1099 Roundup: Congress, Green Cards, and a Misclassification Lawsuit

Nurses in an office looking at a computer screen

Here is another post in our ongoing series on the news, lawsuits and updates around 1099 staffing in healthcare. Please check back with us to see the latest as we follow the stories and bring the latest to you.

The issue of healthcare worker misclassification continues to heat up, this time reaching the halls of Congress and the State Department. As policymakers are discussing worker rights in an expanding gig economy, healthcare stakeholders continue to watch for the changes in legal — and financial — costs of misclassifying nursing care providers as independent contractors.

The added pressure comes at a time of unprecedented nursing shortages, now compounded by a recent freeze on EB-3 visas for nurses. Here’s a roundup of the latest news, and another misclassification lawsuit, to help nursing facilities shape their staffing strategy going forward.

Misclassification in the House — and Senate

As the gig economy continues to grow, the issue of worker misclassification is getting the attention of lawmakers in D.C. On April 19, the House Education and Workforce Committee held a hearing on worker classification. It comes as the labor-friendly Protecting the Right to Organize Act (“PRO Act”) legislation is being reintroduced in Congress. If it became law, the PRO Act would make it harder to classify workers as independent contractors.

The House hearing also occurs amidst the Senate’s consideration of President Biden’s nomination of Julie Su as the Secretary of Labor. Su is expected to support the Pro Act and to lead the Department of Labor in an even more employee-friendly direction. As Secretary of Labor for the State of California, Su previously supported a state law which made it harder to classify workers as independent contractors in California.

Senator Tom Daschle and a DOL Webinar

Former Senate Majority Leader Tom Daschle also joined the conversation this past week, highlighting the increased risks that come when facilities use 1099 nurses to fill their shifts. Calling for more oversight, Daschle points out that at the same time that an estimated 25% of nurses and aides placed in post-acute facilities are 1099 contractors, the Department of Labor (“DOL”) and Internal Revenue Service are working more closely to enforce misclassification laws. Daschle called for a stricter system of enforcement, noting that temporary nurse staffing requires a deeper level of control and oversight more consistent with an employer-employee relationship.

In the wake of Daschle’s call for greater oversight, the DOL is taking proactive steps to help healthcare facilities understand labor laws, including the persistent problem of misclassification. The agency has even developed a healthcare labor law webinar to help healthcare facilities and stakeholders understand the risks of worker misclassification, among other labor law issues.

Shortage of Foreign Nurses Ahead?

As policymakers continue to focus on tightening restrictions on 1099 misclassification, the nursing shortage may be entering an even deeper level of crisis as one critical source of nursing professionals is closing.

A significant number of healthcare workers are foreign-born, with immigrants constituting one in every six nurses in the U.S. healthcare system. However, over the past week the State Department announced a limitation on EB-3 visa applications, which are used by foreign-born nursing professionals. Although not even halfway through the year yet, nearly all of these green cards for nurses have already been filled.

As of this month, any applicant for an EB-3 visa for nurses who has a pending interview may have to wait until October 1 when the State Department will likely reset its quotas. This decreased supply of nurses compounds the ongoing nursing shortage crisis and the ongoing legal risk of understaffing class action lawsuits faced by healthcare facilities.

While facilities are facing unprecedented pressure to fill their shifts with a dwindling supply of nurses, they bump into the dilemma that comes with using 1099 nurses, as highlighted in this week’s misclassification lawsuit.

1099 Misclassification Lawsuit Spotlight: Florida

Sarasota-based Healthcare Staffing Agency Forced to Pay Over $260,000 in Back Wages for 61 Misclassified Caregivers

The DOL recently obtained a consent judgment against a nurse registry staffing service based on its misclassification of caregivers as independent contractors. The agency offers 1099 nursing contractors to support staffing for nursing homes, hospitals, and other healthcare facilities.

According to the DOL lawsuit in that case, the agency misclassified its caregivers as independent contractors and had only paid them straight wages for overtime, instead of time-and-a-half. Some of the caregivers had worked up to 94 hours of overtime without proper compensation. As part of the consent judgment, the agency is required to cover backpay and is bound by a court order to not commit future violations.


For healthcare facilities, this misclassification lawsuit is one more reminder of the risks that come with using 1099 staffing partners. While the staffing agency was found to be the employer of record in this case, the facilities it supported were likely wrapped up in the investigation that preceded the DOL lawsuit, having to spend time and resources supplying information to investigators due to the alleged mismanagement of their staffing agency.

In addition, where courts order staffing agencies to avoid future misclassification violations, such agencies may not be able to sustain their 1099 model, rendering them unreliable staffing partners for the long-term.

Get Staffed With W2 Nursing Professionals Today

As the discussion of healthcare staffing reaches policymakers at the federal and state levels, and as another 1099 nurse staffing agency faces a DOL investigation and misclassification lawsuit, it’s important for your facility to have a trusted partner by your side. Find out how to safely staff your facility with quality professionals and get full-spectrum, long-term staffing support today.

Legal Disclaimer: This article contains general legal information, but it is not intended to constitute professional legal advice for any particular situation and should not be relied on as professional legal advice. Any references to the law may not be current as laws regularly change through updates in legislation, regulation, and case law at the federal and state level. Nothing in this article should be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed to practice in your jurisdiction.


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