Webinar Recap: What Healthcare Facilities Need to Know About Worker Misclassification

worker misclassification webinar

McKnight’s recently hosted a roundtable event on Capitol Hill to discuss the issue of worker misclassification in the temporary healthcare staffing industry and the implications it has for long-term care providers. The event brought together special guests including former Senator Tom Daschle (D-SD) and Congresswoman Alma Adams (D-NC), Ranking Member for the Education & Workforce Subcommittee on Workforce Protections, as well as a panel of experts to examine: 

  • The Rise of Temporary Healthcare Workers Being Classified as 1099   
  • The Difference Between 1099 Contractors and W2 Employees 
  • The Risk 1099 Independent Contractors Pose to Healthcare Facilities 
  • 1099 Work from a Certified Nursing Assistant’s Perspective 

You can access the 50-minute discussion here:

Access the Webinar: Worker Misclassification in the Temporary Healthcare Staffing Industry

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Don’t have time to watch the full webinar? Read on for a detailed recap of the most important topics covered during the discussion.

A Complicated, Misunderstood, and Confused Issue

Senator Daschle, who is well versed in the impacts of worker misclassification in healthcare, kicked off the panel discussion by acknowledging that workforce classification is a “complicated, misunderstood, and confused issue.” He was frank about the fact that there are many nuances involved with properly classifying healthcare workers, especially because the repercussions of misclassification have serious effects on employers, healthcare workers, and patients. 

Congresswoman Alma Adams also shared her thoughts on the issue of worker misclassification prior to the panel discussion, explaining the risks to both employees and employers that she sees as part of her role on the Workforce Protections subcommittee. The congresswoman explained that healthcare employees working as misclassified 1099 independent contractors are entitled to certain benefits that they do not receive in that working model, and thus, are unprotected. Congresswoman Adams reinforced that an employer’s lack of clarity around employee classification can lead to fines and legal ramifications.

The Department of Labor is currently in the midst of addressing many factors involved in the issue of worker misclassification in healthcare, including worker protections and rights and employer liability. Long-term care facilities should pay attention as related investigations, lawsuits, and decisions play out.

The Rise of Online Platforms Has Led to More Temporary Workers Being Classified as 1099

The Great Recession, which began in 2007, led to the rapid growth of the gig economy and rise of online platforms that enabled it. The ride-sharing platforms, Uber and Lyft, helped to generate the technology that supported the development of the gig economy and for defining the working models that fueled this growth over the last 10+ years. 

In connection with COVID-19 – over a decade after the Great Recession – we saw an increase in the use of online platforms that match nurses and aides with temporary placements in nursing homes and long-term care facilities. Many of these platforms classified their workers as 1099 independent contractors. 

The combination of extreme need and available technology led nursing homes to turn to these tech-enabled, 1099 platforms to source their staff. At the time, the biggest question for these facilities was, “How do we provide our residents with the care that they need?” No one was asking, “Are these nurses and aides employees, or independent contractors?” Worker misclassification wasn’t a concern then, but it is at the forefront of the DOL’s mind now. If you are a facility owner, it should be top of mind for you too.

The Difference Between 1099 and W2 Employment Matters

According to the panelists, a major factor that determines employee classification is direction and control. If a worker is acting autonomously – as an Uber or Lyft driver does, with no supervision and with complete control of their schedule and obligations – the greater the likelihood is that they can be classified as an independent contractor.  

If the worker shows up to work knowing that there is a set start and end time, must follow directions and policies, and reports up a chain of command, they are not acting autonomously. Thus, it is a very difficult argument to make that that person is an independent contractor. 

If a worker is not an independent contractor, they are, by default, an employee. But who are they an employee of? The platform through which they found work? The patients for whom they are providing care? Or the facility where they are placed? This is part of the question that the DOL is working through as they determine who is responsible for misclassified healthcare workers. It is also why long-term care facilities should be paying attention to the risks they face if they have worked with or continue to work with 1099 staffing agencies to address their workforce needs. 

1099 Independent Contractors Are a Risk to Healthcare Facilities

The panel of experts agreed unanimously that facilities need to think seriously about the relationship between themselves and their external staff, and to consider how they are being classified. 

