South Carolina Independent Contractor Laws and Healthcare Staffing
Worker misclassification is becoming an increasing concern in the healthcare industry. Facilities often work with contract nurses to temporarily fill shifts that need immediate coverage. However, exercising too much control over these nursing professionals can signal an employer-employee relationship, potentially leading to penalties that may outweigh the initial benefits of hiring contract workers.
Federal and state governmental agencies play various roles in shaping regulations pertaining to worker classification. Particularly in South Carolina, independent contractor laws have been shaped by a long-standing state Supreme Court case. It’s important for facilities to be aware of the state laws that determine the classification of nursing professionals in their facility; doing so can help to minimize liability risks when working with nurse staffing companies.
In this guide, we’ll provide an overview of South Carolina contractor laws and discuss considerations that facilities should make before seeking outside staffing support.
South Carolina Independent Contractor Laws at a Glance
The following chart summarizes all the relevant statutes, cases, definitions, and enforcement policies that South Carolina’s state government uses to enforce worker classification laws.
| South Carolina Contractor Laws | |
|---|---|
| Statute(s) | South Carolina Code of Laws, Title 41, Section 41-27-230 |
| Key Case(s) | Chavis v. Watkins (1971): This case was decided by the South Carolina Supreme Court and defined an independent contractor as “one who, exercising an independent employment, contracts to do a piece of work according to his own methods, without being subject to the control of his employer except as to the result of his work.”
This case also laid out a four factor common law test to determine whether a worker is an employee or independent contractor (see test below). |
| Key Definitions and Tests | Employee: Under Section 41-27-230(b), an employee is defined as any individual who is in an employer-employee relationship as determined by “common law rules.” In South Carolina law, a worker being paid for services is presumed to be an employee unless the facts show that they are an independent contractor.
Common Law Rules: Under Chavis v. Watkins, the common law test to determine a worker’s classification for purposes of workers’ compensation, wage and hour protections, unemployment benefits, and taxation is based on the following four factors:
The common law test is fact based and each of these factors are weighed to determine whether an employer exercises sufficient control over a worker to render them an employee instead of an independent contractor. |
| Enforcement | The following agencies play a role in enforcing independent contractor laws in South Carolina: |
Independent Contractor vs. Employee: South Carolina Overview
Under South Carolina independent contractor laws, an independent contractor — also classified as a 1099 worker for tax purposes — broadly refers to someone who has sole control over their own work. An example of this would be an electrician who comes to your facility to fix the lights. Because they exercise their own expertise and use their own tools, without any supervision by your facility’s management, they’re not considered your “employee.”
Since independent contractors essentially run a business and “sell” their services, they don’t receive typical W2 employee benefits from the companies they work with. This includes things like overtime, worker’s compensation, unemployment insurance, and tax withholding.
Because of this, businesses often work with contractors to save on these costs. However, this can become a liability if businesses hire independent contractors but they are later determined to be employees based on the nature of their working relationship.
South Carolina Independent Contractor Test and Healthcare Workers
Considering how an “independent contractor” is defined under South Carolina contractor laws, it can be difficult for facilities to allow 1099 nurses to execute full control over their work. Unlike an electrician, nursing professionals must follow specific facility protocols that are necessary to meet care and safety standards. Let’s consider how this might look under South Carolina’s four-factor test:
- The employer’s right to control. A nurse’s scope of practice inherently warrants more control than other types of professions. For example, South Carolina law requires nursing professionals to be supervised by advanced practitioners at your facility. This, alongside your facility’s obligation to comply with state and federal healthcare protocols, necessarily requires you to exercise control over all of the nursing professionals in your facility, weighing heavily in favor of an employee — rather than an independent contractor — classification.
- The method of payment. Since nursing professionals must work a set number of hours each shift to prevent patient abandonment, they’re typically paid hourly. However, independent contractors are paid for specific services, while time-based payment is typically a feature of an employee relationship.
- The furnishing of equipment. Aside from watches and stethoscopes, nursing professionals must use the medical supplies provided by facilities to effectively carry out their duties. Because they don’t furnish their own equipment, this can weigh more toward an employee, versus independent contractor, classification.
- The employer’s right to fire. Facilities can terminate their working relationships with 1099 nursing professionals only if conditions outlined in their contracts aren’t met. Thus, facilities must be more cognizant about dismissing nursing staff for reasons that aren’t explicitly outlined in contract terms, since this can indicate the ability to fire workers at will which is more in line with an employer-employee relationship.
It’s important to note that South Carolina agencies investigating facilities for misclassification operate under the presumption that a worker is an employee until proven otherwise. This means that facilities hold the burden of gathering proof that a nursing professional is free from their control under each of these four factors.
1099 vs. W2 Workers: What’s Best for Healthcare Facilities?
Hiring contract nursing staff can feel like a quick and cost-effective way to find shift coverage, but it’s important to weigh the potential risks associated with misclassification. Under South Carolina independent contractor laws, facilities may have to pay up to three times the amount of unpaid wages for each worker they misclassify. This, in addition to the complexities of undergoing an investigation, can pose significant financial and time-consuming burdens for facilities.
If your facility relies on outside staffing support, there are alternative options that you can explore which don’t bring this added risk. Facilities can consider working with staffing companies that supply the services of W2 nursing professionals. These companies operate as the nursing professional’s employer of record so you don’t have to. This allows facilities to fill both short and long-term placements with nursing professionals who are trained, supervised, and covered by protections under a designated employer.
Find Shift Coverage Without Increasing Your Risk of Liability
It’s important for facilities to comply with South Carolina independent contractor laws in order to minimize legal and financial risks. Thankfully, working with W2 nursing professionals can help you meet your staffing needs without adding to your legal and financial risks.
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.