NALTO Independent Contractor Status


You may proudly recall that at 6pm on March 28, 2020, thousands of New Yorkers stepped out on their balconies, leaned out their windows, and cheered as healthcare’s first responders walked out of their shifts at medical facilities across the city. At that time, there were over 70,000 healthcare professionals that volunteered to combat the pandemic, with many more on the way. Among them were over 8,000 doctors.

For nearly half a century, our country has relied on locum tenens physicians; doctors wanting to be free to practice medicine, a patient who needs care, and an efficient way for them to meet where the delivery of healthcare can be maximized. Overbroad government intervention and regulatory policies have posed a material impediment to the efficiency of this marketplace; i.e., staffing companies, healthcare facilities and the independent contractors that desire to fill urgent needs at such facilities.

As a result of the 1997 Balanced Budget Act which capped the number of federally funded residency slots, this legislation still causes the ever-widening discrepancy between the supply of doctors and the demand for them to this day[, particularly in rural communities that desperately need coverage]. In fact, over 90% of today’s healthcare facilities use locum tenens.

“Though perhaps little known to the average citizen, the use of locum tenens by our healthcare system is immense in scale. With most healthcare facilities already using locum tenens physicians, combined with the fact that the physician shortage, estimated to approach 100,000 by 2025, is expected to exacerbate a current scenario where healthcare facilities and the communities they serve will be desperately short of reasonably convenient access to healthcare” says Matt Young, COO of All Star Healthcare Solutions and Co-Chair of NALTO’s Legislative Committee.

The Affordable Care Act, with increasing access to care for millions, failed to address the issue of the labor force to see those patients. It does not matter how many Americans you insure; they still must wait in the same line to see a physician as the rest of the insured population. Single-payer plans, if ever enacted, are no different. They simply do not address the subject of labor, specifically the medical doctors who are the ones bringing in the most revenue to our healthcare facilities.

On September 22nd, the U.S. Department of Labor proposed a rule to clarify the definition of an employee under the Fair Labor Standards Act (FLSA). The proposed rule has been available for public comment for the last month. This rule could result in the change of employee status for over 52,000 locum tenens physicians that desire and have heretofore enjoyed the status of being an independent contractor.

Being an independent contractor enables physicians to take advantage of the benefits of becoming a locum tenens provider. Much like today’s rise in our “gig “economy, locum tenens doctors enjoy the freedom and flexibility that comes with being an independent contractor, thus allowing the profession to become the foremost method by which our nation’s healthcare facilities continue to make up for the ongoing, and widening, shortage of physicians.

“Quite frankly, and especially in the rural areas of our nation, the system could break down without them. Who would see the 1 million patients yearly that these locum tenens physicians are caring for now? Any change to their status as independent contractors could have a devastating effect, as many physicians could not provide coverage if forced to be employed. As a result, facilities that currently have coverage by using these physicians, say, in ER and Critical Care as examples, would then be forced to go on diversion and send patients elsewhere, sometimes 50-100 miles away. That is not an ideal scenario when you are in a situation where, literally, every second counts” adds Young.

To its credit, the State of California has wisely recognized the importance of maintaining the categorization of physicians as independent contractors when it codified the court’s decision in Dynamex Operations West, Inc. v. Superior Court, 516 P.3d 1 (2018) (establishing the ABC test for determining employee or independent contractor status) in California Assembly Bill 5 (“AB-5”) in 2019. In determining whether an individual is an employee or independent contractor, the ABC test presumes a person providing labor or services for remuneration to be an employee rather than an independent contractor unless (A) the person is free from control and direction of the hiring entity in connection with the performance of the work, (B) the person performs work outside the usual course of the hiring entity’s business, and (C) the person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. Cal. Labor Code § 2750.3(a)(1)(A)-(C).

Notably, AB5 provides that neither AB5 nor Dynamex applies to “[a] physician and surgeon licensed by the State of California performing professional or medical services provided to or by a health care entity.” Cal. Labor Code § 2750.3(b)(2). The State of California has aptly recognized that physicians occupy a unique and special position, and that even if they were to fall within the ambit of the ABC test, they have been expressly carved out.

In summary, if the Department of Labor indeed adopts the economic reality test, NALTO urges the DOL to include a carve-out or exemption for locum tenens physicians. This will provide greater clarity and predictability in the locum tenens staffing industry and go a long way to alleviating the increasingly challenging supply issues facing healthcare facilities and a plethora of communities.

The National Association of Locum Tenens Physicians (NALTO) wishes to ensure that locum tenens physicians retain their independent contractor status. Voices opposing any change in their status must be heard before a decision is made at the end of this year. We urge you to contact your Congressional representatives now.

For more information please contact Matt Young of NALTO’s Legislative Committee at [email protected]

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