Court Opinion

ID: 3457993
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:26:25.395194+00
Date Added: 2024-06-11T13:52:54.843609
License: Public Domain

Dear Mr. Duhon:
You have requested the opinion of this office as to whether an incentive pay plan for Abbeville General Hospital employees, providing for a bonus of a fixed percentage of their salary and based upon the hospital's overall financial performance at a pre-determined level, is constitutional under Louisiana Constitution Article VII, Section 14 and La. R.S. 33:1891.
Article VII, Section 14 provides in part:
     (a)  Except as provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged or donated to or for any person, association, or corporation, public, or private.
Your request also sought review of La. R.S. 33:1892, however this statute is applicable to municipalities only and therefore is not relevant to compensation paid by hospital service districts to their employees.
In response to a similar opinion request, Opinion Number 89-112 opined that an incentive pay plan could pass constitutional muster if the incentive pay was awarded for employee achievements beyond the scope of ordinary duties.  However, Opinion Number 89-328 opined, "If the bonuses are simply spontaneous payments for past performance, they are unconstitutional donations of public funds."
The information you have provided to us on the incentive pay plan proposed for Abbeville General does not appear to meet constitutional criteria, since it is the Hospital's overall financial performance rather than the individual employee's extraordinary effort  which is the determinant of extra pay.
Still, it does appear that an acceptable incentive pay plan can be fashioned taking into consideration the criteria suggested above.
I trust that this answers your inquiry.  Please advise if we can be of further assistance.
Sincerely,
                           RICHARD P. IEYOUB Attorney General
                           BY: GLENN R. DUCOTE Assistant Attorney General
GRD:251