On August 3, 2022, New York Governor Kathy Hochul announced the opening of the $1.2 billion dollar Health Care and Mental Hygiene Worker Bonus Program aimed at rewarding and retaining frontline healthcare and mental hygiene workers. Passed as part of the FY2023 New York State Budget in April 2022, this program requires that eligible health care providers (see “Qualified Employers” below) administer and pay up to $3,000 in bonuses to full-time, part-time or independent contractor health care and mental hygiene practitioners, technicians, assistants, support staff, and aides who provide hands-on health or care services in New York State and earn less than $125,000 per year (see “Eligible Employees” below). In addition to the governor’s release announcing the opening of the program, which is codified in Part ZZ of Chapter 56 of the Laws of 2022, the State Department of Health (DOH) launched an informative website with guidance aimed at rapidly implementing the program, with the first deadline for employers’ submissions coming up quickly on September 2, 2022.

Qualified Employers

Qualified Employers are: employers with at least one employee and that (1) bill under the state Medicaid plan; or (2) bill under the home or community-based services (HCBS) waiver; or (3) that bill for Medicaid through a managed care organization or managed long term care plan. Certain educational institutions or other funded programs may also be eligible. This definition includes providers, facilities, pharmacies, and school-based health centers licensed under the Public Health Law, Mental Hygiene Law and Educational Law as well as certain programs funded by the State Office of Mental Health, the Office for the Aging, the Office of Addiction Services and Supports, the Office for People with Developmental Disabilities, and the Office of Children and Family Services.¹

Eligible Employees

Full-time and part-time employees, as well as independent contractors, may be eligible. As set forth by the DOH, the program is available to workers who are front-line health care and mental hygiene practitioners, technicians, assistants and aides that provide hands-on health or care services to individuals. To be qualified, workers:

1. must be continuously employed by a qualified employer for the duration of at least one vesting period;
2. must have a title on the list of titles from the legislation and the DOH;
3. must have an annualized base salary (excluding overtime and bonuses) not exceeding $125,000 per year; and
4. must not be suspended or excluded from the Medicaid program² during the vesting period or when the payment is made.

Eligible Worker Titles: The legislation sets forth a list of eligible worker titles, and authorizes the DOH to determine additional titles. Under that authority, the Commissioner of Health added the titles of “medical fellow” and “medical resident.” DOH guidance explains that workers must support the provision of patient-facing care provided within a patient care unit of a hospital or other institutional medical setting in support of treating and caring for patients. It remains unclear if additional titles are planned to be added, including workers in non-institutional settings, or when additional titles would be announced.

Homecare Aides Excluded: The DOH explained in its FAQs that homecare aides and other similar titles (home health aide, personal care assistant, home maker, etc.) are not an eligible title for the bonus program because the state already enacted a $2.00 per hour wage increase that goes into effect on October 1, 2022 for such workers, and will add another $1.00 per hour next year, as set forth in NY Public Health Law § 3614-f. Fiscal intermediaries operating under Social Services Law SOS § 365-f are also categorically excluded from participation in the program.

The FAQs note, however, that “certain Article 36 entities, such as Certified Home Health Agencies (CHHAs) and Licensed Home Care Services Agencies (LHCSAs), may employ eligible titles (e.g., Nurses, PT/OT Therapists, speech pathologists, etc.) that provide hands-on services, and may be eligible for the bonus if they meet all of the employee eligibility requirements.”

Vesting Schedules

Pursuant to its statutory obligation, on August 3, 2022, the DOH announced a schedule of five, six-month vesting periods:

For the first vesting period, claims must be submitted by employers no later than September 2, 2022. Notably, as discussed further below, the first vesting period is the six months immediately preceding the law being passed as part of the FY2023 New York State Budget.

Bonus Entitlements

Under the program, bonuses are set based upon the number of hours worked by the employee for the vesting period at issue. The maximum bonus an employee can receive in any vesting period is $1,500. Employees are eligible for up to two vesting periods per employer and may receive up to a total of $3,000 under the program. For each vesting period, eligible employees are entitled payments based on the following:

• Eligible non-exempt employees who work 20 to 30 hours a week for the vesting period are entitled to a $500 bonus for the vesting period.
• Eligible non-exempt employees who work 30 to 35 hours per week receive a $1,000 bonus for the vesting period.
• Eligible non-exempt employees who work 35 or more hours receive a $1,500 bonus for the vesting period.
• Full-time overtime-exempt eligible employees receive a $1,500 bonus for the vesting period.

Use of accruals or leave time, including leave under the Family and Medical Leave Act, can be credited towards an employee’s work hours for a vesting period, along with all other hours worked in that period.

