In March, 2011, the Nassau County Interim Finance Authority [NIFA] imposed a year-long wage freeze on Nassau County employees.
Fifteen unions representing these employees sued NIFA, its directors, and other County officials, contending that the wage freeze, because it was a legislative act that was not reasonable and necessary to achieve NIFA’s purported goal of fiscal soundness, violated the Contracts Clause of the United States Constitution* to the extent the freeze obviated the relevant compensation provisions set out in various collective bargaining agreements between Nassau County and the several employee organizations then in place.
Federal district court granted NIFA's motion for summary judgment. The court held that NIFA’s implementation of the wage freeze was administrative, in contrast to being legislative, and, therefore, "did not implicate the Contracts Clause."
The United States Circuit Court of Appeals, Second Circuit, assuming, without deciding, that NIFA’s imposition of the wage freeze was legislative in nature, concluded that the wage freeze was a reasonable and necessary means to achieve NIFA’s asserted end of "ensuring the continued fiscal health of the County."
For that reason, said the court, NIFA's action "did not violate the Contracts Clause," and affirmed the judgment of the district court.
* Article I, Section 10, Clause 1, of the Constitution of the United States provides, in pertinent part, that "
The decision is posted on the Internet at: