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August 11, 2014

N.Y. Court Backs State Salary Cap for Nonprofit Leaders

A New York State judge has ruled in favor of efforts by Gov. Andrew Cuomo's administration to restrict executive compensation at taxpayer-funded nonprofits, Capital New York reports.

Under the rule instituted in May 2012, nonprofit contractors that get more than $500,000 and 30 percent of their revenue from the state cannot put more than $199,000 a year in state money toward an executive's salary. The regulation prompted multiple legal challenges from social-service providers.

Ruling in a case brought by a home-care charity, Suffolk County Supreme Court Justice Emily Pines said the cap falls within officials' authority "to regulate the financial assistance provided by the state in connection with public health care activities." She added that the regulations "do not truly cap executive compensation" because organizations can tap other funding sources to pay more than $199,000.

Another Supreme Court judge, ruling in April in a separate case, said the state had overstepped its authority in imposing salary restrictions.