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Risks of Hiring Independent Contractors in Healthcare

Updated: Nov 17, 2023

Protect Your Community, Utilize GrapeTree’s Services with Confidence

If you work in the healthcare industry, chances are you have already heard some buzz surrounding 1099 workers and the rising awareness of misclassification.

It’s no secret that staffing shortages continue to be problematic within the healthcare sector. Because of this, healthcare facilities desperately turn to agencies to fill their staffing gaps. What can present itself as a secret though, is that there are some “agencies” operating through online or app-based platforms that are classifying their workers as independent contractors. Many facilities are not aware of the risks they are taking on by leveraging these agencies, which can, and most likely will, hurt them in the long term.

The Department of Labor has recently started cracking down on the use of 1099 contractors and is bringing awareness to the major red flags and potential lawsuits it brings. Since 1099 contractors are considered to be self-employed and not employees of a company, the federal minimum wage and overtime requirements don’t apply to them, even if they worked over 40 hours in their work week. Over the years, The U.S. Department of Labor and your State Wage and Hour Department have determined that the job expected by healthcare professionals doesn’t meet the eligibility for independent contractor classification.

So, what does this mean for healthcare facilities with 1099 contractors in their building? To put it simply, if you’re using a staffing agency that provides 1099 workers, there is a high chance that you may be sued by the Department of Labor for unpaid overtime. Along with the staffing agency, you as the facility are liable as a joint employer.

One rising case is the Pennsylvania-based operator of skilled nursing facilities, who was recently sued by the DOL for an alleged $19 million as a result of unpaid overtime. Take this example as your warning to be wary about the staffing agencies with which you do business with. Before you hire workers sourced from staffing agencies, make sure they are W-2 employees, and not 1099 independent contractors. This is vital in ensuring that your facility is in compliance with the law as it pertains to contract labor and overtime pay.

As a partner with GrapeTree, you can feel 100% confident that not only we, but also the 180+ suppliers we partner with, are hiring our healthcare professionals as W-2 employees to protect you legally and to ensure your community takes on the least risk when utilizing agency staff. We don’t take this issue lightly, which is why you can rest assured that we are mitigating your risk by extending coverage for our employees in terms of taxes, benefits, and other labor regulations. We guarantee you comprehensive, flexible, and cost-effective staffing solutions tailored to help your community succeed.


Are you looking for staffing help? Fill your shortages with confidence with GrapeTree as your W-2 partner. Our W-2 healthcare professionals are ready to help you fill shifts while ensuring you’re legally protected.

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