A federal appellate court has upheld a state-imposed freeze on pay increases for Nassau County employees—reaffirming the Legislature’s power to grant similar much-needed budgetary relief to every level of government in New York to help deal with the severe post-pandemic fiscal crisis.

The 2011 pay freeze imposed by the Nassau Interim Fiscal Authority (NIFA) was “reasonable and necessary to achieve the legitimate public goal of rescuing the County’s finances,” and NIFA acted “with a legitimate public purpose,” a three-judge panel of the 2nd Circuit U.S. Court of Appeals held.

This is an installment in a special series of #NYCoronavirus chronicles by Empire Center analysts, focused on New York’s state and local policy response to the coronavirus pandemic.

The county’s public employee unions had sued NIFA to block the freeze, claiming it violated the contracts clause of the U.S. Constitution. But the federal judges—appointees of Presidents Clinton, Obama and Trump, respectively—called the pay freeze “eminently reasonable.”

“NIFA reasonably concluded,” the judges wrote, “that the broader public interest would be served by obtaining savings from a wage freeze instead of through what appeared to be the County’s only other remaining options: draconic additional cuts to the County’s labor force or unpaid furloughs.”

The court also gave a good explanation of how, as they put it, a government entity “may not contract away its power to govern in the public interest”:

A government contract that induces a sword company to produce plowshares cannot be abrogated by an otherwise valid statute simply because the government later discovers that a knife company can make cheaper plowshares. On the other hand, a clause in that contract that says the state will forego war cannot keep the government from declaring war when the national security demands it.

Their ruling noted that Nassau County residents benefit from NIFA’s pay freeze powers “because layoffs and furloughs would lead to a decrease in services, while a wage freeze would not.”

This latest decision, handed down in May, builds on a 2006 federal appeals decision that upheld a 2004 pay freeze by the City of Buffalo’s control board, the Buffalo Fiscal Stability Authority. 

As E.J. McMahon explained at the onset of the COVID crisis, the state Legislature could save at least $1.9 billion in just the first year by freezing public-sector pay. The Nassau County ruling is a timely reminder that the Legislature can enact a freeze that withstands federal legal challenges provided it shows the move is “reasonable and necessary” to close its own $10 billion budget gap and to restore the fiscal health of its political subdivisions and public authorities.

About the Author

Ken Girardin

Ken Girardin is the Empire Center’s Director of Strategic Initiatives.

Read more by Ken Girardin

You may also like

Record high public pension fund return won’t necessarily mean lower pension costs

The cost to taxpayers of New York's generous pension benefits for government employees depends largely on the performance of pension fund investments. Read More

Digging deeper on the (very deep) East Side Access project

Governor Cuomo held a press conference at Grand Central Terminal today to announce completion of construction work on the $11 billion East Side Access project, which for the first time will provide direct Long Island Railroad (LIRR) service to and from Gr Read More

New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year

The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. Read More

Where were New Yorkers headed in the run-up to the pandemic?

The Empire State has lost a net 1,585,770 residents to the rest of the country since 2010, the largest outflow of any state Read More

Financial plan update reflects NY state budget loaded with cash

A year after Governor Cuomo declared the state was "broke" due to the pandemic, New York's budget is bursting with cash Read More

New York’s jobs recovery outpaced U.S. in April

Private-sector employment in New York increased faster than the nationwide recovery rate in the month of April, according to The April count of private-sector employment was estimated at 7.4 million jobs, up slightly mo Read More

Voters Approve Nearly All School Budgets Within Tax Cap

School budget votes proposing an average increase in per pupil spending of 4.2 percent were overwhelmingly approved in state-wide voting held yesterday. Read More

NY per-pupil school spending topped $25k in 2018-19

New York's spending on public elementary and secondary education reached $25,139 per pupil during the 2018-19 school year, once again surpassing all states in . The Empire State's public schools spent 91 percent more than the national Read More


Sign up to receive updates about Empire Center research, news and events in your email.


Empire Center for Public Policy
30 South Pearl St.
Suite 1210
Albany, NY 12207

Phone: 518-434-3100

General Inquiries: Info@EmpireCenter.org

Press Inquiries: Press@EmpireCenter.org


The Empire Center is an independent, non-partisan, non-profit think tank located in Albany, New York. Our mission is to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.

Empire Center Logo Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!