The rank and file of the Public Employees Federation has rejected a tentative contract with the Cuomo administration, setting up the potential for thousands of state workers to begin as early as Wednesday.

The union of mostly 54,000 white-collar workers voted down the five-year contract, 19,629 to 16,906. While turnout was expected to be high, the overwhelming rejection of the contract by the state’s second largest union will likely surprise observers.

In a statement released just after 2 p.m., PEF President Ken Brynien said the workers felt they were being asked to sacrifice more than others.

Brynien added that he hoped the state and PEF can return to the bargaining table to negotiate a new contract. It remains unclear if that will happen, given the Cuomo administration’s tough talk as late as Monday.

“The decision to reject the tentative agreement was made by our rank-and-file members who clearly feel they are being asked to sacrifice more than others, particularly in light of the pending expiration of the state’s millionaire’s tax,” Brynien said. “We will ask the governor to direct his negotiators to immediately return to the bargaining table to work out an agreement which our members will ratify. We are calling on the governor to resist laying off thousands of our members as he has threatened and, instead, work with us to identify savings that would preserve the state’s depleted workforce and services, especially during this economic downturn and in light of the recent flooding.”

The agreement would have meant a three-year wage freeze, nine days of furloughs and an increase in health-insurance premiums.

The administration as late as Monday threatened up to 3,500 layoffs would be triggered by the contract rejection.

Cuomo officials were confident up until this morning that the contract would pass. The larger Civil Service Employees Association had agreed to a similar labor contract earlier this year.

But PEF was always seen as different. The PEF workers, who tend to have higher levels of education, were always more vocal about their dissatisfaction with the agreement forged by Cuomo and PEF’s leadership.

The accord with PEF was expected to actually save more than the CSEA deal: about $400 million over the five-year contract term.

The news of the contract’s rejection comes the same day (and will likely overshadow) the news that five major technology companies would invest $4.4 billion in the state’s economy, which Cuomo announced in Albany.

The approved 2011-12 state budget includes $450 million in workforce concessions.

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