2020 represents a bright new year moving forward, but some of the same issues that affected 2019 appear poised to have an impact on 2020 as well.

From healthcare staffing, to H-1B visas to legislative challenges, here is what some staffing industry executives expect the New Year to bring:

Healthcare staffing going strong. Janet Elkin, president and CEO of GHR Healthcare, said nurse staffing is revving up again after seemingly reaching a plateau three years ago, and hospitals understand they need nurse staffing firms.

“The big ‘what-if’ for the end of 2020 is the election in terms of how that might effect healthcare staffing in particular,” Elkin said.

So far, the Affordable Care Act remains in place and hasn’t been affected much, but that could change either positively or negatively in the wake of the election.

The election is not the only unknown.

Legal and legislative. It was big news last year when California lawmakers approved AB 5, aimed at making it more difficult to classify workers as independent contractors. Other legal and legislative changes will affect 2020 as well.

Staffing industry attorney George Reardon said he sees five trends that will impact staffing firms in 2020:

1. More staffing clients are insisting workers be W-2, not independent contractors. Reardon said it appears buyers are getting the message about how risky 1099s are to them. And it’s not just the risk, but buyers don’t get a big benefit either, he said. There’s concern over responsibility for workplace injuries with independent contractors and buyers don’t have automatic rights to what independent contractors create while on the job.
2. A Texas judge’s ruling that the entire Affordable Care Act is unconstitutional has been affirmed by the Fifth Circuit Court of Appeals, but only with respect to the individual mandate. Staffing firms are principally concerned with the ACA’s employer mandates. The Fifth Circuit rejected any automatic unconstitutionality of other parts of the ACA and sent the case back to the Texas judge to determine which other ACA rules, if any, are also unconstitutional. However, even if the court finds the employer mandates unconstitutional, employers won’t be out of the woods. Antidiscrimination provisions of the Affordable Care Act are part of the original law and would prohibit discrimination in favor of highly compensated people in health coverage. This could impact staffing firms that provide one insurance plan to internal workers and another for external workers. This part of the law has been inactive since 2011, but all it needs to take effect is for the regulations to be written.
3. While the federal government hasn’t done much in terms of labor laws, many states are. That trend will likely continue. “We see that in mostly blue state we’re getting the death of a thousand cuts,” Reardon said. This includes laws on issues from paid sick leave to independent contractor compliance.
4. Increasing activity on noncompete clauses in employment contracts. California never welcomed noncompetes, but now more states are making laws aimed at these. In many states, employers can no longer have noncompetes with certain employees.
5. Multifront degradation of margins: VMS and MSP fees have drifted upward, penalties have risen under service-level agreements and financial forfeitures are in place for things such as stale invoices. Reardon also said he has seen step-down markups where, for example, a 20% markup on a worker reduces to 15% if the worker is still in place after 60 days.

Skills mismatch. “The demand on the client side is still consistently high,” said Ranjini Poddar, co-founder and CEO of Artech LLC, a New Jersey-headquartered provider of IT staffing. “The impediment to growth is the talent shortage.”

IT candidates receive multiple offers and some are taking traditional-staff opportunities rather than staying in the contingent workforce. Given the shortage of talent, this means that both finding workers with the right skills is difficult and keeping them as contractors represents a challenge.

And it’s not likely to ease up in 2020.

Poddar said November and December are typically when things slow down, but was not the case in 2019.

The November US jobs report bears this out. The US added 266,000 nonfarm jobs in November, well above the monthly average of 180,000 so far in 2019. The Conference Board said the upbeat jobs report squashed recession fears.

“Being in the staffing industry is like being on a roller coaster. When the economy is up, you go up and when the economy is down, you go down,” said Sue Burnett, president and founder of Burnett Specialists, who will be entering her 50^th year in the staffing industry in 2020.

No two areas are the same, and Burnett noted low oil prices are impacting the energy industry in Houston. However, she said other cities served by her company in Texas, including Dallas, Austin, San Antonio and El Paso, are going strong.

Companies with a strong direct-hire component tend to do particularly well during a strong economy. The only downside to a good economy is there tends to be fewer people on the street looking for work, so recruiting becomes more of a challenge.

Finding the right people with the right skills is particularly challenging in IT.

H-1B visas. One avenue some firms use to find skilled workers, especially IT professionals, is to bring in workers from overseas. However, the H-1B visa, which is commonly used to bring in such professionals, has come under fire from the current administration.

“We see surging denial rates, surging requests for evidence and continue to see the administration restrict H-1Bs using the adjudication process,” said Mark Roberts, CEO of the TechServe Alliance, a trade association of technology and engineering staffing firms. “While these trends are impacting companies of all types, staffing firms are a particular target with an even higher rate of adverse determinations.”

2020, if anything, will likely be even more restrictive, Roberts said.

One possible change is an effort to make it even more difficult for IT occupations to qualify for the H-1B visas. Also, on the horizon is a redefinition of the employer-employee relationship for H-1B visas, which goes to the heart of staffing.

In addition, Roberts noted efforts remain in the works to prohibit spouses of H-1B workers from becoming employment-eligible in the US by using H-4 visas. Some spouses on H-4 visas are IT workers themselves, and this would take them out of the workforce. It would also make the US less attractive to potential H-1B professionals.