Weary from spending the last two years focusing on pandemic-driven legislative agendas, state and federal lawmakers started the new year focused on the upcoming elections and a return to “normal” legislative issues. However, the first half of the year was defined by a legislative effort aimed at one of the most important segments of the industry: health care staffing. Nurse staffing agencies, which months earlier were being lauded as playing an integral part in fighting the pandemic, found themselves the subject of proposed restrictive legislation.
But it wasn’t just nurse staffing that was the target of state and federal legislatures. Bills and initiatives dealing with employers’ use of artificial intelligence, pay disclosure, predictive scheduling, and other issues made the beginning of 2022 particularly busy for the staffing industry in state houses across the country.
Through it all, ASA secured major legislative victories in an effort to ensure that its members could remain unencumbered in placing people in jobs.
ASA Mounts Multifront Defense Against Attacks on Nurse Staffing Agencies
Not since the Affordable Care Act have ASA and its members faced a regulatory challenge more complex, widespread, and daunting as this year’s legislative assault on nurse staffing agencies. Squeezed by the rising cost of nursing services and the limits on government reimbursement, hospitals, nursing homes, and assisted living facilities unfairly lashed out at nurse staffing agencies complaining of abusive pricing and urged federal and state regulators to act.
Bills aimed at reining in the cost of nurse staffing services and regulating how agencies providing those services can operate were introduced in 14 states—California, Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Missouri, Ohio, Oregon, Pennsylvania, and Rhode Island. At the federal level, national hospital and long-term care associations urged Congress, the White House, and the Federal Trade Commission to investigate whether nurse staffing agencies should be regulated, despite their nurses making up less than 2% of the U.S. nurse population and thus having a nominal effect on the nationwide cost of nursing services.
To defend against the onslaught, ASA staff and its outside lobbyists, along with a broad coalition of nurse staffing agencies, engaged with federal and state policymakers—and with groups arguing for regulation—in a multifront effort to address their concerns. We argued that these various state proposals to cap agency prices largely ignored all the costs that agencies incur in providing their services that must be reflected in the price for the firm to operate profitably. In addition to wages, agencies provide benefits and pay other labor-related costs like payroll taxes; employee screening; professional liability; workers’ compensation; unemployment insurance; and travel, meal, and housing costs, plus overhead expenses like marketing, rent, equipment, and administration. A few proposals considered some of those costs, but still would have imposed arbitrary percentage limits on agency profit margins and burden agencies and regulators with unnecessary compliance costs. In some cases, the caps were so onerous that agencies simply could not continue to operate profitably.
Although price caps were the main concern, many of these bills also included language that would have imposed new regulatory requirements on nurse staffing agencies similar to laws that have been on the books for years in several states, such as licensing and registration requirements. Other provisions included language to ensure that health care personnel are properly screened and credentialed, prohibitions on charging health care facilities “conversion fees” when the facility hires agency employees, and reporting of wage and bill rate data to clients and the state.
While ASA explained rate caps were the wrong solution and would aggravate the nursing shortage, we also suggested several steps that can be taken to constructively address the cost of nurse staffing without imposing costly, complex, and burdensome regulations. These proposals focused on
- Increasing the supply of nurses. We urged state lawmakers to increase investment in nursing schools and teachers so more students can achieve their dreams of becoming nurses; remove state licensing barriers so nurses can work across state lines to meet demand; and reform immigration rules to allow more foreign nurses to work in the U.S.
- Increasing facility reimbursement rates. Medicare and Medicaid reimbursement rates should be increased to relieve financial pressure on health care facilities.
- Fostering agency competition. Thousands of nurse staffing agencies compete vigorously across the country for clients and nurses. Hospitals and nursing homes should be urged to aggressively shop for the best price among the agencies in the market.
When it came to rate caps, fortunately policymakers listened to and understood the industry’s arguments. Nurse groups also weighed in strongly against such caps, arguing persuasively that they would effectively act as a cap on nurses’ wages, which no one supports—and that by discouraging agencies from doing business in a state, rate caps would deprive nurses of the flexible work arrangements they prefer and that agencies provide. As a result of these efforts, no state price cap proposal has thus far been enacted.
However, to date eight states (Colorado, Connecticut, Illinois, Iowa, Kentucky, Louisiana, Missouri, and Oregon) have enacted new laws concerning the operation of nurse staffing firms, covering such areas as licensing and registration, the use of restrictive covenants, and the submission of quarterly data reports to various government agencies.
ASA continues to advocate against the bills that are still under consideration in Ohio and Pennsylvania, while also working with state regulators who are drafting rules and regulations where initiatives have passed. For an updated list of the fourteen bills and where they stand in the legislative process, click here.
Federal Activity
Artificial Intelligence in Hiring
Late last year, the Equal Employment Opportunity Commission announced that it would begin examining the use of artificial intelligence in hiring practices to determine whether such use has an unlawful disparate impact on minorities. The announcement came on the heels of press reports and accusations that some social media platforms and employers’ artificial intelligence programs unlawfully screened out protected categories of workers.
ASA and a working group of members met with EEOC staff, noting that in addition to their own internal algorithms, staffing agencies use myriad job boards whose candidate ranking systems and other proprietary technology could be classified as artificial intelligence. We stressed that it would be manifestly unfair for agencies to be held responsible for third party “black box” software, which agencies neither create nor have insight into. Therefore, we argued that any forthcoming guidance should hold software vendors responsible for any discriminatory impacts of their own products (assuming, of course, that the user does not use such products in an intentionally discriminatory manner).
