A government civil war continued in a Sacramento appellate court on Monday, setting the stage for a dramatic decision that will dictate whether the state can withhold pay to the federal minimum for more than 200,000 workers.
Attorneys for the Schwarzenegger administration and State Controller John Chiang debated a lower court ruling that said Chiang had overstepped his authority when he refused to issue minimum wage paychecks during a 2008 budget impasse.
The legal tussle has taken on a renewed urgency since there's no budget deal in sight just eight days before the start of the new fiscal year. Without a budget that appropriates money for payroll, Gov. Arnold Schwarzenegger could again order most state workers' wages temporarily withheld to the federal minimum of $7.25 per hour.
The case's uncertain outcome has put pressure on state employee unions to revive long-dormant negotiations with the governor. Four unions last week announced tentative agreements that exchanged several concessions for guarantees their members won't be subjected to minimum wage or furlough orders.
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