What’s the difference between the Lord and regulators? Regulators don’t giveth.
Or so it seems if you happen to be a skilled care operator these days. The latest piece being pulled from the Jenga tower that is long-term care comes in the form of a new labor rule that kicks in one week from today (on March 11).
Like many regulator-driven mandates, it sounds perfectly legitimate if you just read what’s on the tin. The Department of Labor is changing the test that determines whether a worker is an independent contractor or an employee.
Sounds simple enough, right? Maybe even helpful.
But once you start peeling back the layers of this particular onion, you’ll encounter more than a few things that might make you want to cry. The pending measure removes the more employer-friendly five-factor test currently being used to assess a worker’s economic dependence. In its place will be a six-factor “economic reality” test. Its components are:
1. Opportunity for profit or loss depending on managerial skill.
2. Investments by the worker and the potential employer.
3. Degree of permanence of the work relationship.
4. Nature and degree of control over the work.
5. Extent to which the work performed is an integral part of the potential employer’s business.
6. Skill and initiative.
The previous rule emphasized two key factors (the nature and degree of the worker’s control over the work and his/her opportunity for profit/loss). As for the, ahem, new and improved model? It requires that all of the new factors be weighed equally. As the saying goes, what could possibly go wrong?
Not surprisingly, providers are less than thrilled with the change.
Senior living and care industry representatives have told McKnight’s that the new labor mandate is broader and more vague than the previous rule. Moreover, the latest version will present greater liability risks for employers contracting with services providers.
So, what should you as an operator do in order to prepare? Experts are suggesting three specific measures:
First, review existing contracts — particularly those involving staffing agencies or other contingent work arrangements — to ensure they are in agreement with the new rules.
Second, consult legal counsel. These folks can be a good investment when it comes to assessing the new rule’s impact on your business, and in making sure your organization takes the right steps to align with new requirements.
Finally, maintain thorough documentation of contractual agreements, communication, and any actions taken that demonstrate little to no control over essential employment terms. Such records can serve as valuable evidence, should disputes regarding employment status arise in the future.
Do those things and your organization should be in relatively decent shape. That is, until the next new mandates come along.
John O’Connor is editorial director for McKnight’s. Opinions expressed in McKnight’s Long-Term Care News columns are not necessarily those of McKnight’s.
