Healthcare Staffing: Illinois regulations; Federal study proposed

Illinois has enacted legislation that precludes conversion fees and noncompetes in nurse staffing, among other requirements. Meanwhile, a senator calls for a study on the business practices of healthcare staffing firms during the Covid-19 pandemic.

Illinois bans noncompetes and conversion fees. New legislation that restricts noncompetes and conversion fees in nurse staffing and establishes reporting requirements for nurse staffing providers went into effect July 1.

The law, HB 4666, “protects temporary nurses and nurse aides’ right to change jobs or get hired directly by a healthcare facility,” said Jane Flanagan, acting director of the Illinois Department of Labor. “It will also increase stability and transparency in the healthcare industry in the state.”

According to the department, the law:

  • Prohibits nurse staffing agencies from entering into covenants not to compete with nurses and certified nurse aides.
  • Prohibits nurse staffing agencies from requiring the payment of liquidated damages, conversion fees, employment fees, buy-out fees, placement fees and/or other compensation if the employee is hired as a permanent employee of the healthcare facility.
  • Requires nurse staffing agencies to disclose new contracts with facilities to the Illinois DOL within five business days of the effective date.
  • Requires that wage rates paid to nurses and certified nursing assistants match wage rates identified on the contract and empowers the department to recover underpaid wages for the worker.
  • Requires nurse staffing agencies to submit quarterly reports related to average charges to healthcare facilities to the Illinois DOL.
  • Requires the Illinois DOL to annually report average amounts paid to employees and charged to healthcare facilities by county.

Federal study. Sen. Kevin Cramer, R-North Dakota, in June introduced the Travel Nursing Agency Transparency Act, which calls for a study on the business practices of healthcare staffing firms during the Covid-19 pandemic.

The legislation would require the Government Accountability Office to conduct a study and report to Congress on the business practices and the effects of hiring agencies across the healthcare industry during the pandemic.

IC Classification. The Department of Labor is back to square one on independent contractor classification rulemaking, and a Massachusetts initiative modeled after California’s AB 5 has been stalled by the courts.

DOL final rule. The Department of Labor has begun a new rulemaking process on independent contractor classification under the Fair Labor Standards Act, according to a blog post by Jessica Looman, acting director of the department’s Wage and Hour Division. The current rule was established by the Trump administration in January 2021. The DOL under the Biden administration withdrew the rule in May 2021, but a court in March 2022 reinstated the Trump rule. As part of its new rulemaking process, the DOL in June held public forums to hear from employers and workers who may be affected by employee or independent contractor classification.

Massachusetts initiative. Massachusetts voters won’t get to weigh in on whether drivers for Uber, DoorDash and other B2C work services platforms should be classified as independent contractors. Two petitions that would have gone before the voters should not have been certified by the Massachusetts attorney general, the Massachusetts Supreme Judicial Court ruled in June.

The court noted Massachusetts law prohibits measures from going before voters if they contain unrelated subjects. The court said the two IC ballot measures — which are largely similar — would classify drivers as independent contractors but would also extend the independent contractor classification in cases of possible lawsuits against drivers. These might include lawsuits involving driver assaults or traffic collisions.

The extension of the classification could limit platform companies’ legal liabilities in certain cases — and that represents a different subject than only making drivers independent contractors in terms of their work relationship.