NY State Supreme Court Rejects Compensation Cap

April 16, 2014 Posted by Jessica Shofler in Jobs, News, Nonprofits

CompensationShould there be a cap on nonprofit executive’s compensation? We told you before that the Governor of New York thinks so. But the Nassau County state Supreme Court disagrees.

Governor Andrew Cuomo’s regulation, which he issued more than two years ago by executive order, limits executive salaries at state-supported nonprofits to $199,000 unless the charity secures a waiver from the state to pay more. When issuing the regulation, Cuomo noted that one chief executive of a state-supported nonprofit was receiving a $2.2 million salary.

Children’s Therapy Services, a state-supported nonprofit that represents more than 30 agencies that provide early intervention and special education programs, filed suit against Cuomo’s regulation.

In rejecting the regulation, Nassau County state Supreme Court Judge Thomas Feinman found that the Department of Health overstepped its boundaries and that the Legislature has rejected similar proposals before.

New York officials say they will appeal the ruling.

This again calls into question how much the government should get involved with ensuring that a nonprofit is being “effective.” What do you think the government’s level of involvement should be?

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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