'Gig Economy' Law Shakes Local Healthcare

by Placerville Newswire / Sep 22, 2019 / comments

[Cheryl Clark, Contributing Writer, MedPage Today] 

With California Gov. Gavin Newsom (D) signing a landmark "gig economy" bill on Wednesday, healthcare workers and employers now face the task of figuring out what it will actually mean for them.

The legislation takes effect in less than four months, creating something like panic for the many organizations that rely on contract workers. Some of those individuals, meanwhile, prefer working under contracts rather than employment and are trying to find an escape hatch.

"We are still analyzing the impact on hospitals," said Jan Emerson-Shea, spokeswoman for the California Hospital Association, many of whose members – especially those in rural parts of the state -- rely on contract workers to serve smaller, remote populations.

Amendments, which set forth many groups of workers who are to be excluded, made the final language "somewhat ambiguous," she said.

The new law is designed to force employers to hire, and thus pay benefits and taxes for, their contract workers whose treatment on the job is hard to distinguish from regular employees. But it specifically excludes California-licensed physicians, surgeons, dentists, podiatrists, psychologists, or veterinarians. Likewise, it exempts licensed lawyers, architects, engineers, private investigators, or accountants, and even "a commercial fisherman."

But it is silent on nurse practitioners, registered nurses, home health aides, hospice workers, speech therapists, and other large categories of clinicians. One clause suggests, vaguely, that some of those might be exempt. It lists "among others, licensed insurance agents, certain licensed health care professionals, registered securities broker-dealers or investment advisers," leaving unstated which "licensed health care professionals" are included.

And that has made some sectors a bit nervous. Corrigan Gommenginger, president of Advanced Home Health and Hospice in Sacramento, worries how organizations like his will serve the state's vast rural areas.

"Let's say somebody in Shingle Springs" -- a town of 4,400 in the Gold Country foothills -- "needs a nurse three times a week. It's a small community and probably doesn't need a full time RN. So we might have a retired RN who has a contract with my company, and a contract with a few other home health agencies, that basically says, 'When you have a patient up in this area, I'll be happy to be that contract nurse for you.' "

Under the new law, that RN would have to be hired by all three agencies to serve those clients, he said, and the clinician might have to choose. "There's not a lot of people who like being employed with multiple different agencies," he said, adding that it can cause confusing issues with taxes and benefits. His company, like many others, may lose some people they need to serve those communities if they choose to retire, or decide to work with another employer.

"That's what I'm worried about with this legislation. Independent contractors who are helping to serve a vital gap in service delivery are not going to be able to have that option anymore [to provide services to multiple agencies] and that's going to make patients suffer. They're not going to get access to the care they need."

Gommenginger's organization has three to five registered nurses and physical therapists on contract in rural areas, and said the company is "reaching out to them and encouraging them to join our staff." But if they accept, it may mean that the other agencies that they now work for won't be able to hire them. It also may mean that Gommenginger's company won't have enough work for them to do in their areas.

One solution is that these home-visit clinicians would instead be hired by staffing agencies, which Gommenginger said will impose another layer of administration and another layer of operations.

"For people who want to be their own managers, their own business owners, you've just taken away their livelihood."

Asked about the impact on other sectors of the healthcare workforce, Assemblywoman Lorena Gonzalez (D-San Diego), the primary sponsor of the bill, said in a message to MedPage Today, "Physicians and dentists are generally exempted," but declined to comment on other specialties, many of whose providers prefer to work on contract.

Nurses group is big supporter

Within the healthcare industry, one of the bill's biggest supporters, known within the state as AB5, is the California Nurses Association, which represents about 100,000 of the 400,000 registered nurses and nurse practitioners in the state.

Stephanie Roberson, CNA director of government relations, said her organization is adamant that too many industries "have abused the definition of what is full-time employment, and end up in contracting situations so they can shirk their responsibility on payment of wages and benefits. We're a labor union. We don't support that."

Nevertheless, a contingent of the members they represent, several thousand nurse practitioners and nurse anesthetists who work full-time for Kaiser Permanente and University of California hospitals and clinics, asked the CNA to fight for an exclusion for them as well, so they could work as independent contractors if they wanted. Their request was summarily denied, Roberson said.

"We're not quite sure why they want to be classified as independent contractors. I'm assuming it's because they may make a better wage. But when you balance that with a full-time job, where you get a good wage and benefits, I'm not sure that's a better arrangement," Roberson said.

MedPage Today's attempts to contact those members were unsuccessful.

However, one nurse anesthetist, Christina Canio, commented on the website LegiScan, "Certified Registered Nurse Anesthetist (CRNAs) should be exempt as well! Many of us practice as independent contractors. This allows CRNAs flexibility and control over our professional, family, & quality of life."

The new legislation stems from a landmark California Supreme Court case, Dynamex Operations West v. Superior Court of Los Angeles, which sought to remedy harm to misclassified workers who must go without workplace protections and the loss of revenue from taxes such as workers' compensation, Social Security, unemployment, and disability insurance. In effect, the new law codifies that decision and was strongly supported by labor unions across the state.

Other concerns raised about the new law are that it could result in age discrimination against contracted older workers, as companies are faced with a requirement that they must be hired as employees -- meaning far more expensive health insurance premiums as well as higher payments for Social Security and other taxes, compared with costs of hiring a younger worker, or perhaps a worker in another state.

Gommenginger acknowledged that the new law might affect older workers more, especially those in occupations that are still in high demand, but where professional clinicians just want to slow down or scale back. "A lot of these people are older, and the insurance premiums are definitely more for older employees."

Although he said age discrimination is illegal, he knows it occurs. The law "is certainly going to perpetuate the problem, for sure," he said.