The Soapbox and Toolbox for New York State's Nonprofits

July 7, 2017

NY Appellate Court Issues Decision on Executive Comp Regulations

NY Appellate Court Issues Decision on Executive Compensation Order and Regulations 

Greenberg Traurig Alert
READ THE FULL ALERT

On June 22, 2017 – more than 4 years after the issuance of Executive Order (EO) 38 and regulations promulgated by 13 New York State agencies  limiting the amount certain service providers could compensate executives and spend on administrative expenses – the New York State Appellate Division, Third Department, affirmed the judgment of the lower court inLeadingAge New York, et al. v. Shah, et al. Both courts upheld the Department of Health (DOH) regulation on executive compensation and administrative expenses generally, but struck down the compensation “soft cap” component.  Applying the Court of Appeals’ multi-factor analysis in Boreali v. Axelrod, the four-Justice majority concluded that “limit on administrative costs and executive compensation paid for by state funds and state-authorized payments, do[es] not violate the separation of powers doctrine.”  In contrast, the Court said that DOH exceeded its authority by imposing the soft cap and restricting executive compensation paid from non-state dollars.  In a lengthy discussion of New York administrative law, the Court explained that “the soft cap provision cannot pass constitutional muster,” as it violates the constitutional separation of powers doctrine.  As a result, there is now a conflict between the Appellate Division’s Third Department and Second Department, which previously upheld Governor Cuomo’s Executive Order and DOH’s implementing regulations.

Greenberg Traurig Alert
READ THE FULL ALERT




Share This Article

NYCON develops and promotes an effective and vibrant charitable nonprofit community throughout New York State.  We strengthen organizational capacity, act as an advocate and unifying voice, help to inform philanthropic giving, and conduct research and planning to demonstrate relevance and impact.