As labor shortages continue, nursing homes sometimes want to hire proven contract-agency staffers as their own full-time employees.
But some agencies who hire out temp nurses won’t let them go without a price, specifically a “conversion” fee that requires a facility to buy out a worker’s contract for thousands of dollars.
Lawmakers in Colorado are poised to prohibit agency collection of such damages. This week the House passed a bill prohibiting those fees. It covers agency staff in nursing homes, assisted living facilities and all other healthcare facilities in the state.
Doug Farmer, president and CEO of the Colorado Health Care Association and Center for Assisted Living, told the State of Reform website that up to one-third of Colorado nursing home labor was supplied through agency in 2022.
Providers there have increased hourly wages by an average of more than 20% since 2020, and temp workers are often enticed by improving incentives and long-term opportunities in skilled nursing settings. But Farmer said the contract restrictions put in place by agencies create an additional barrier in bringing those workers on board at a reasonable cost. One of the bill’s sponsors called it a “ransom fee.”
“There’s a separation fee that must be paid contractually and it is often $5-7,000 in average cost to buy someone out of one of those contracts,” he told State of Reform. “But the challenge is really less about the one-time costs than it is about the fact that it’s not a guarantee.”
Workers might still leave the nursing home for a competitor, or another job, and the facilities — largely funded by taxpayer dollars — are still out the buyout fee.
Under the Colorado legislation, of which a Senate version was introduced Wednesday, any agency that violates the rule would be subject to a monetary penalty up to $5,000.
If passed, the law would be the second in Colorado to rein in aggressive agency tactics. Last year, lawmakers limited the use of non-compete clauses in agency contracts. Illinois, Iowa and Kentucky also passed updates restricting the use of non-competes for nurses or healthcare employment agency workers, according to the Fair Competition Law blog.
Earlier this year, the Federal Trade Commission also proposed barring employers across the country from requiring workers to sign noncompetes. That rule is widely viewed as applying to independent contractors as well as company employees.