their cause was right,” Meyers said. “It may yet be determined to be that way.”
The error occurred in the 1997-1998 school year, when the state began making contributions to teachers’ retirement accounts. The district withheld payroll taxes for Medicare and Social Security from the contributions, according to the appellate court’s decision.
The Internal Revenue Service directed the district in 1998 to stop withholding because the contributions were not taxable. But the withholding continued until October 2005 when a staff member questioned deductions on her paycheck.
The district stopped withholding and took steps to obtain payroll tax refunds from the federal government. Refunds were issued for the years 2002 through 2005, but a federal statute of limitations prevented refunds for prior years.
District Judge Allen McCall ruled last year that the teachers’ contract did not obligate the district to compute and withhold the correct amount of payroll taxes. McCall rejected the teachers’ argument that there was an implied contractual obligation that the district breached.
The school district’s attorney, Chuck Wade, said the district still managed to secure more than $500,000 in refunds for teachers for payroll taxes mistakenly withheld between 2002 and 2005.
“We did everything we could to recover as much as we could for our teachers,” Wade said. “We did that at our expense.”
But no one had thought to include language in the teachers’ contract requiring the district to correctly calculate withholding from payroll checks, Wade said.
“We intended to make the calculations correctly,” he said. “We weren’t contractually responsible.”