In the US, people can be hired in two ways: as W-2 employees or as 1099 contractors. The differences are in the nature of the work, but also in how people will be taxed and who will pay those taxes.
Some of our tech-enabled competitors, such as ShiftKey, Kare, and Clipboard are 1099, while others, such as IntelyCare, ConnectRN, and ShiftMed, are W-2.
ESHYFT nurses are W-2, which means they are employees.
There are pros and cons to W-2 and 1099, but we firmly believe that W-2 is the right classification of per diem nurses and is the approach that is most beneficial in the long run.
Did you know? Back in 2018, the original ESHYFT product was built as a 1099 model. We eventually rebuilt ESHYFT with a W-2 model, and this is why:
Pros of W-2:
- A longer and more thorough hiring process of nurses
- Nurses are employees of ESHYFT and are more committed to their work
- Unlike 1099s, there are no surprise tax bills for nurses at the end of the year
- As a 1099 contractor, nurses can expect to pay 15-16% of their pay in self-employment taxes
- As a W-2 employee, taxes are taken out of your paycheck. Additionally, the employer pays a portion of your social security tax.
- Holiday pay and overtime pay for nurses
- Ability for the facility to manage and supervise ESHYFT’s nursing staff (technically this is not the case with 1099 contractors)
- Increased liability for facilities:
- If nurses get injured on the job, this opens the facility up for liability if the nurse doesn’t have their own worker’s comp. W-2 employers, like ESHYFT, carry a workers comp policy on all employees.
- Incorrect misclassification of nurses as 1099, risk of legal and financial penalties for back pay, benefits, and delinquent taxes.
- If a nurse requires disciplinary action, W-2 employers are legally able to work through that with nurses, while 1099 contractors cannot receive such instruction.
Recently, the Pennsylvania Department of Labor sued Comprehensive Healthcare Management Services (CMHS), an operator of nursing homes, for $19 million for unpaid overtime. A large number of CMHS’ workers came from Clipboard, which uses the 1099 model. Some workers were working over 70 hours per week and not receiving overtime.
The Biden administration and other states are taking a close look at the misclassification of nurses as 1099 contractors. Around 25% of nursing professionals who work at nursing homes are 1099 contractors, a major increase from the 1% before the pandemic. There is growing concern about the liability this poses and its effect on the quality of care for residents.
ESHYFT is proud to be an employer of W-2 nurses, it’s a more complex way to hire, manage, and pay nurses, but we know it’s the right one.