Loyola University Chicago School of Law, JD 2023
The pandemic overloaded hospitals with increased patient volume, and after almost two years of battling COVID-19, health care worker burnout is at an all-time high. As a result of burnout, the healthcare industry is suffering from worker shortages, especially among nurses. Nursing shortages are straining hospital profitability, care delivery, and efficiency. Competition for labor will likely continue even after the pandemic. The healthcare labor shortage has attracted significant interest from venture capital. Venture capitalists are pouring millions into new healthcare worker staffing platforms. This week, a proposed measure was filed with the California attorney general’s office that could be on the ballot for the state’s voters this fall. The proposal seeks to classify certain healthcare workers as independent contractors, so that workers can find work online or through apps. The proposal to include health care in the gig economy presents the question of whether nurse staffing platforms will be the next Uber Technologies Inc. (“Uber”).
The proposed measure in the wake of Proposition 22
The proposed measure was submitted by the same law firm that worked on Proposition 22, the law that defines app-based rideshare and delivery drivers as independent contractors. The proposed measure seeks to classify nurses, dental hygienists, occupational therapists and other healthcare workers who secure work online or through apps as independent contractors. Proposition 22 was the over $200 million initiative funded by Uber, DoorDash Inc. (“DoorDash”), Lyft Inc. (“Lyft”), and Instacart. Proposition 22 was in response to a California law that required companies similar to Uber to employ their drivers. The campaign prevented drivers from accessing basic workers’ rights.
An overview of how the proposed measure would work
The proposed measure would allow for nurses to be hired on an on-demand basis. There are already apps like Nurse on Demand, NurseDash, and CareRev offering on-demand staffing solutions. Nurse on Demand even compares its service to Uber. The apps allow for facilities to post available shifts and for healthcare professionals to book the shifts. Some apps have software that matches the shifts to available nurses. Like Uber, the apps complete a background check on each nurse, so once a shift needs to be filled, a nurse is already vetted.
The advantages and disadvantages
As healthcare workers become independent contractors under the law, they will be responsible for deducting and paying their own taxes and setting up their own retirement plan. Additionally, they will have to buy their own insurance coverage, including health insurance and liability insurance. As independent contractors, workers will not have access to any employee benefits or services. Further, some reviews of CareRev have noted there no protections in place for nurses placed in unsafe staffing conditions. Some of the apps also lack the ability to ensure nurses are placed at facilities within the scope of their practice, increasing the potential for liability and licensing issues. Thus, if the proposed measure makes it on the ballot in November and passes, California will likely need to create additional regulations in response to some of the disadvantages. Ultimately, many believe that the proposed measure will only devalue one of the most important jobs in healthcare. Despite the many disadvantages, nurses will have more flexibility. Just like Uber, nurses can build their own schedules and build the income they want.
The legal implications
Experts caution that turning nurses into gig workers could create a ripple effect and future legislation may expand the scope of healthcare workers that could serve as independent contractors. This could affect patients’ ability to hold hospitals liable for medical malpractice as they are typically not held vicariously liable for the actions of independent contractors. However, it is unknown whether or what type of agency would be recognized for this type of employment regarding the nurse’s relationship to the care facility. In other words, it is unclear whether hospitals could be held responsible for the actions of nurses. In addition, nurses working as independent contractors eliminates the legal implications of moonlighting, as independent contractors would not necessarily have the same fiduciary duties that employed nurses owe to their employer, the hospital. This could give nurses more flexibility and freedom, but the hospital employer will not enjoy the duty of loyalty, such that nurses could spread information on operations or finances to other hospitals. Hospitals would have to mitigate these types of risk through the independent contractor contracts. Finally, if the gig economy expands to other healthcare workers, it could be more difficult for hospitals to comply with healthcare regulations, such as Stark Law or the Anti-Kickback statute. These statutes ensure that physicians or healthcare providers do not receive kickbacks, payment, or anything of value in exchange for referrals of patients who receive treatment paid by government healthcare programs. Certain considerations must be made like setting compensation in advance and ensuring each worker is paid fair market value.
Proposition 22 monopolized the debate over the campaign to make drivers independent contractors because the drivers of Uber, Lyft, DoorDash, and many more are not unionized. In the context of nurses, the new proposed measure faces more of a fight against California’s nurses’ unions. Thus, the fate of the newly proposed measure remains unclear.