The question of whether temporary nursing staff can be classified as independent contractors is creating controversy within the staffing industry. Industry experts say it can be a complex question with potential ramifications for staffing firms and clients.

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.

However, an issue paper released by the ASA noted that while staffing platforms may be able to classify workers as independent contractors, the practice could pose risks to clients.

“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,” according to the issue paper.

It noted a Virginia healthcare staffing firm was ordered to pay $7.2 million in back overtime wages and damages for misclassifying 1,105 certified nurses aides, licensed practical nurses and registered nurses as independent contractors.

There’s also the question of potential new regulations by the Biden administration covering this area of law. In a comment opposing the coalition letter, Littler Mendelson said it is unlikely that the Department of Labor would issue an opinion on the subject while the proposed new regulations are pending.

And there’s hardly one school of thought when it comes to whether workers should be classified as independent contractors.

“This always will be a fraught subject,” Lenz said. “There’s no consensus in the country at any level about what direction to take there.”

SIA contacted the Department of Labor about the independent contractor question, and a spokesperson sent this response:

“Misclassification of nurses as independent contractors may result in costly violations of federal labor laws. Although most care workers are considered employees and not independent contractors, the Department of Labor’s Wage and Hour Division assesses independent contractor status by examining the employment relationship on a case-by-case basis, not according to job titles.”

The issue continues to garner interest in the industry.

“The call for the US Department of Labor to ignore the ask to share its stance on the classification of temporary healthcare staff in post-acute care settings ignores the facts,” IntelyCare, one of the firms in the coalition, wrote in a note to SIA.

“Temporary staff in post-acute care have historically been classified as W-2 employees because their work inherently requires a higher level of oversight, training and control,” the representative said. “The placement of temporary staff in post-acute settings is of course circumstantial, but the requirements of their work [are] not. Allowing temporary nurses and aides to practice in these settings as independent contractors not only jeopardizes patient care standards, it directly contradicts the Fair Labor Standards Act.”

Separately, longtime healthcare staffing executive David Savitsky, CEO of ATC Healthcare Services, said he doesn’t see the merits in the arguments that temporary nursing staff can be classified as independent contractors.

“There’s really no difference that I see between who they want to classify as independent contractors and the people that are working at traditional medical staffing companies, Savitsky said.

Nurses working through staffing firms as W-2 employees have the same rights to turn down assignments or ask for higher pay, he said. Hospitals or other healthcare facilities at which nurses are placed control how a nurse works whether that person is an employee or contractor.

Whether W-2 employees or not, nurses follow the same rules and procedures working under doctors and the protocols of hospitals.

Staffing firms also provide insurance, workers’ comp, disability insurance, professional liability insurance and other things, Savitsky said. And hospitals are places where injuries can happen, the most common being needle sticks, back injuries, and slips and falls. An independent contractor nurse might receive more in terms of take-home pay, but they would have to acquire their own coverage as well as pay taxes.

“They really aren’t independent contractors, and they just don’t meet the standard,” Savitsky said. “This to me is just a stretch, a big stretch.”