As government entities and organizations in the nursing home space are scrambling for policy changes to regulate staffing agencies, they seem to be prioritizing legislation that addresses price gouging while worker classification also remains on the table.
The Protecting the Right to Organize Act (PRO Act) introduced in Congress in 2021 and currently being examined by a Senate committee, if passed will make it harder to classify workers as independent contractors – a classification not beneficial for nursing homes.
It that has traditionally benefited temp agencies, while shifting the liability to skilled nursing facility (SNF) providers. SNFs currently employ more 1099 workers than ever before in the past, and since the pandemic a growing number of these workers are less clinically skilled, often requiring training by the nursing home. A more lax application of the 1099 classification to accommodate for a scarcity of workers has now meant that certified nursing assistants (CNAs) and licensed practical nurses (LPNs) are also being classified as independent contractors.
And so, nursing home advocates are hoping legislators will clamp down on both misclassification and price gouging, which in some states can result in less skilled clinical staff earning four times as much as the average going rate. To that end, many states have introduced wage rate caps.
Moreover, while the PRO Act deals heavily with expanding union protections, the bill also revises the definitions of the terms employee, supervisor and employer to broaden the scope of individuals covered by fair labor standards.
And, national organizations like the American Staffing Association are offering members guidance on how to stay informed about the risks of misclassifying workers, and at the same time also encouraging enforcement action to investigate potentially unlawful practices in highly controlled health care environments, including SNFs.
On the federal level too, former Senate Majority Leader Tom Daschle has called for more oversight with staffing agencies – those employing W2 workers and those connecting 1099 workers with contracts – leading to health care labor law webinars being hosted by the Department of Labor.
But generally, while there are ongoing efforts to push for regulation, more robust efforts have stalled. And some industry experts say a careful, more balanced consideration of temp agency regulation is crucial. After all, temp agencies can allow flexibility and enable the industry to boost a depleted workforce during a crisis, they argue.
Steve LaForte, director of corporate affairs and general counsel for Cascadia Healthcare, for one is concerned that measures to regulate the staffing agency industry are too narrow of an approach, and might overregulate the space while nursing homes are still grappling with the workforce shortage.
Stateside policy
On the state level, it appears policy is geared more toward the staffing agency industry overall, with a focus on having agencies join a registry or curbing price gouging rather than honing in on worker misclassification.
Pennsylvania, for one, passed the Health Care Facilities Act, which would further regulate staffing agencies regardless of their types of workers, but it has yet to be enacted after Former Gov. Tom Wolf signed the bill into law last fall.
Pennsylvania is among just a handful of states that passed legislation to oversee and regulate staffing agencies, said Zach Shamberg, CEO of the Pennsylvania Health Care Association (PHCA).
“It was the Wild West when it came to staffing agencies and operating across the long-term care continuum, and the entire health system,” Shamberg told Skilled Nursing News. “Moving forward in Pennsylvania, there will be oversight, there will be accountability mechanisms to ensure that all staffing agencies are operating as good partners with nursing homes, personal care homes, and assisted living communities.”
Prior to amendment processes, the legislation had protections to ensure all staffing agency employees were W-2 workers, Shamberg said, but that was scrubbed from the bill along with caps on how much agencies can charge SNF operators for temporary staff.
The state happens to be within the sights of the Department of Labor as it cracks down on 1099 worker misclassification, with operator Comprehensive Healthcare Management Services sued by the entity for an alleged $19 million owed due to unpaid overtime.
Rate caps need to be included either at the state or federal level, he said, given the price gouging happening among staffing agencies and average hourly rate at most four times the normal rate for CNAs, LPNs and RNs.
He views the legislation as a “first step,” with staffing agencies now having to register with the state of Pennsylvania and its Department of Health. The law also has a mechanism for SNF providers to report on staffing agencies, he said, and ensure they are good partners.
Rhode Island, Oregon, Minnesota and Massachusetts will soon have staffing agency oversight as well, he said, with a wage rate cap component. At the federal level, the Federal Trade Commission has received letters about staffing agencies price gouging nursing homes, but no action has been taken.
“There will be a reporting mechanism and there will be enforcement from our Department of Health, if a staffing agency does something wrong,” added Shamberg. “There are subsequent steps that we need to and should take both in Pennsylvania and across the country to ensure that this is a sustainable model moving forward.”
Coupled with the latest legislation, PHCA is also working with the state Department of Health to track whether nursing home citations involved a full time employee or a member of agency staff.
“We’re asking for that data, we’d like to see those numbers,” said Shamberg. “What I can tell you is, anecdotally, as we hear from our providers, more and more of the citations they’re experiencing are committed by agency staff, not full time employees, not folks with skin in the game necessarily, but agency staff.”
Balancing overregulation and oversight
Shamberg feels that the Pennsylvania legislation is, in fact, trying to strike a balance between overregulation and oversight of staffing agencies overall.
It’s a delicate dance, he said, recognizing staffing agencies as important partners throughout the pandemic, while also ensuring a best possible system for providers, their workers and residents.
“But also not experience the price gouging and the abuse that too often we hear from providers,” is something the legislation will control, Shamberg said.
Idaho, where Cascadia is based, has not enacted any added regulatory oversight for staffing agencies, and La Forte advises caution on any over zealous efforts to regulate.
“I’ve been in front of lots of legislators in the state of Idaho, where all of my entreaties regarding agency labor are met with the rejoinder that Idaho believes in the free market,” said LaForte. “There’s not really any ironic realization that our industry is not a free market. To point out that Medicaid reimbursement is not a free market doesn’t go super far either.”
But for others like Shamberg, Pennsylvania’s regulation of temp agencies will bear fruit for the industry. In addition to its staffing agency legislation, Shamberg said misclassification of workers across the health care continuum is a big priority of PHCA, and of the PA state legislature.
Just like the “first step” for more oversight among staffing agencies, such steps need to be taken to ensure correct worker classification, and that staff are getting the benefits they deserve, he said.
More discernment among operators
Cascadia has always been “really careful” about how they use 1099 workers, LaForte said. He reiterated Cascadia’s biggest issues include labor, workforce, and agency among policymakers in Washington, and state legislators in Montana, Arizona and Oregon.
“The control issue is just too ripe,” he said. “In our industry, you can’t really get away with it.”
Instances of Cascadia using 1099 workers have been rare, he said. But one example involved bringing in clinical leadership to help a facility manage a plan of correction process after a survey.
Cascadia chose a clinical consultant from a staffing agency that had been around for 35 years, and is operated by a registered nurse (RN).
“We brought that person on as a 1099 [worker], to come in and be a clinical resource consultant, to bolster our clinical leadership team and get through the re-survey process,” said LaForte.
Otherwise, Cascadia operates an in-house pool of floating staff to share between buildings, and has W-2 agency labor – but has been focused on reducing the latter since January.
“Your quality is less, without question,” LaForte said of agency staff. “It’s not the same commitment. It’s not the same cultural assimilation.”
In place of too much regulation, including that on how to classify workers, LaForte would like to see less siloed solutions from policymakers – and more workforce solutions that include industry input in a meaningful way.
Just having a solution that addresses misclassification is “missing the mark,” he said, because it’s going to make everything else more complicated. It doesn’t take into account bigger issues that are driving 1099 usage.
“I think a big part of what exacerbates the problem is agency labor. The other part is a lack of long term workforce development strategic plans between the public and private partnership,” he noted.
Companies featured in this article:
American Staffing Association, Cascadia Healthcare, CMS, Department of Labor, Pennsylvania Health Care Association
