News & Insights

Department Of Labor Issues New Guidance Regarding Nurses And Caregivers As Independent Contractors

Health care registry companies provide matchmaking and referral services for qualified, pre-screened and vetted home caregivers.  They often also provide administrative services.  As part of the “gig economy,” health care registries often tread a fine line between classifying caregivers as independent contractors or employers. 

On July 13, 2018, the Wage and Hour Division of the Department of Labor (“DOL”) issued a Field Assistance Bulletin (“FAB”) entitled, “Determining Whether Nurse or Caregiver Registries are Employers of the Caregiver.”  Although the FAB directly relates only to nurses and caregivers, this is the Trump Administration’s first substantive guidance on independent contractor classification.

The DOL previously withdrew its 2015 Administrative Interpretation (“AI”) on independent contracting, but did not replace the AI with other guidance.  Now, the DOL restates the traditional “economic reality” test for determining independent contractor status such that it will consider the “totality of the circumstances to evaluate whether an employment relationship exists” and “will evaluate all factors…to reach appropriate conclusions in each case.”  This indicates a return to historically important factors, including control of the work performed by the independent contractor.  The FAB discusses specific business practices for registries that could affect the determination of whether an employment relationship exists.  The following relevant factors are flagged by the DOL: (1) background checks; (2) hiring and firing; (3) scheduling and assigning work; (4) controlling the caregiver’s work; (5) setting the pay rate; (6) continuous payments for caregiver services; (7) paying wages; (8) tracking caregiver hours; (9) purchasing equipment and supplies; and (10) receiving Employer Identification Number (“EIN”) or 1099.

The FAB provides specific guidance on how to structure independent contractor relationships in the caregiver industry.  It also generally signals the DOL’s return to the traditional, multifactor balancing test to determine independent contractor status with a primary focus on control of the worker.

Independent contracting remains one of the most challenging issues facing the business community because of the differences in legal standards between federal and state laws, and even between different statutory schemes.  Businesses should consider reviewing their independent contractor relationships under both federal and state laws.