Can a Mississippi city pay employees a $200 annual bonus for getting a yearly wellness check from their primary care doctor?

Plain-English summary

Biloxi wanted to pay each city employee $200 a year as an incentive for getting an annual wellness check with their primary care physician. The city attorney asked whether that was allowed under Mississippi law.

The AG said yes, with the standard performance-based incentive pay rules.

Sections 66 and 96 of Article IV of the Mississippi Constitution prohibit public entities from paying employees extra compensation for past services. Doing so would amount to an unlawful donation. So a "thanks for the great year" bonus paid for past performance is out. But "do this thing in the coming year and we'll pay you" is in, if structured correctly.

The AG distilled the test from earlier opinions (Eleuteris (2013), Campbell (2010), Chiles (2020), Gaskin (2022)). The incentive payment must be:

1. Contracted for between the employer and the employee prior to the date the services are to be performed,
2. Determined in accordance with objective standards of measurement,
3. Earned by personal services performed by the employee.

For Biloxi's wellness program: the city must adopt the policy before employees do their wellness checks. The standards must be objective (e.g., proof of a wellness visit with a primary care physician within the calendar year, documented by a physician's note or claim record). The employee must actually perform the wellness check (or whatever the qualifying service is) to earn the payment.

The AG also flagged the procedural piece. Whether the proposed program meets the requirements is a factual determination for the municipality, made consistent with the facts and entered on the governing authority's minutes. § 25-41-11 requires minutes of all public body meetings, and the AG has long held that "[a] public body may only speak through its minutes" (Custom (2010)).

The opinion adds one more point: the incentive payment is excluded from "earned compensation" for PERS retirement purposes under § 25-11-103(k), so it may not be reported to PERS for retirement (Chiles (2020)). The AG did not address any federal-law issues; its analysis is entirely about Mississippi constitutional and statutory law.

What this means for you

If you are a Mississippi city or county HR director designing a wellness incentive

Under this opinion, a city may pay this kind of incentive if it satisfies the three-part test the AG drew from its prior opinions: the payment must be (1) contracted for with the employee before the services are to be performed, (2) determined by objective standards of measurement, and (3) earned by personal services the employee performs. A payment for a wellness check the employee already completed before the program existed would be compensation for past services, which Sections 66 and 96 of Article IV of the Mississippi Constitution treat as an unlawful donation.

Whether a specific program meets the three requirements is a determination for the municipality to make, consistent with the facts, and spread upon the governing authority's minutes (§ 25-41-11; Custom (2010): "[a] public body may only speak through its minutes"). The $200 amount is a policy choice; the opinion addresses the structure, not the figure.

If you are a Mississippi city or county employee considering a wellness incentive

Under this opinion, the incentive is permissible only if it is set up prospectively: promised before the qualifying services are performed, tied to objective standards, and earned by your own performance. A bonus announced after the fact for a wellness check you already had would be paying for past services, which the AG says the constitution does not allow.

One consequence the opinion flags: the payment is excluded from "earned compensation" under § 25-11-103(k), so it does not count toward your PERS retirement calculation.

If you are a city attorney drafting the policy

Use the AG's three-part test as the structural frame: (1) the program is adopted and contracted before the qualifying services are performed; (2) the trigger is an objective, measurable standard; (3) the payment is earned by personal services. The opinion stresses that whether the program meets these requirements is a factual determination the municipality makes and spreads upon its minutes (§ 25-41-11; Custom (2010)). The opinion does not address federal wellness-program or tax rules, so it does not clear those.

If you are a Mississippi mayor or city council member voting on a wellness incentive program

The state-law question the opinion answers is whether the program is structured as prospective, objective, personal-service incentive pay rather than a payment for past services. Before acting, the governing authority makes that determination consistent with the facts and records it on the minutes. The opinion does not opine on budget choices or on any federal-law requirements.

If you are a PERS administrator

Under this opinion, performance-based incentive payments meeting the AG's test are excluded from "earned compensation" as defined in § 25-11-103(k) and "may not be reported" to PERS for retirement purposes (Chiles (2020)).

Common questions

Q: Can the city pay the bonus only to employees who actually complete the wellness check?
A: Yes. The opinion frames the payment as earned by personal services the employee performs, so paying only those who complete the qualifying activity is the structure the AG describes.

Q: Why can't the city just pay employees who already got a wellness check this past year?
A: Because that would be extra compensation for past services, which the AG says Sections 66 and 96 of Article IV of the Mississippi Constitution prohibit as an unlawful donation. The payment has to be contracted before the services are performed.

Q: Does the bonus count toward my PERS retirement?
A: No. The opinion says these incentive payments are excluded from "earned compensation" under § 25-11-103(k) and may not be reported to PERS for retirement.

Q: Who decides whether a particular wellness-incentive program is set up correctly?
A: The AG says that is a determination for the municipality, made consistent with the facts and spread upon the governing authority's minutes. The AG opines on the legal standard, not on whether a specific program satisfies it.

