A state appellate court sided Friday with the Schwarzenegger administration in its attempt to impose the federal minimum wage on tens of thousands of state workers.
It was not immediately clear how the ruling would affect Gov. Arnold Schwarzenegger's order a day earlier to pay 200,000 state workers the federal minimum of $7.25 an hour.
The state controller has refused to comply with the order. Friday's ruling affirms a lower-court decision in favor of the administration in a lawsuit filed two years ago after the governor's first attempt to impose the minimum wage.
The controller's office declined to comment because it is still reviewing the ruling.
The Republican governor issued the order on the first day of the new fiscal year because the state remains without a budget.
The California legislature's deadline to send a spending plan to Schwarzenegger passed two weeks ago, and the fiscal year began Thursday with Republicans and majority Democrats no closer to finding a compromise.
Schwarzenegger's action sent a signal to the state's powerful unions that represent the majority of the state's workers, that they should agree to his demands for pension reform and reductions in pay, or he will make their members' lives more difficult.
Six of the state's unions, representing about 37,000 state workers, agreed to such changes in the past two weeks. Schwarzenegger's order does not affect those workers.
Some of the state's 250,000 employees would fare even worse under the plan: doctors and attorneys are not protected by minimum wage law, so they would not get paid at all until a deal is struck, Jolley said.
The state's largest union, Service Employees International Union, which represents more than 95,000 workers, is still at the bargaining table.