Staffing Industry Analysts discusses the debate around the classification of nurses as employees.
It became a more public debate in August. A coalition of 30 healthcare staffing firms asked the US Department of Labor to issue an opinion letter confirming that temporary nursing staff placed in post-acute care facilities be classified as employees and not independent contractors. It came in reaction to a half dozen online platforms providing nursing staff on an independent contractor basis.
However, a call for the department to not issue a one-size-fits-all ruling was sent Oct. 10 by law firm Littler Mendelson’s Workplace Policy Institute. It argued an overbroad opinion letter would be applied to firms with disparate business models instead of making a determination based on facts. It also noted several states have drawn distinctions between staffing platforms and staffing firms. Additionally, regulation on this issue is pending.
The issue of independent contractor versus W-2 employee classification is not new.
In fact, the issue has been a subject of concerns within the American Staffing Association for the last two years, said Edward Lenz, senior counsel at the ASA.
It’s a complex question that touches on a number of different areas, and if the rules are applied incorrectly can result in potential liability to both the provider of staffing and the client, Lenz said. On the other hand, it can offer costs savings for those who do supply nursing staff as independent contractors with those savings in employment taxes and benefits, which can create competitive issues.
“We are very mindful and sympathetic to all of these concerns — the legal concern, the operational concerns, the reputational issues that are involved — because no one wants to be accused of misclassifying workers,” Lenz said.
The staffing industry has traditionally classified workers as W-2 employees. On the other hand, new technology has led to other means of delivering services.
“The coalition letter asking the Department of Labor to opine on the matter was trying to achieve an outcome that would provide some consistency and reliability in how workers are classified,” Lenz said. The idea was to spell out how staffing firms, workers and clients should go forward. But complicating this is that judgments regarding worker classification have historically been made on a case-by-case basis.
So far, the Department of Labor has not taken action regarding the coalition’s letter, and it’s unknown if it will.
Read the full story at Independent contractor classification issue for temp nursing staff driving controversy
The American Staffing Association has published an issue paper that discusses risks of misclassifying nurses.
Online health care job platforms are increasingly classifying nurses and nurse aides placed through their platforms as independent contractors instead of employees—and issuing Forms 1099 to those workers instead of W-2s. This allows the platform to provide those caregivers to health care facilities at a much lower cost by not providing employee benefits or paying payroll taxes and other labor costs. This poses significant legal risks for unwary facilities, which could end up getting stuck with those costs. While some platforms may legitimately claim that the workers placed through their systems are independent contractors with respect to the platform, the end users of the services generally cannot make the same claim because they exercise supervision and control over the work performed by the workers at the work site. Hence, health care facilities using such services could face claims that they are employers of the workers and owe payroll taxes, overtime wages, and other employment-related costs and benefits. The financial perils of misclassification can be severe. A federal court in Virginia recently fined a health care staffing agency $7.2 million in back overtime wages and damages for misclassifying 1,105 certified nurse aides, licensed practical nurses, and registered nurses as independent contractors. In a news release, the U.S. Department of Labor, which sued the agency, said the ruling sends “an unequivocal message to healthcare industry employers” that the department “will not hesitate to bring legal action, pursuing all available remedies, when it finds that an employer has willfully violated the law.” This is but one example. Plaintiffs’ class action lawyers have increasingly targeted this issue in lawsuits against employers. To address the problem, ASA has created a “coalition against worker misclassification,” made up of the nation’s leading health care staffing agencies, to educate online platform users about the risk of using workers misclassified as independent contractors and their potential obligations as employers.