Background and statutory framework

Sections 66 and 96 of Article IV of the Mississippi Constitution prohibit donations of public funds. Extra compensation paid for past services has been treated as a donation, because the public got the services already and a later payment is a gift, not compensation.

Performance-based incentive pay is a recognized exception. The AG opinion line (Eleuteris (2013), Campbell (2010), Chiles (2020), Gaskin (2022), and now Abide (2023)) holds that incentive pay is permissible when it is (a) contracted prospectively, (b) determined by objective standards, and (c) earned by personal services. The reasoning: this is not a gift; it is compensation under a prospectively-set agreement.

§ 25-41-11 requires public bodies to keep accurate minutes of meetings and to record final actions. The Custom (2010) opinion line confirms that "[a] public body may only speak through its minutes": the program adoption and the eligibility determinations both belong on the minutes.

§ 25-11-103(k) defines "earned compensation" for PERS retirement purposes. The AG states that performance-based incentive payments are excluded and may not be reported to PERS for retirement. The Chiles (2020) opinion is the authority the AG cites on this point.

Citations

• Miss. Const. Art. IV, § 66 (donation prohibition)
• Miss. Const. Art. IV, § 96 (donation prohibition)
• Miss. Code Ann. § 25-11-103(k) (PERS earned compensation definition)
• Miss. Code Ann. § 25-41-11 (Open Meetings Act minute requirements)
• MS AG Op., Campbell (Apr. 12, 2010) (prospective incentive pay permissible)
• MS AG Op., Custom (Mar. 12, 2010) (public body speaks through minutes)
• MS AG Op., Eleuteris (Nov. 1, 2013) (extra compensation for past services is unlawful donation)
• MS AG Op., Chiles (Nov. 10, 2020) (three-prong test for incentive pay; PERS exclusion)
• MS AG Op., Gaskin (Oct. 11, 2022) (incentive pay framework)

Source

• Landing page: https://attorneygenerallynnfitch.com/divisions/opinions-and-policy/recent-opinions/
• Original PDF: https://attorneygenerallynnfitch.com/wp-content/uploads/2023/01/P.Abide-January-24-2023-Incentive-Payment-for-City-Employees-that-Receive-Annual-Wellness-Check.pdf

Original opinion text

January 24, 2023
Peter C. Abide, Esq.
Attorney, City of Biloxi
925 Tommy Munro Drive, Suite H
Biloxi, Mississippi 39532
Re:

Incentive Payment for City Employees that Receive Annual Wellness Check

Dear Mr. Abide:
The Office of the Attorney General has received your request for an official opinion.

Question Presented
May the City of Biloxi add an employee incentive of $200.00 a year for those employees who
receive an annual wellness check with their primary care physician?
Brief Response
A city is authorized to make incentive payments for future performance when it is contracted for
prior to the date when services are to be performed, determined in accordance with objective
standards of measurement, and earned by personal services performed by the employees.
Applicable Law and Discussion
Sections 66 and 96 of Article IV of the Mississippi Constitution prohibit public entities from
paying employees extra compensation for past services because doing so would amount to an
unlawful donation. MS AG Op., Eleuteris at 1 (Nov. 1, 2013). Employee incentive payments that
"are implemented prospectively and for which payment is made pursuant to conditions met in the
future do not run afoul of [the] constitutional provisions." MS AG Op., Campbell at 1 (Apr. 12,
2010). Therefore, if the city wishes to provide employee incentive pay, the incentive payments
must be "(1) contracted for between the parties or with the employee prior to the date when services
are to be performed; (2) determined in accordance with objective standards of measurement; and
(3) earned by personal services performed by the employee." MS AG Op., Chiles at 1 (Nov. 10,
2020); see also MS AG Op., Gaskin (Oct. 11, 2022). Whether the proposed incentive payments
for wellness checks meet the requirements is a determination to be made by the municipality,
consistent with fact, and spread upon the minutes of the governing authority. See Miss. Code Ann.
§ 25-41-11 (requiring minutes to be kept of all meetings of a public body and including "an
accurate recording of any final actions taken at such meeting"); MS AG Op., Custom at 2 (Mar.
12, 2010) ("[A] public body may only speak through its minutes.")
Additionally, though performance-based incentive pay for municipal employees is authorized
when the aforementioned requirements are met, such payments are excluded from "earned
compensation" as defined by Mississippi Code Annotated Section 25-11-103(k) and may not be
reported to the state's Public Employees' Retirement System (PERS) for purposes of retirement.
Chiles at *2.
If this office may be of any further assistance to you, please do not hesitate to contact us.
Sincerely,
LYNN FITCH, ATTORNEY GENERAL
By:

/s/ Abigail C. Overby
Abigail C. Overby
Special Assistant Attorney General