If someone is coming to a facility as an independent contractor, what is the facility’s potential liability if a court or an agency such as the DOL decides that the worker is an employee? Panelist Steven Dwyer laid out the potential damages that facilities could be liable for, such as: 

  • Overtime  
  • Health and other benefits 
  • Workers’ comp 
  • Paid leave 
  • Unemployment benefits 
  • Payroll taxes  

All of the responsibilities that a facility owes to its own internal employees, they could also owe to any misclassified 1099 workers on their staff. 

This threat is real. A Pennsylvania-based operator of skilled nursing facilities was recently fined $19 million by the DOL for unpaid overtime and many other lawsuits retroactively affecting healthcare staffing agencies and facilities have come to pass. Luckily, 1099 independent contractors aren’t the only option for long-term care facilities looking for external support to fill staffing gaps. A number of the online platforms fueling this segment of the gig economy hire W2 employees. 

A question raised during the panel was, what happens if an online platform or staffing agency identifies their workers as W2 employees? Is there still risk? The answer given by Mr. Dwyer was that the risk was “much, much lower.” In such a scenario, all of the responsibilities listed above – overtime, paid leave, etc. – are taken care of by the platform or the staffing agency, minimizing, if not eliminating, any potential damages. This is obviously a huge benefit to healthcare facilities. It is a benefit to employees as well. 

A Certified Nursing Assistant’s Perspective on 1099 Work 

One of the experts on the Worker Misclassification panel was Syeda Abbas, a certified nursing assistant. Ms. Abbas shared that she has worked as both a 1099 independent contractor and a W2 employee when picking up shifts on various online platforms over the last several years.  

According to Ms. Abbas, the work she would do was the same, regardless of whether she was working 1099 or W2. She stated that in either working model, she was still showing up to a facility and reporting to a supervisor, having set shift start and end times, following all procedures, wearing requested scrubs, taking vital signs according to each specific facilities requirements, and taking breaks when she was told she could. Ms. Abbas’ experience is a proof point backing up the idea that there is no such thing as 1099 independent contractors in the healthcare setting; there is too much oversight for it to be possible. 

Ms. Abbas also mentioned that she found working as a 1099 independent contractor to be more difficult than working W2. As an independent contractor, she found it hard to keep up with her taxes and was often stressed about not being provided with worker’s compensation insurance. As she said, “At first it seemed, wow, this is great, with 1099 I’m getting a little bit higher pay,” but after a while, reality set in. Ms. Abbas now prefers to work as a W2 employee due to the benefits she receives, how much easier she finds it to do her taxes, and how much more support she receives due to having an employer. 

Worker Misclassification Will Impact the Future of the Gig Economy in Healthcare 

According to panelist Dane Steffenson, the number of independent contractors working in the United States is continuing to rise. The Great Recession, COVID-19 pandemic, and rise of technology as a tool to help people find work have created the perfect storm to allow this to happen.  

In healthcare specifically, the pandemic pushed people into contract work and put facilities in the vulnerable position of needing a lot of help and needing it quickly. According to Mr. Steffenson, the exponential growth of online staffing agencies and technology platforms would not have been possible without the pandemic. Now, these agencies and technologies are likely here to stay. However, they will need to evolve in order to meet the requirements that will be set forth by the Department of Labor on a federal level, and by specific states at the regional level, as time goes on. 

States like California and Illinois, for example, have some of the most stringent regulations for 1099 contractors in healthcare. Other states may soon follow in their footsteps as they react to the legislation being brought down from the DOL and learn more about the impacts that healthcare worker misclassification has on employees, employers, and patients. 

The ultimate takeaway from this McKnight’s panel on worker misclassification was this – as the healthcare subset of the gig economy continues to develop, and as the DOL continues to regulate employee classification in healthcare, it would behoove long-term care facilities to evaluate where they are getting their external staff from and to choose to work only with staffing partners who can provide them, their nurses and aides, and their patients with the protections that the W2 employment model ensures.  

W2 employment is safer and preferable for everyone in the care system, starting with employers and ending with the most vulnerable parties of all – patients. 

Ready to Make the Switch to a W2 Talent Partner? 

IntelyCare has been a W2 employer from the start. You can count on us to be a partner to you, to treat our nurses and aides well, and to help you provide outstanding patient care. Talk to us today to learn how we can help you safely supplement your workforce


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