The growth of the gig economy has transformed the modern workforce. Uber and Lyft were just the beginning. Now, with app technology’s aid, businesses are increasingly relying on temporary workers, freelancers, and independent contractors.
While this model brings flexibility, it also raises an alarming trend of worker misclassification. This misclassification can have profound implications for individuals, businesses, and the broader community. This is especially true in our healthcare industry, which venture capitalists have seized as a significant opportunity to address critical worker shortages by developing new healthcare staffing apps.
This new gig economy enables healthcare workers to upload their certifications, educational information, and areas of expertise. This can then be matched with specific staffing needs of healthcare facilities. Operating like a corporate version of Tinder for employment, healthcare workers browse the available shifts and swipe for a match. This process is quick and easy.
But for businesses and workers, it can get complicated quickly; there may be significant tax or legal implications if workers are not accurately classified.
Healthcare is an intricate field that demands workers to operate under stringent protocols. These professionals juggle patient schedules, safeguard sensitive information and ensure adherence to facility rules. It’s a delicate balance that clashes with the “be-your-own-boss” narrative that is so attractive to independent contractors.
At the tip of the spear, businesses like Uber and Lyft are frequently cited as examples of the gig economy’s challenges. Many have faced legal confrontations over accusations of worker misclassification. The recent Proposition 22 ruling in California underscores this complexity, revealing that not all gig businesses can assume to be immune from legal challenges. This holds particularly true for the healthcare sector.
Amid the changing demographic landscape, the demand for healthcare is skyrocketing. By 2030, in California alone, the 65+ age group is expected to grow from 6 million to 8.4 million. This trend will likely coincide with a supply of workers that cannot keep up, resulting in an even worse labor shortage.
In this evolving scenario, healthcare staffing apps have the potential to play a critical role. While some app staffing companies employ these workers as W-2 employees, others classify them as independent contractors. Unsurprisingly, the U.S. Department of Labor and the Justice Department are taking notice.
In response to these concerns, the Department of Labor has embarked on a “nationwide effort by its Wage and Hour Division to focus on improving compliance by residential care, nursing facilities and home health services.”
The department reported that since its 2021 launch of this program, it has completed over 1,600 investigations and identified violations in an astonishing 80 percent of its reviews. More than $28.6 million in back wages and damages for nearly 25,000 workers has been recovered. As a result, about $1.3 million in civil monetary penalties for employers have been issued. The most common violation? Misclassification of employees as independent contractors.
In California, Attorney General Rob Bonta recently “filed a lawsuit in Los Angeles Superior against Care Specialist HCS, accusing the company and its operators of misclassifying in-home care workers as independent contractors instead of employees in direct violation of California’s labor laws and Unfair Competition Law.”
Last year, the California Labor Commissioner’s Office fined home healthcare placement agencies $1.8 million for misclassifying 66 workers. It also sued healthcare app-based staffing company CareRev for misclassifying workers who signed up on the app as independent contractors.
While technology offers undeniable efficiencies, it comes with significant responsibilities and costs. In leveraging the advantages of the gig economy, the healthcare sector must remain mindful of the broader implications of worker misclassification. As a human resources specialist, I can attest to the importance of balancing technological advancements and legal considerations in our labor system.
Amy Dellinger serves as a human resources specialist in California.