Merit pay is now in the midst of a renaissance. Hundreds of school districts are experimenting with some type of performance-based pay system. At least six states have statewide or pilot programs, and the federal government has spent close to $100 million on the Teacher Incentive Fund. Whether such programs will last, encourage the start of others, or fold like their predecessors remains to be seen. In the meantime, there are a number of important policy and empirical questions to ask about these programs and performance-based pay in general. The author addresses the question of whether there are legal obstacles to the creation and implementation of performance-based pay programs. The chapter sets out a framework for analyzing the legal issues raised by performance-based pay, which can be divided into two categories: governmental authority and individual rights. The former addresses whether the government has the authority to develop a performance-based pay system and if there are any limitations on that authority. The latter issue asks whether individual teachers possess any rights that must be protected in the implementation of such a system.

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