New York Independent Contractor Law and Healthcare Staffing

With ongoing staffing shortages impacting the healthcare industry, many facilities rely on staffing agencies that supply contract nursing professionals to temporarily fill vacant shifts. For tax purposes, these nursing professionals are often classified as 1099 workers — indicating that they work independently. However, if facilities execute some degree of control over these workers (which is often the case), this can signal an employer-employee relationship, increasing liability risks associated with worker misclassification.
To prevent independent contractors from being treated like employees but without the benefits or protections of employment, federal and state government agencies have made strides to tighten regulations surrounding worker classification. Particularly in New York, independent contractor laws have many important implications that facilities working with 1099 staffing companies should understand.
In this guide, we’ll walk you through how New York laws can impact the way your facility staffs its nursing professionals and discuss factors to consider before seeking outside staffing support.
New York Independent Contractor Laws at a Glance
The following chart summarizes all the relevant statutes, definitions, tests, and enforcement policies that New York agencies use to apply worker classification laws.
New York Independent Contractor Laws | |
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Statute(s) | New York Consolidated Statutes, Chapter 31:
New York Consolidated Statutes, Chapter 20:
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Key Definitions | Employee: A laborer working for another for hire.
Freelance Worker: Any natural person or organization that is hired as an independent contractor to provide services for at least $800. *Note that under Article 44-A, Section 1412, an employer hiring a freelance worker must have a written contract in place which includes an itemization of all services to be provided and their value, as well as the rate and method of compensation, among other requirements. The employer is also required to keep the contract in its records for at least 6 years. Independent Contractor: While this isn’t specifically defined by statute in New York, state courts generally define independent contractors as workers who:
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Test | Based on case law, an employer-employee relationship isn’t determined by the existence of a contract, or whether the work is part-time or per diem. Instead, a worker can be determined to be an employee based on a variety of factors, like where the hiring entity:
Note: In applying these factors, no single one is determinative, but rather all of the applicable factors are weighed together to determine whether a worker is an employee. |
Enforcement | Section 210-A: An employer can face misdemeanor charges for unlawfully avoiding their duty to provide workers’ compensation coverage for an employee.
Section 218: In addition to unpaid wages and benefits, an employer who is found to have wilfully or egregiously violated a worker’s rights can also face a civil penalty of up to double the total amount of wages, benefits, or wage supplements that are owed. In addition, employers could face fines of up to $1,000 for a first violation, up to $2,000 for a second violation, and up to $3,000 for subsequent violations. New York has a Joint Enforcement Task Force that monitors and enforces compliance with misclassification laws in the state. The taskforce consists of the following agencies:
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New York Independent Contractor Misclassification: Overview
A 1099 — or “freelance” — worker is broadly defined as someone who runs their own business and sells their services to the public, according to New York independent contractor law. Because of this, they’re expected to have complete direction and control over their own work.
For example, if you call a freelance plumber to fix your facility’s sink, they’ll usually come in on their own time and use their own set of skills and tools without supervision. This can be mutually beneficial, since the plumber can work independently while the facility saves on the typical costs of having to hire the plumber as a W2 employee.
However, this type of working relationship can become more of a liability in the healthcare context. Unlike plumbers, nursing professionals require more supervision while they work due to the nature of their jobs. They must follow facility protocols to meet standards of care while performing their work. This means that, according to New York independent contractor laws, responsible facilities who are supervising and directing the care provided by nursing staff in their facility could unintentionally be treating these workers like their employees, increasing the risk of an employee misclassification determination, and resulting liability.
New York Independent Contractor Test and Healthcare Workers
As noted above, courts and the Joint Enforcement Task Force weigh various factors to determine whether a worker is an independent contractor or employee. Let’s take a look at some of these factors to see how the nursing professional’s scope of practice could make a 1099 nurse appear to be more of an employee of your facility under New York independent contractor laws:
- Instruction. New York’s board of nursing requires facility nursing directors to supervise and evaluate the activities of all nursing professionals working in their units. In order to comply with these practice regulations, facilities ultimately must have some degree of control over how nursing staff (even 1099 nursing staff) do their jobs.
- Scheduling. In New York, freelancers typically have control over their schedules. But unlike plumbers, nursing professionals work shifts that are set by the facility. They must show up to these shifts — and perhaps stay beyond their set hours — in order to prevent patient abandonment, showing how little control they can have over their work hours. Even if a nursing professional notifies a facility that they can’t show up, receiving permission for their absence can also be indicative of an employer-employee relationship.
- Training. In order for nurses to carry out their duties appropriately, they must receive proper training from the facilities they work in — which is usually the responsibility of an employer. The New York independent contractor test presents facilities with a dilemma: either providing training to contract nursing professionals and appearing more like an employer, or don’t train them to preserve their “independent” status and risk falling short of essential care standards.
- Equipment. Beyond stethoscopes, it’s not practical for nursing professionals to self-supply all of the medical equipment needed to provide patient care. This includes things like blood pressure cuffs, charting systems, and other point of care tools. If your contract nursing staff is primarily using equipment provided by a facility, this can also indicate employer-employee relationships.
Employers who want to ensure they’re following Department of Labor independent contractor rules should reference the NY Department of Labor independent contractor fact sheet. Here, you can find clear and concise information on state laws and other state 1099 restrictions.
Employee vs. Independent Contractor: New York State Review
While facilities may want to save time and money by hiring contract nursing professionals, it’s important to weigh the potential risks, and costs, associated with violating New York independent contractor law. After all, even if a misclassification is unintentional, the unpredictable expenses associated with audits, investigations, and litigation can easily outweigh the initial benefits of hiring a 1099 nursing professional.
For example, in just one year alone, New York’s Joint Enforcement Task Force identified nearly 26,000 instances of employee misclassification, uncovering roughly $316 million in unreported wages and assessing $8.8 million in unemployment insurance contributions. This snapshot doesn’t reflect other fines and penalties that could be assessed by federal agencies or courts in civil suits filed by misclassified employees, additional hidden costs which don’t show up in 1099 staffing contracts.
Under New York independent contractor laws, there are also logistical considerations that can complicate the hiring of a contract nursing professional. For example, employers hiring 1099 workers must write a contract itemizing and charging all expected services. Unlike a plumber who is simply charged for fixing your sink, nursing professionals carry out a range of duties that change depending on their patients’ needs. Ultimately, it’s difficult to anticipate what your nursing staff will do from shift to shift and how they should be charged for each “service” — especially since most nursing professionals are paid hourly.
If your facility relies on staffing reinforcement, there are alternative options that don’t bring the added risk and burden of hiring 1099 nursing staff. You can consider working with staffing companies that fill shifts with W2 nursing professionals — healthcare workers who are hired as employees by a staffing company. This allows you to fill placements with nursing professionals who are trained, supervised, and covered with employment protections provided by a designated employer. Essentially, these staffing companies serve as the employer of record for your outside nursing staff so you don’t have to.
Fill Vacant Shifts Without Increasing Your Risk of Liability
Finding outside staffing support while complying with New York independent contractor laws can be stressful. Thankfully, there are companies who can fill your shifts with W2 nursing professionals and help minimize your risk of liability.
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.