Big names in the staffing agency world are urging the U.S. Department of Labor (DOL) to classify temporary staff in nursing homes, among other health care settings, to be classified as employees rather than independent contractors.
The coalition of some 30 health care staffing companies sent a letter earlier this month to the DOL, calling for this change to the classification because of missed benefits for those nurses labeled as independent contractors, inadequate training of temporary workers as well as higher legal risks for facilities with misclassified workers.
The companies also asked the federal department to provide its own response and guidance on the matter.
Companies such as IntelyCare, Gale Healthcare Solutions, ShiftMed and connectRN as well as about 26 other health care staffing companies endorsed the letter.
The staffing coalition’s letter follows the DOL’s notice of proposed rulemaking issued in October 2022, regarding employee classification under the Fair Labor Standards Act (FLSA), written comments for which were collected in November.
DOL’s proposed rule offers several points of clarification that support the coalition’s position, the letter said. One, that being classified as employees is reflected in the nature of the nursing profession, and also that a lack of permanence in work relationships is not indicative of independent contractor status.
The DOL’s proposed rule also clarified that an independent contractor’s compensation must be “capital or entrepreneurial in nature” to support independent contractor, or 1099 status. Meanwhile, the “opportunity for profit or loss” depends on the independent contractor’s managerial skill, the letter notes of DOL’s proposed rule.
In the letter, the coalition of staffing agencies took issue with the misclassification of temporary nurses, saying that there are significant risks associated with this. Independent contractor status harms such workers, they said, being denied employment-related benefits like overtime pay, access to employer healthcare, unemployment insurance, workers’ compensation and other benefits.
On top of missed benefits, agency workers in the nursing home space are subjected to stressors resulting from being in a highly regulated environment and thrust with the care of a vulnerable population, with managerial oversight and control needed for most clinical positions, the coalition of staffing companies noted.
“The nature of the job inherently requires a higher level of oversight, training, and control to ensure optimal patient outcomes and achieve the required standards of care,” the letter said. “Facilities that rely on independent contractors significantly increase the risk of substandard patient care and malpractice claims.”
Agencies that connect independent contractors and nursing homes, they said, do not provide necessary clinical and professional oversight for their workers, leading to insufficient training, continuing education and support.
SNFs that use independent contractors, or 1099 workers, face co-employment risks, misclassification claims and audits related to unpaid overtime, unpaid taxes and workers’ compensation liability, authors said.
The coalition referenced one enforcement action brought against a temporary nursing staffing registry in Walsh v. Medical Staffing of America. The DOL argued that the registry was misclassifying nurses as independent contractors, and that they should have been W2 workers under the FLSA.
“Based on the DOL’s briefing and the applicable case law, the coalition’s position is that the economic reality test plainly shows that temporary nursing staff operating in post-acute facilities should be classified as employees,” the letter said, referencing an assessment administered by the DOL.
Among the many issues the economic reality test addresses is the degree to which the employer has control over how the work is performed as well as the worker’s opportunity for profit or loss based on their managerial skill.
During the pandemic, more than a half dozen technology-enabled staffing agencies opted to classify their workers as independent contractors, the companies said in the letter. The move took advantage of a market experiencing unprecedented demand and increasing labor shortfalls.
The temporary nursing industry has grown rapidly in the last few years, the companies argued in the letter, noting that roughly 100,000 registered nurses (RNs) having left the industry and more than 800,000 plan to leave in the next five years, with difficult working conditions and stress as being the main reasons for RNs leaving the health care space.
The nursing home industry has lost 221,0000 caregivers, according to the letter, with 87% of nursing homes experiencing moderate to high staffing shortages as of June 2022. Shortages affected access, with 61% of facilities last year reporting limiting new patient admissions and 73% saying that they were concerned that staffing shortages would lead to forced closures.
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