Good to know - 1099 vs W-2
1099 employment status is very different from W-2. A 1099 contractor must pay the employer's portion of taxes so, although it may seem like you can make more money, you will be required to pay more taxes next April. Also, 1099 contractors must carry their own liability insurance which is covered by your agency if you are a W-2 employee.
FAQs
Online Job Placement Platforms and W2 vs 1099 Employment – What does it mean?
Online healthcare job placement platforms that have recently become a way to find opportunities and “make more money” are being scrutinized by the Department of Labor as unlawful because they misclassify employees as 1099 contractors.
Am I an employee of the agency if I am a W-2 employee?
Yes, you are employed by an agency if you complete all of the employment paperwork and accept employment with an agency. Your agency is then responsible for paying their portion of Federal and State employment tax and carrying worker’s compensation and liability insurance on your behalf.
If I work as a 1099 contractor, who is my employer?
You are self-employed if you work as a 1099 contractor, which means you are responsible for paying self-employment tax and carrying the cost of liability insurance.
If I work as a 1099 contractor and I get hurt on the job, who pays for my care?
You pay for your care unless you carry for liability insurance.
If I work as a 1099 contractor and someone under my care gets hurt, what happens?
If you are self-employed (working as a 1099 contractor) you will have to carry liability insurance to protect yourself from lawsuits that happen when someone is injured. If you work for an agency, the agency carries the insurance that covers you in the event of an injury and lawsuit.
If I work as a 1099 contractor, will I owe taxes in April?
It depends how much money you made during the previous year but is likely that you will have some tax burden.
If I work as a 1099 contractor, will I qualify for benefits over time?
No, if you work as a 1099 contractor, you are considered self-employed and are not considered an employee, therefore will not ever qualify for benefits. However, if you work for an agency, you are an employee and may qualify for benefits over time.
American Staffing Association Online Health Care Job Platforms Worker Misclassification Risks
SOURCE: American Staffing Association
277 South Washington Street, Suite 200 | Alexandria, Virginia 22314-3675
703-253-2020 | 703-253-2053 fax | americanstaffing.net
June 2022
Online Health Care Job Platforms— Worker Misclassification Risks
I. Introduction
Online health care job platforms are increasingly classifying nurses and nurse aides placed through their platforms as independent contractors instead of employees—and issuing Forms 1099 to those workers instead of W-2s. This allows the platform to provide those caregivers to health care facilities at a much lower cost by not providing employee benefits or paying payroll taxes and other labor costs. This poses significant legal risks for unwary facilities, which could end up getting stuck with those costs. While some platforms may legitimately claim that the workers placed through their systems are independent contractors with respect to the platform, the end users of the services generally cannot make the same claim because they exercise supervision and control over the work performed by the workers at the work site. Hence, health care facilities using such services could face claims that they are employers of the workers and owe payroll taxes, overtime wages, and other employment-related costs and benefits. The financial perils of misclassification can be severe. A federal court in Virginia recently fined a health care staffing agency $7.2 million in back overtime wages and damages for misclassifying 1,105 certified nurse aides, licensed practical nurses, and registered nurses as independent contractors. In a news release, the U.S. Department of Labor, which sued the agency, said the ruling sends “an unequivocal message to healthcare industry employers” that the department “will not hesitate to bring legal action, pursuing all available remedies, when it finds that an employer has willfully violated the law.” This is but one example. Plaintiffs’ class action lawyers have increasingly targeted this issue in lawsuits against employers. To address the problem, ASA has created a “coalition against worker misclassification,” made up of the nation’s leading health care staffing agencies, to educate online platform users about the risk of using workers misclassified as independent contractors and their potential obligations as employers. This paper is part of the coalition’s education and outreach effort.
By Gerald L. Maatman, Jr., Esq. Partner,
Seyfarth Shaw LLP 233 S. Wacker Drive, Suite 8000 Chicago, IL 60606-6448 gmaatman@seyfarth.com seyfarth.com 312-460-5965
Stephen C. Dwyer, Esq.
ASA Senior Vice President, Chief Legal and Operating Officer 703-253-2037 sdwyer@americanstaffing.net
Brittany Sakata, Esq.
ASA General Counsel 703-253-2038 bsakata@americanstaffing.net
Edward A. Lenz, Esq.
ASA Senior Counsel 703-253-2035 elenz@americanstaffing.net American Staffing Association