The NY Salary Cap Saga Continues

August 14, 2014 Posted by Jessica Shofler in Employment Matters, News, Nonprofits, Policy

In April we told you that that the Nassau County State Supreme Court in New York ruled that Governor Andrew Cuomo had overstepped his authority when he issued an executive order putting a cap on executive salaries at state-supported nonprofits to $199,000 unless the charity secures a waiver from the state to pay more. Last week a New York State judge ruled in favor of Cuomo’s executive order.

The case was brought by Concerned Home Care Providers, a trade association whose members are home health care agencies. Suffolk County Supreme Court Justice Emily Pines ruled that the cap was within the authority of the health department, which was implementing the order. Justice Pines explained that the health department had the authority “to regulate the financial assistance provided by the state in connection with public health care activities.” And based on past rulings, Justice Pines added: “Where an agency has been endowed with broad power to regulate in the public interest, we have not hesitated to uphold reasonable acts on its part designed to further the regulatory scheme.”

Justice Pines also noted that it wasn’t truly a cap. The regulations only limited the amount of state funds that could be used for executive compensation. The regulations did not in any way restrict or limit the use of other funds for payment of executive compensation.

Now all eyes are on another lawsuit on the cap filed in Albany County by the New York State Health Facilities Association, which is still pending.

How would your organization respond if the government imposed a salary cap? And how would your senior executives respond?

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Casey Summar, Partner, The Law Firm for Non-Profits, 4705 Laurel Canyon Blvd, #306, Studio City, CA 91607

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