A proposed rule issued Tuesday by the US Department of Labor would more strictly limit how healthcare and other employers classify workers paid on an hourly basis.
“Misclassification is a serious issue that denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large,” said the DOL said in a press release announcing the proposed rule change set to be published later this week.
But after reviewing the proposal, two attorneys told McKnight’s Long-Term Care News that many nursing homes may already be using hiring and payment practices that would make them well prepared for the adoption of a new DOL standard.
A worker’s status as being directly employed or under an agency contract may not be as big a concern in this proposal as it has been in recent labor-related rulings, either.
“The proposed rule focuses on issues like the nature and degree of control by the employer, and so unless you’ve got an agency representative in the nursing home directing these employees and telling them what to do, if the nursing home is actually doing the directing and controlling and telling them what to do and how to do it it, appears they should be employees,” Martha Boyd of Baker Donelson told McKnight’s Long-Term Care News. “And if they’re employees of the agency, maybe they’re joint employees of the nursing home and the agency, using this test.”
Two labor issues conjoined
Boyd recited language from the rule that makes it clear that control implemented by the employer weighs in favor of employees status.
“I said to myself, ‘Jeez, that’s a lot of what a nursing home would do, make sure all the workers have the right immunizations and log things correctly in patients’ charts and have training on HIPAA and various other things,” Boyd said. “The more that the nursing home imposes on the workers, the more they look to be employees of the nursing homes and not independent contractors.”
While DOL specified that the rule would likely apply to some healthcare workers, Boyd’s colleague said nursing homes’ labor needs may be so unique that they require their own rules.
“A call for dialog recognizing the unique situation in which healthcare providers, particularly nursing homes, find themselves in a tight labor market is merited,” said Howard Sollins, leader of Baker Donelson’s long-term care practice. “They shouldn’t just use a one-size-fits-all test without at least a conversation about the impact.”
For instance, said Sollins, much of the discussion about employee vs. independent contractor is that employers typically want to avoid the financial burdens of full-time employees so they hire and try to classify workers as independent contractors as much as they can.
“In the nursing home world, it’s the reverse,” he said. “Nursing homes prefer that people stay on as employees for the continuity that comes with that, learning the residents and learning the community. It’s the employees that are looking for the distance that comes from working for agencies, the flexibility to control the shift, when and where and how they work.
Proposed rule details
It all boils down to a rule that ensures a case by case basis, the attorneys said.
For its current proposal, DOL’s Wage and Hour Division considered feedback shared by stakeholders in forums during the summer of 2022. It will accept comments on the proposed rule through Nov. 28.
“This rule encapsulates most of what the courts have already been doing and the IRS 20- Factor Test that we’ve been using for a long time,” Boyd added.
But she also noted that more stringent state laws could affect some provider practices outside of this new proposal.
Specifically, the proposed rule would:
- Align the department’s approach with courts’ Fair Labor Standards Act interpretation and the economic reality test.
- Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA.
- Rescind a 2021 Independent Contractor Rule.