A proposal from the U.S. Department of Labor would impact long-term care providers and other organizations that rely on temporary workers to meet their staffing needs.
The proposed rule, which is scheduled to be finalized this spring, provides clearer guidelines for whether a worker is an employee or an independent contractor and sets the stage for enforcement against those who get this classification wrong.
This rule has a direct bearing on long-term care providers that rely on platform-based temporary staffing companies. Now one of the fastest growing segments of the temporary staffing industry, these platforms offer numerous advantages, as they equip providers to secure staff with far greater speed, efficiency and ease compared to traditional staffing services.
However, not all platform-based companies are created equally, and the differences are important to understand. Currently, healthcare providers have two options when selecting a platform-based staffing partner. On one side, companies offer clinicians that are hired as “W-2” employees; on the other side, firms offer workers as “1099” independent contractors.
While working as an independent contractor makes sense for many “gig-style” jobs – think a contractor painting your house or a freelance photographer for a wedding – misclassifying healthcare workers as independent contractors is not only illogical; it can pose serious financial and legal risks.
The proposed rule would provide a more complete analysis of factors that should be taken into account when assessing worker classification, including the degree of control a worker has on the job. Reasonably, workers exercising more control are more apt to be considered independent contractors, whereas those with limited control would be considered to be working as employees.
As anyone who has worked in the long-term care industry knows, temporary nursing staff do not exercise significant control over their duties when they work per diem shifts. They do not dictate when they will arrive or depart, the responsibilities they will have, or what procedures they will use. On the contrary, just like a healthcare provider’s permanent employees, clinicians are offered set hours, work under management supervision, and follow standard procedures. These work conditions are critical for ensuring that important standards of care are met – and are unequivocally indicative of W-2 employee status.
Healthcare providers that misclassify workers as independent contractors may face enforcement actions in the future. But the financial and legal risks do not end there. Providers that misclassify workers can be subject to unpaid payroll taxes, workers’ compensation liability, and malpractice claims. Last year, a Philadelphia-based healthcare staffing company paid $9.3 million in back wages and liquidated damages to their staff after it was discovered they misclassified employees as independent contractors and failed to provide required overtime pay. The potential to be regarded as a “joint employer” puts healthcare providers served by 1099 companies at their own legal and financial risk. When the new Department of Labor rule goes into effect, the ramifications of misclassification will only become more serious.
The national nursing shortage continues to challenge the long term care industry. It puts more strain on nurses, causing many to leave or to look for more flexible work options. Indeed, a recent survey of more than 500 clinicians working per diem shifts found 65% work temporary shifts exclusively instead of working for a facility full-time. Nearly half of these clinicians reported working the equivalent of a 40-hour week, showing they want to work, but on their own terms.
As more nurses turn to flexible work options, it is important for healthcare providers to know the differences between 1099 and W-2 clinicians, and the risks that will come with having improperly classified workers providing care in their communities.
As a 30-year veteran in the healthcare staffing industry, I have seen the effects of the nursing shortage firsthand and I understand the impulse to hire independent contractors as a quick fix, “Band-Aid” solution. However, the legal, financial and quality ramifications of relying on 1099 workers are simply not worth the consequences, especially when there are technology platforms that provide the same service with W-2 employed clinicians. W-2 employment protects clinicians and providers, and ultimately, contributes to a stronger healthcare system for us all.
The Department of Labor proposal is a step in the right direction when it comes to limiting instances of worker misclassification. By understanding this rule and hiring W-2 clinicians, healthcare communities can take a proactive step to solve their staffing challenges today and shield themselves from the potential risks of worker misclassification in the future.
Tony Braswell is president and founder of Gale Healthcare Solutions, a leading technology-based healthcare staffing company.
The opinions expressed in McKnight’s Long-Term Care News guest submissions are the author’s and are not necessarily those of McKnight’s Long-Term Care News or its editors.
