Emerging healthcare gig economy: an Uber driver in scrubs

OPINION – Do you want to receive healthcare services from someone functioning as an Uber driver in scrubs? When most people hear “gig economy,” they likely think of Uber, Lyft, and other app-based delivery drivers (such as DoorDash, GrubHub, or Instacart) – not the person handing you medication or injecting you with IV fluids.

Most people do not realize that tens of thousands of healthcare personnel are app-based workers that are not employees at hospitals, clinics, senior centers, and other health facilities.

In the past few years, venture capitalists have invested hundreds of millions of dollars in staffing apps that allow healthcare facilities and nursing professionals to upload their information and documents.

Just like the app-based ridesharing and dating companies like Lyft, Uber, Tinder, and Hinge, the parties on each side of the healthcare app swipe left or right until they find the right person and healthcare facility.

Some healthcare staffing apps include agencies such as ShiftKey, IntelyCare, Clipboard Health, Kare, CareRev, and Nursa. But with each staffing app, not all healthcare workers are defined the same. Some classify their healthcare workers as W-2 employees, and others as 1099.

The misclassification of workers is a ticking time bomb, and the California Labor Commissioner’s Office and the U.S. Department of Labor are beginning to file cases.

In California, healthcare app-based staffing company CareRev was sued for misclassifying workers who signed up on the app as contractors.

In September 2022, the California Labor Commissioner’s Office cited home healthcare placement agencies nearly $2 million for misclassifying 66 workers. In March 2023, the Commissioner’s Office cited a therapy provider for more than $9 million for willfully misclassifying 1,280 speech, physical and occupational therapists as independent contractors.

Classifying a worker as an independent contractor enables the app company and healthcare facility to avoid various costs, such as providing workers’ compensation benefits, overtime premiums, and paying payroll taxes.

What these staffing app companies need to realize is that the healthcare industry and facilities will always be under a great deal of scrutiny, and they should be because they care for our loved ones in their most vulnerable state of life.

While a recent appeals court ruling upholding California voter-approved Proposition 22 provides an exemption from key California employment laws to Uber, Lyft, and other app-based ridesharing and delivery companies, this decision was extremely narrow. Proposition 22 should not be seen as an umbrella cover for other gig industries.

As an attorney in California, I have seen how costly misclassifying workers can be to businesses in this state. If the Uber/Lyft staffing model is improperly applied, both the staffing company and healthcare facility could be found as joint employers of the worker, and both could be financially liable for, among other things, failure to pay minimum wages, overtime wages, missed break premiums, liquidated damages, and other penalties.

Classifying a worker as an independent contractor enables the app company and healthcare facility to avoid various costs, such as providing workers’ compensation benefits, overtime premiums, and paying payroll taxes.

Under California’s employment rules, it is often difficult to see healthcare workers correctly classified as independent contractors. Any nurse or healthcare worker who walks into a long-term care or memory care facility will have a long list of rules and procedures that must to be followed. They are given badges for identification and access to certain areas, a work schedule, a patient list, and access to medical records. These healthcare workers must also follow designated time slots for patient medication, food, or exercise rotation.

As the gig economy grows, there is an expanding talent pool of people who want control over their work choices. Still, when businesses ignore state laws, they create a gold mine for regulators to explore.

Filling our healthcare gaps with independent contractors and avoiding having to pay overtime, paid sick leave, and other labor benefits may seem like a quick and inexpensive fix. However, this choice could have significant legal and financial consequences for staffing app companies and their clients, the healthcare facilities.

Brian Crone is the owner of The Law Office of Brian Crone, an attorney specializing in employment law since 1997