The bonus claims process outlined in the law provides for eligible employees to sign an attestation form that confirms their eligibility under the program. While employers must obtain employees’ signatures on the attestation forms, employees cannot file a claim for a bonus payment from the state. Rather, the administration and payment of bonuses is to be handled exclusively by qualified employers subject to strict audit requirements from the state.

Tax and Other Ramifications

While the statute and guidance provide some information on how employers are required to treat bonus payments under the program, several questions remain. It is clear from law and guidance that:

• Bonuses cannot be used to reduce any portion of wages otherwise due to an eligible employee under applicable law, including the Wage Parity Law or the Labor Law, or a collective bargaining agreement.
• Bonuses are taxable at the federal level and should be included in eligible employees’ IRS Form W-2s; such bonuses are not considered income at the state and local level.
• Bonuses are not considered income for public assistance and benefits programs.

Left unaddressed by the statute and thus far in the guidance is how such bonuses under this program can or must be treated for the purposes of overtime, which generally must include non-discretionary bonuses in the calculation of an employee’s “regular rate of pay” that is used for the calculation of overtime rates of pay.

Employer Requirements

Determine Employee Eligibility: Employers are responsible for determining if employees are eligible based upon the eligibility criteria outlined above. Failure to identify, claim and/or pay more than 10% of eligible employees may result in enforcement actions, as outlined below.

File Claims for Eligible Employees: The law directs qualified employers to track hours worked by eligible employees throughout the vesting periods and to submit claims for reimbursement of employee bonus payments through the online portal for bonuses in accordance with the schedule established by the DOH.

Make Bonus Payments: Bonuses must be paid to eligible employees within 30 days of the employer’s receipt of bonus payment. There is no obligation under the program for qualified employers to pay bonus payments to employees before receipt of bonus payment money from the state.

Recordkeeping: Employers must keep records of hours of eligible employees, and documents to substantiate bonus claims, for at least six years. Qualified employers also must make information used for determining employee eligibility available to pertinent regulatory agencies, including the U.S. Department of Health and Human Services, the New York Departments of Labor and Health, the Medicaid Inspector General, and the Attorney General’s Medicaid Fraud Control Unit.

Enforcement and Oversight

The DOH and the Medicaid Inspector General are tasked with audits of employers, and any improperly paid claims under the bonus program will be treated as Medicaid overpayments. Violations or failures under the Health Care Worker Bonus Program are subject to sanctions and penalties where the employer:

• Claims a bonus not due to an employee under the program’s requirements, or makes a claim for an incorrect amount.
• Claims and receives a bonus, but fails to pay it.
• Fails to claim a bonus due to an employee.

Employers in such situations can be subject to penalties of $1,000 per violation. Employers that fail to pay a bonus for more than 10% of bonus eligible workers may be subject to additional penalties and sanctions under the Public Health Law. Employers are further prohibited from recovering any bonuses paid out to employees where the claims are found by the state to be improper.

Collective Bargaining Implications

As the bonus program is non-discretionary in nature — in that health care employers are required to participate and submit bonus applications to the state — there may be no decisional bargaining obligations under the National Labor Relations Act. However, there could be “effects” bargaining obligations as labor organizations are likely to submit detailed requests for information (“RFIs”) concerning employee eligibility, titles, hours worked and gross pay amounts, and timeline for payment, as well as information outlining the employer’s intentions concerning the attestation process. In addition, unions could request immediate labor-management discussions to gain better understanding of an employer’s efforts to comply with the bonus program and ultimately obtain information about the employer’s intended or actual submission to the state. Employers should consult their collective bargaining agreements and counsel to determine potential bargaining obligations, particularly with the short turn-around time before the first submission close date of September 2. Likewise, bonus-related RFIs should be analyzed under the same standard that the employer would apply to any other wage-related information request. The National Labor Relations Board may find RFIs concerning compliance with the bonus program to be “presumptively relevant” (the standard for permissibility for RFIs) to the labor-management relationship.

Employer Takeaways

While additional guidance is expected, given the forthcoming September 2, 2022 submission deadline in connection with the first vesting period, qualified employers promptly should begin ascertaining eligible worker titles in their operations and tracking hours worked during the vesting period to determine bonus entitlements. Qualified employers also should familiarize themselves with required attestation forms and plan on how to communicate with eligible employees about the availability of bonuses, the criteria for same, and the need for (and consequences of not having) attestation forms signed by eligible employees. Qualified employers should continue to monitor the status of the program and watch for any further guidance issued by the DOH.