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Commentary: Tech meets government, the legal tug-of-war in staffing apps


In the fast-paced realm of technology and invention, a relentless push and pull exist between the tech industry and government. Tech ventures forth, boldly embracing innovation, often outpacing the bounds of current legal structures, and navigating the uncertainties they bring. They are on a mission: to identify inefficiencies, tackle challenges, and enhance existing systems. Yet, as they speed ahead, they sometimes skirt the edges of established legal confines.

Meanwhile, the government stands sentinel. Quick to act when tech appears to threaten security, privacy, or public interests, they respond with regulations or even outright bans.

While tech champions innovation and agility, there is a watchful eye for governance bound by laws and regulations. Every technological marvel, no matter how groundbreaking, must ultimately adhere to the dictates of policymakers and courts.

Enter the digital age’s latest game-changer: staffing apps. These platforms act as bridges, connecting businesses with potential hires and presenting an agile solution to workforce demands. Particularly during worker shortages, they’re a game-changer. However, they’re not without pitfalls, especially regarding worker classification.

Healthcare staffing apps epitomize this trend, allowing healthcare professionals to upload qualifications, which are then matched to healthcare facilities needs. Like a job “dating” app, healthcare workers peruse available shifts, swiping to signify interest.

Illinois passed HB 4666 in 2022 to address concerns over worker misclassification, targeting the booming healthcare staffing app industry.

Backed by vast venture capital, these app companies are spreading like wildfire across the U.S.

Fast forward to 2023, healthcare staffing agencies in Illinois must now provide detailed quarterly reports to the state’s Department of Labor. These reports delve into financials, spotlighting amounts charged to healthcare facilities, payments made to workers, and various labor costs, from taxes to insurance.

While union groups herald HB 4666 as a triumphant shift, the issue of worker misclassification resonates nationwide, as the U.S. and State Labor Secretaries and Attorney Generals have started to regulate this area of the healthcare industry more aggressively.

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.”

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 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.

This month, Illinois Attorney General Kwame Raoul and the Illinois Department of Labor announced the settlement of an investigation involving a medical staffing company, GrapeTree, that resulted in $950,000 in back wages for 3,000 current and former employees. “GrapeTree is a medical staffing company that provides healthcare professionals to work in long-term care and assisted living facilities in 12 states. Employees manage their own schedules by signing up for shifts through an online system.”

While at the Small Business Administration, I witnessed firsthand the struggles of small businesses, particularly the threat of liabilities and legal actions. Misclassifying workers often becomes a goldmine for lawyers.

It is important to remember that as technology hurdles forward, it remains tethered to the decisions of our elected officials and the judiciary. Regardless of personal opinions, understanding these rules is paramount; otherwise, the omnipresent reach of the law is poised to intervene – the Labor Commissioners and Attorney Generals are paying attention.

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.

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