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In Three Years, Santa Cruz Muni Paid ¢120 Million in Compensation

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Since 2013, the budget line item for compensation for the Municipality of Santa Cruz has skyrocketed so much that from then until now, the municipality has paid out ¢120,120,000 ($226,640).

According to the municipality’s expenditures report, in 2013 the local government paid out ¢59,890,000 ($113,000), in 2014 the sum was ¢37,790,000 ($71,300) and so far in 2015, they have paid ¢22,440,000 ($42,340) in compensation.

The director of finance for the municipality, Mario Moreira, estimated that the entity should spend no more than ¢10 million ($18,870) a year in this category. However, Moreira contended that bad management decisions are to blame.

“The problem was that since the year 98, overtime was not paid to a few security guards and this is still being paid. The municipality refused to reconcile with them and this led to litigation,” Moreira specified.

In the director of finance’s opinion, the situation becomes complicated at the moment when investments are no longer made in community services in order to pay off these debts.

“This is a case of opportunity cost— the Municipality stops doing [community] projects to pay the debt…. In some years, [the amount of compensation] must be included in the regular budget, so then we can no longer include that money to paint the Santa Cruz park or do other projects,” Moreira stated.

For her part, the administrative director, Alexandra Gutierrez, explained that this labor proceeding began in 2010, 12 years after the fact, when eight security guards filed a complaint that they were not paid overtime.

According to Gutierrez, the employees had a 12×24 system in which they worked for 12 hours in a row and then had a day off. However, the guards contend that they requested overtime pay when they worked more than eight hours.

“The problem was that the legal counsel did not object to anything that they were judging us on. The legal department did not defend municipal interests with the elements that backed us up. They had their days off and they agreed to that work system with the person who was mayor at that time,” Gutierrez said.

In defense, Marcos Gutierrez, from the legal department of the Municipality of Santa Cruz, explained that when the case was filed, he recommended that the municipality reconcile with the employees since the chances that the court would rule in favor of the employees was high.

“At that time, I sent an official letter in which I suggested that a reconciliation be made with the parties, but that process did not take place,” Gutierrez commented.

Marcos Duarte, a legal expert on labor issues from the firm BDS Asesores, explained that even though days off are taken, overtime should be paid.

“In Costa Rica, overtime work shifts are calculated based on the maximum hours per day, not hours per week. In the country, the maximum hours per week is 48 hours. However, in these cases where they work 12 hours per day and have a day off, if you do the calculations, they are working 48 hours but they exceed [the daily maximum] by four,” Duarte explained.

Muni Could Pay More Than ¢100,000,000 This Year

For now, the municipality faces four other labor proceedings for unjustified employment terminations and overtime pay.

“Right now, new lawsuits have come up due to employment terminations that were done badly, following the wrong procedures. Then obviously, the people take the legal route and win the case,” Moreira said.

Although there is still no ruling establishing the amounts for these four officials, according to the claims of those affected, the municipality could pay more than ¢100 million ($188,680).

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