It’s plain that the pandemic fractured the already tenuous relationship between well being techniques and staffing companies. Confronted with overwhelming affected person demand, well being techniques more and more relied on conventional companies and tech-enabled platforms to fill shift gaps. Sadly, the desperation for nursing employees opened the door for exploitation, with some companies selecting to cost gouge and take large income.
The exploitation, nevertheless, shouldn’t be restricted to these companies that used the constrained nursing provide to prioritize revenue over care. One other exploitative observe has emerged, specifically the misclassification of nursing employees as 1099 unbiased contractors. The Division of Labor (DOL) has taken discover of this situation, and their curiosity carries important authorized and monetary implications not just for companies however the techniques that have interaction them.
The truth is, the DOL not too long ago filed a lawsuit in Pennsylvania towards a talented nursing facility, alleging that the ability used a tech-enabled staffing platform supplier which categorized its staff as unbiased contractors, and searching for $19 million in unpaid time beyond regulation.
It’s possible you’ll be questioning why the DOL is suing the ability possession group and never the staffing company. That’s as a result of within the eyes of entities such because the IRS and DOL, healthcare techniques and amenities are on the very least simply as culpable because the company relating to employee misclassification. Assuming that companies tackle the entire authorized and monetary danger that comes with misclassification shouldn’t be solely mistaken, but it surely might the truth is fall squarely on the healthcare system.
Because the healthcare trade continues to intersect with the gig financial system, we’re seeing the emergence of extra laws to deal with the grey areas that exist. Whereas unbiased contractor classification has been widespread within the gig financial system to offer organizations with a degree of flexibility, it doesn’t appropriately apply to healthcare staff, particularly nursing professionals.
The IRS and DOL decide worker classification by the office relationship, not the phrases of a contract between the office and staffing supplier. If the IRS and DOL conduct an audit of a healthcare facility and discover {that a} 1099 contractor was misclassified and needs to be a W-2 worker, the ability could also be held legally accountable as an employer. Which means that the ability could be responsible for unpaid time beyond regulation pay, taxes, and different steep penalties.
Healthcare leaders want to know the implications of those laws throughout the context of their trade. For instance, in long-term care, licensed nurse aides (CNAs) make up over half of the nursing workforce. CNAs require important oversight, coaching, and management to make sure optimum affected person outcomes, which aligns with the traits of an worker. The DOL seems to agree with this angle.
The Labor Division has performed over 1,200 employee misclassification investigations in long-term care since 2021, leading to hundreds of thousands of {dollars} in again wages for unbiased contractors and fines paid to the federal authorities. Moreover, particular person states like Illinois, California, Oregon, Louisiana, Pennsylvania, and Connecticut are actively making adjustments to their healthcare labor classification laws.
Whereas it’s essential to keep in mind that the latest litigation is shining a lightweight on the dangers of employee misclassification, this situation shouldn’t be new. There are monetary benefits to classifying staff as unbiased contractors, which is why some companies select this method. Working as a 1099 enterprise permits enlargement into new markets with out the burden of onboarding and totally credentialing each nurse and aide. With out the prices of advantages and payroll taxes, a extra engaging sticker worth is obtainable to healthcare communities.
W-2 employed nurses and aides obtain the advantages, wage, and time beyond regulation protections mandated by the Truthful Labor Requirements Act (FLSA). Extra importantly, worker designation allows staffing companies to offer correct coaching, supervision, and administration to satisfy high quality requirements and appropriately deal with medical incidents.
That is the place the 1099 mannequin in healthcare falls flat. It creates an setting the place nurses and aides are offering the vast majority of direct affected person care but lack the coaching, assist, and oversight that they require. The 1099 mannequin shouldn’t be solely dangerous for well being techniques, but it surely’s additionally harmful for sufferers.
The newest knowledge reveals that 60% of nurses are planning to alter their work standing within the coming 12 months. To beat this, we want staffing partnerships which can be constructed on belief. This begins with stopping companies from offloading important danger onto the communities that depend on them, permitting them to prioritize income over the well-being of each sufferers and nurses.
With the enforcement of employee classification changing into stricter, healthcare leaders should rigorously consider their staffing companions. Defending nursing professionals and protecting them on the bedside have to be a shared accountability that’s upheld via state and federal laws and licensing necessities. By means of transparency and belief, we are able to prioritize the well-being of nurses and construct partnerships targeted on higher affected person outcomes.
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