By Michael Vallante
In the ever-evolving world of technology and innovation, a perpetual game of cat and mouse exists between technology companies and government regulators. It's an age-old dance: technology seeks to fill a need or open new possibilities, while the government, concerned with the broader implications and public interest, scrambles to regulate and oversee these innovations.
In their pursuit of innovation, technology companies often tread in uncharted territories. Their primary objective is identifying gaps, solving problems, and optimizing existing systems. In doing so, they sometimes outpace existing laws and standards, leading to ambiguity and potential risks.
Conversely, the government's primary role is safeguarding the public interest. It must ensure that the lightning-fast developments in the tech sector don't compromise security, privacy, or the public's general welfare. This often results in implementation of rules, regulations, and sometimes even outright bans.
But here's the catch: while tech companies have innovation, speed, and agility on their side, the government wields the power of the law. No matter how advanced or transformative a technology might be, it ultimately must bow to the edicts of elected officials and the courts. With its long arm, the justice department and other agencies ensure that tech innovations adopt uniform standards and play by the rules set by these government structures.
A good example is healthcare staffing. In the past few years, venture capitalists have invested hundreds of millions of dollars in healthcare staffing apps that operate similarly to the ride-sharing apps we are accustomed to using. Healthcare facilities and nursing professionals upload their information and documents, and the healthcare workers swipe left and right until they find something that works for them.
According to Grand View Research, the United States healthcare staffing market was valued at $20.5 billion in 2022. Globally, Insight Partners expects the healthcare staffing market to grow to $51.58 billion by 2028.
Some healthcare staffing apps classify their workers as W-2 employees, others as independent contractors. The U.S. and State Labor Secretaries and Attorney Generals have noticed this discrepancy and have started to regulate this area of the healthcare industry more aggressively.
In California, healthcare app-based staffing company CareRev was sued for misclassifying their workers as contractors. In September 2022, the California Labor Commissioner's Office cited another healthcare placement agency for nearly $2 million for misclassifying 66 workers. In March 2023, the Commissioner's Office fined a therapy provider more than $9 million for misclassifying 1,280 speech, physical and occupational therapists as independent contractors.
Bloomberg Law reported that the healthcare staffing app, "Clipboard Health, faced complaints from workers alleging unpaid overtime, violations of California meal and rest break law, and unfair labor practices. A spokesman for Clipboard Health declined to comment."
MedCity News reporter Katie Adams wrote that "the Department of Labor recently sued Comprehensive Healthcare Management Services (CHMS), a Pennsylvania-based operator of skilled nursing facilities, for an alleged $19 million owed as a result of unpaid overtime, he pointed out. A large number of CHMS' workers came from Clipboard and other agencies providing 1099 workers."
In 2021, the U.S. Department of Labor (DOL) launched a nationwide effort within its Wage and Hour Division to focus on improving compliance by residential care, nursing facilities, and home health services. The DOL reported that since 2021, they have completed over 1,600 investigations and identified violations in 80 percent of its reviews. These investigations recovered over $28.6 million in back wages and damages for nearly 25,000 workers. The most common violations were for " misclassifying employees as independent contractors."
Technology moves at the speed of need. If there is a need, technology can fill the void, provide the service, and break new ground. While technology can race ahead, it can’t outrun the long arm of the law. Technology companies must adhere to current laws and regulations; it’s simple fairness. There’s no reason a technology company can ignore the law, but a brick-and-mortar business must follow the law.
Our elected officials determine the rules of the playing field, and our courts uphold those rules. If healthcare staffing apps want to provide a service to potential employees and the healthcare community, they must follow or change the laws that require workers to be W-2 employees. It's that simple.
Michael Vallante provides consulting and strategic communications services for small businesses and non-profits around the country. From 2017-20, Vallante was the US Small Business Administration's Associate Administrator for the Office of Field Operations, overseeing the 68 district offices around the country and the management of SBA's capital, contracting, and counseling programs serving small businesses.