By declining to hear an Iowa appeal, the U.S. Supreme Court has opened the way for state and local employees to sue for overtime pay. The action could have a devastating fiscal impact on Iowa, but it won't necessarily affect other states.

The case started eight years ago. Iowa had classified state troopers as supervisors and therefore ineligible for overtime pay. The troopers decided to sue, arguing that they were subject to disciplinary policies and therefore had a right to overtime pay under the federal Fair Labor Standards Act. Last year, the Iowa Supreme Court agreed with the troopers and allowed their lawsuits to proceed.

The state appealed to the U.S. Supreme Court, even though that court had already ruled in the 1980s that the FLSA applies to states. "In the last 10 years, the Supreme Court has gone a long way toward reestablishing states' rights," says Iowa Solicitor General Dennis Johnson of the decision to take the case to the highest court. "We thought they might reconsider."

Once the court declined to do that, the way was cleared for the 140 Iowa troopers and other state employees to sue for a total of $30 million in overtime pay.

Although the Supreme Court ruling pertains to all states in terms of the FLSA, it will not cause the same fiscal repercussions in other states. Iowa has a problem because the state Supreme Court ruled that the legislature had waived the state's immunity to damages by referring to the FLSA in legislation. "Based on the Supreme Court's ruling, state employees cannot sue unless there's been a waiver," says Pamela Walker, the attorney for the Iowa troopers. "It depends on each state's law as to whether or not there's been a waiver."