Temporary Health Care Staffing Agencies Can No Longer Charge for Hiring Their Personnel

Many health care entities turn to staffing agencies to help fill voids in their personnel rosters. Effective August 1, 2023, a new Article 29-K of the New York Public Health Law imposes new requirements upon these temporary health care staffing agencies. The new law applies to a person or entity “in the business of providing or procuring temporary employment of health care personnel for health care entities.” A “health care entity” is an agency, corporation, facility, or individual providing medical or health care services. The personnel covered includes nurses, CNAs, and licensed or unlicensed direct care staff provided to administer temporary health care services in a health care entity. A direct care worker is one who is responsible for patient handling or assessment as a regular or incidental part of their services, which could encompass a broad array of individuals. The law also applies to nurses’ registries and entities that use mobile applications or other technology-based platforms to provide temporary placement of health care personnel.¹

In addition, contracts between health care entities and agencies have a host of new requirements. They must include, at a minimum: 

• The types and qualifications of health care personnel available for assignment
• The required minimum licensing, training, and continuing education requirements for each assigned health care personnel
• Any requirement for minimum advance notice in order to ensure prompt arrival of assigned health care personnel
• The maximum rates that can be billed or charged by the temporary health care services agency
• Procedures for the investigation and resolution of complaints about the performance of agency personnel
• Procedures for notice from health care entities of failure of medical personnel to report to assignments
• Procedures for notice of actual or suspected abuse, theft, tampering, or other diversion of controlled substances by medical personnel

Most importantly, temporary staffing agencies are prohibited from restricting in any manner the employment opportunities of their health care personnel. They cannot require personnel to enter into noncompete agreements and cannot require the payment of liquidated damages, employment fees, or other compensation if the person is hired as a permanent employee of a health care entity where the individual was placed to work.

The agency must submit to the Department of Health (DOH) executed copies of all contracts with health care entities within five business days of the effective date of each contract (although these contracts are not subject to disclosure to the public under the Freedom of Information Act), as well as copies of all invoices to health care entities’ personnel. In addition, on a quarterly basis, agencies will be required to report to the DOH a full disclosure of charges and compensation, including:

• A schedule of all hourly billing rates per category of health care personnel 
• A full description of administrative charges 
• A schedule of rates of all compensation per category of health care personnel, including:
  • Hourly regular pay rate
  • Overtime
  • Holiday pay
  • Travel or mileage pay
  • Shift differential
  • Weekend differential 
  • Hazard pay 
  • Charge nurse add-on
  • Any health or other fringe benefits provided 
• The percentage of health care entity dollars that the agency expended on temporary personnel wages and benefits compared to its profits and other administrative costs 
• A list of the states and zip codes of the primary residences of their health care personnel 
• The names of all health care entities with which they have contracted within New York State
• The number of agency personnel working at each entity

The DOH will publish the list of registered agencies on its website and will also publish a quarterly report containing aggregated and de-identified data.

Agencies must now be registered with the DOH. Just recently, the DOH published an updated webpage that includes links for registration, uploading the required documentation, and FAQs. A 30-day grace period for submitting registration materials has been extended to November 15, 2023, and the submission of the first quarterly reporting file will be due by November 30, 2023. 

Agencies that fail to register with the DOH may be subject to penalties and fines of up to $2,000 for every day they fail to register. In the event of a failure to comply with the new law, the DOH may, after appropriate notice and hearing, suspend, revoke, or refuse to issue or renew an agency registration, issue penalties and fines, or both. Upon the request of the DOH, the New York Attorney General may also bring an action or an injunction against any individual or entity that violates these requirements. Questions may be submitted to TempAgencyRegistration@health.ny.gov. Additional information will be added to the FAQ page as questions are addressed.

If you have any questions regarding the content of this alert, please contact Fran Ciardullo, special counsel, at fciardullo@barclaydamon.com, or another member of the firm’s Health & Human Services Providers Team.
                                                                           
¹Licensed home care agencies and individuals who only provide their own services on a temporary basis to health care entities are exempt from the new law’s requirements.