Legal Opinion: Legislature Can Freeze Public Employee Pay

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Contact: Lise Bang-Jensen

The state Legislature has the power to impose a temporary freeze on the collectively bargained wages and “step” increments of public employees in New York to help deal with a severe fiscal crisis, according to a legal opinion released today by the Empire Center for Public Policy.

“Temporary wage freezes are lawful under New York and Federal law provided they are supported with appropriate legislative findings and tailored in a reasonable manner to protect the public,” concludes the opinion written by Terry O’Neil and Howard Miller, partners at the law firm of Bond, Schoeneck & King, PLLC.

O’Neil and Miller cite federal and state court decisions upholding wage freezes in New York City, Yonkers and Buffalo, all imposed with legislative authorizations by state- created financial control boards. In another case, a federal court upheld a furlough in Baltimore, Md.

“In short, a court reviewing a statutory wage freeze will likely defer to legislative findings of a fiscal emergency,” they write. “If it can be shown that other less intrusive interventions were tried without success to protect the public, the Legislation will be upheld.”

The opinion notes that the state has already sought unsuccessfully to deal with its financial problems by increasing taxes, cutting aid to school districts and municipalities, delaying income tax refunds, postponing payments to school districts and temporarily halting highway construction funds as the construction season began.

A freeze on all public-sector wages at the state, local and school district level would save at least $1.6 billion in 2010-11 fiscal years, growing to over $2 billion by 2013, according to the Empire Center’s recent report, Blueprint for a Better Budget. A wage freeze would more than offset the property tax increases that most school districts have proposed for 2010-11, according to E.J. McMahon, director of the Empire Center.

“A freeze can’t completely prevent layoffs, but it’s a way of preserving jobs and public services that would otherwise be jeopardized as a result of aid cuts that are now absolutely essential to balance the state budget,” McMahon said.

O’Neil, a nationally recognized expert in labor law, is co-author of the 2007 Empire Center report, Taylor Made: The Cost and Consequences of New York’s Public-Sector Labor. Miller specializes in employment and education law. The Albany-based Empire Center is non-partisan, independent think tank.