Missouri Independent Contractor Laws and Healthcare Staffing
If your healthcare facility is considering working with temporary staff to fill vacant shifts, you may have the opportunity to hire an independent contractor (IC), or “1099,” nursing professional. These nurses and aides often work on a contract or per diem basis to fill urgent needs. While this staffing solution is beneficial in the short term — saving hospitals costs related to benefits, training, and more — there may be potential long-term legal and financial consequences of hiring 1099 nurses.
If a nurse is classified as an independent contractor but operates more like an employee (“W2”) in your facility, they may be misclassified. This could lead to an audit by the U.S. Department of Labor (DOL) and, if violations are found, the IC in question could file a legal claim. It’s critical for healthcare employers to understand and appreciate the distinction between independent contractors and W2 employees before using temporary nurse staffing because the consequences of getting it wrong can be costly.
In this article, we provide an overview of the Missouri independent contractor laws that affect healthcare staffing and how to minimize the risks of employee misclassification determinations.
Missouri Independent Contractor Laws at a Glance
In Missouri, employers must recognize workers as employees if they fit certain criteria. Failure to do so can result in civil penalties, or even criminal charges. This chart covers the relevant statutes, definitions, and tests to help you better understand how Missouri 1099 laws work.
| Missouri Independent Contractor Laws | |
|---|---|
| Statute(s) | Missouri Revised Statutes, Chapter 285: |
| Key Definitions and Tests | Misclassification: An employer knowingly misclassifies a worker if it fails to claim the worker as an employee but knows that the worker is an employee.
Employee: Any individual who performs services for an employer that would satisfy the 20-factor test used by the IRS. Knowingly: A person either: (1) knows the nature of their conduct or its attendant circumstances; or (2) is aware that their conduct is practically certain to cause that result. |
| Enforcement and Penalties | Under Section 285.506, in any enforcement action under this statute, the state has the burden of proving that an employer misclassified a worker.
Under Section 285.512, the Missouri Attorney General is authorized to seek injunctions prohibiting an employer from engaging in employee misclassification where such violations are occurring or are about to occur. Section 285.515 allows for civil penalties in the amount of $50 per day per misclassified worker up to a maximum of $50,000. In addition, an employer could also face:
Note: In an effort to improve enforcement efforts, in 2020 the Governor issued Executive Order 20-15 which created an interagency task force to facilitate investigations and enforcement of worker misclassification matters. |
Missouri Independent Contractor Test
The term “independent contractor” typically refers to a self-employed worker who uses the IRS tax form 1099 for compensation. This status indicates that the worker is capable of carrying out their work independent of control and direction from the person or company hiring them. They pay Missouri independent contractor taxes instead of filing W2s like traditional healthcare employees. If a company exercises some degree of control over an IC worker, often required in a healthcare environment, they could face investigations, lawsuits, and penalties related to misclassification.
To make the distinction between an employer and an independent contractor, Missouri independent contractor laws follow the IRS’s 20-factor test. It considers three main contributing factors to help decide if an employer is exercising control over workers. The types of control include:
- Behavioral — An employer exercises behavioral control by providing instructions such as when and where to work and which workers are needed to assist others. Other indicators include whether an employer requires initial or ongoing training for the job to be done in a specific way. In healthcare, nurses are often required to perform on-the-job training depending on their place of employment. They also receive assignments for their type and location of work routinely. To see how this might affect your healthcare facility, take the Missouri Behavioral Control Test.
- Financial — Factors such as how a worker is paid and whether they’re reimbursed for certain aspects of the job are considered when determining an employer-employee relationship. To complete clinical training, nurses are often required to take courses for certifications or facility-based competencies. If a facility pays for a training course, such as CPR or Safe Patient Handling, this weighs more toward an employer-employee relationship. This would also be the case if a facility provides the resources for a nurse to do their job — which is nearly unavoidable in healthcare.
- Relationship — Factors that determine the relationship between the worker and employer can include contracts, employee benefits, services provided, and the permanency of the relationship. Nurses typically enter a contractual agreement with a healthcare facility before beginning temporary employment. Employers should carefully consider the language in the contract to determine the type of relationship between the nurse and the healthcare facility. But keep in mind that a worker’s classification isn’t determined by the terms of a contract, but rather by the nature of their work and working relationships.
Employers looking to ensure DOL compliance and reduce legal risk should reference the Missouri employment law handbook. Here, you can find detailed information on Missouri misclassification law and other state 1099 restrictions.
How Missouri Independent Contractor Laws Affect Healthcare Facilities
To better understand how 1099 laws in Missouri affect your healthcare facility, it helps to know how they’re structured and enforced. In Missouri, a dedicated task force was created to bring together multiple state agencies to handle employee misclassification claims. The Interagency Task Force on Worker Classification facilitates communication about misclassification investigations while seeking to improve collaboration among agencies involved in the process, including the:
- Department of Labor and Industrial Relations
- Attorney General
- Department of Revenue
- Department of Commerce and Industry
- Division of Workers’ Compensation
- Division of Employment Security
- Division of Labor Standards
In addition to the time and expense of facing investigations by multiple state agencies, a healthcare facility found to have misclassified 1099 nursing professionals could face lawsuits from those workers seeking back pay for overtime or other entitlements, civil fines and assessments, and even potential criminal charges. Become familiar with Missouri labor laws to stay compliant with worker classifications, fair wages, workforce regulations, and more.
Alternatives to 1099 Healthcare Staffing
Fluctuating patient census and staff turnover are common in the healthcare field, but there are alternatives for supplementing your workforce without increasing your exposure to liability for misclassification. By partnering with a staffing company that hires W2 nursing professionals instead of 1099 ICs, you can significantly reduce the risk of violating Missouri independent contractor laws.
W2 staffing partners, as opposed to 1099 agencies, are responsible for their employees’ onboarding, training, and supervision. In addition, W2 employers provide their nursing professionals with the necessary coverage, benefits, and entitlements. Not only does this help shield your facility from liability concerns, but also helps ensure better-supported staff who are more likely to be dependable and satisfied with their jobs.
Missouri W2 vs. 1099 Nurse Staffing: What’s Best for Your Facility?
As Missouri independent contractor laws, as well as those in other states, trend toward greater scrutiny of 1099 healthcare workers, it may be in your best interests to consider alternatives to hiring ICs for your facility. Choose a trusted partner to get the W2 staffing support your facility needs.
Legal Disclaimer: This article contains general legal information, but it is not intended to constitute professional legal advice for any particular situation and should not be relied on as professional legal advice. Any references to the law may not be current, as laws regularly change through updates in legislation, regulation, and case law at the federal and state level. Nothing in this article should be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed to practice in your jurisdiction.