Specifically, we pointed to New York City; Washington, DC; and other jurisdictions as models of what not to follow in terms of creating policy. These jurisdictions have proposed requiring users of artificial intelligence software to annually audit each product, and also provide advance notice of their use to job candidates. We pointed out to the EEOC that for employers such as staffing agencies that use multiple job boards, such requirements could entail auditing multiple software services, resulting in significant cost. We further stressed that requiring advance notice to candidates makes little sense because, by the time such notice is provided and the requisite waiting period elapses, the job opportunity may no longer be available.
Subsequently, ASA submitted a position statement to all of the agency commissioners, proposing that (i) to the extent the EEOC recommends that artificial intelligence software be audited for bias, such audits should be conducted by the software vendor or a neutral third-party under contract with such vendor, and that, absent particular use of software in a discriminatory fashion (for which current antidiscrimination laws would apply), employers be afforded a good faith reliance defense to claims that the audited software has an unlawful disparate impact; and (ii) any advance notice requirement to candidates regarding the use of artificial intelligence can be satisfied by postings on employer websites, which may include nonproprietary information provided by the software provider.
ASA will continue to engage with the EEOC on this important issue.
Department of Labor Office of Disability Employment Policy Alliance
ASA renewed its alliance with the U.S. Department of Labor’s Office of Disability Employment Policy in May, extending the relationship for another five years. Throughout 2021 and into 2022, ASA’s general counsel, member engagement director, and public relations director met monthly with ODEP staff to discuss collaboration opportunities to increase workforce participation for individuals with disabilities.
In January, ASA launched a microsite aimed at helping members ensure their recruiting practices and workplaces are inclusive. The site serves as a resource for agencies that want to recruit, hire, retain, and advance people with disabilities. Looking ahead, the alliance is discussing veteran employment assistance opportunities, as well as job accommodations and employment resources with respect to long Covid. The new alliance term is five years.
Occupational Safety and Health Administration Alliance
After two successful terms of a formal alliance with OSHA, ASA has entered into an ambassador relationship with the agency. Alliance participants that have successfully completed an initial two-year agreement and one five-year renewal period may become an ambassador. Through this enhanced partnership, OSHA and ASA will continue their work providing ASA members and other interested parties with information, guidance, and access to training resources to help protect the health and safety of temporary workers.
Since the alliance’s start date of May 2014, OSHA and ASA have collaborated through speaking engagements, video presentations, webinars, articles, and other means to raise awareness about temporary worker safety and educate staffing agencies and host employers about their respective safety obligations. Most recently, ASA and members of its employee safety committee provided comments on a new Temporary Worker Initiative Bulletin pertaining to heat illness and injury prevention.
State Legislative Activity
California: ASA Secures Exemption for Staffing From Pay Reporting Bill; Second Bill Pending
ASA, its affiliated chapter California Staffing Professionals, and the association’s California lobbyists were able to secure an exemption for staffing from AB 2095, a bill that would require employers with 1,000 or more employees to submit to the state certain employee-related information including “pay, hours and scheduling, prospects for internal advancement, benefits, the use of contractors, workplace safety, turnover, and equity.” The bill’s stated goal was to promote large employers’ “high-road” practices by publishing the aforementioned information on a public website.
We argued that requiring staffing agencies to submit data on such things as temporary employee pay rates, scheduling, prospects for advancement, benefits, turnover, and equity would not only be economically burdensome, but would be virtually useless from a policy standpoint. We noted that every temporary assignment is different, as are the associated pay rates. Staffing employees work in virtually all occupations in all skill and income levels. Thus, we said that there are no apples-to-apples comparisons to be made when it comes to temporary employee assignments, and information provided by staffing firms would be highly misleading.
The bill’s author agreed and amended the bill to specifically exclude staffing agencies.
ASA is now opposing a second, similar bill (SB 1162). The bill originally would have required clients to publish job openings with their internal staff before using staffing agencies but, in a significant victory for the industry, ASA persuaded legislators to strike that provision.
SB 1162 also would require both staffing agencies and clients to report temporary employees’ annual “pay data” by race, ethnicity, and sex. ASA and CSP continue to oppose this requirement.
California: ASA Defeats Workers’ Compensation Legislation That Would Have Upended Staffing Business Model
A bill that would have required staffing agency clients to procure a separate policy of workers’ compensation insurance covering agencies’ temporary employees was amended into a study bill after fervent opposition from ASA and CSP.
The legislation, which was supported by a veteran-owned staffing agency looking to level the uneven playing field created by unscrupulous agencies that cheat to lower their workers’ compensation modification factors, not only would have failed to solve the problem, but would have undermined a central tenant of the staffing agency model—that staffing agencies are employers for purposes of securing and maintaining workers’ compensation for temporary employees. The agency has signaled that it is willing to work with ASA on more effective ways to combat so-called workers’ compensation “mod-swapping.”
Connecticut: ASA Defeats Predictive Scheduling Bill
For the fifth consecutive year, the Connecticut legislature introduced and considered legislation that would have required businesses, including staffing agencies, to provide employees with advance notice of work schedules and changes in schedules. HB 5353 would have also required businesses to “make every effort” to schedule existing employees before hiring a new employee from a staffing agency or other outside entity.
ASA submitted written testimony to the Joint Labor Committee in opposition to the bill and worked with our outside lobbyist as well as the state retail and restaurant associations throughout the legislative session. We were once again successful in defeating the bill when the legislature adjourned in June without voting on the measure.
Massachusetts: ASA Defeats Wage Theft Legislation
Representing the latest in a multiyear opposition effort regarding legislation that would impose strict liability on clients for staffing agency wage violations, ASA and its affiliated chapter Massachusetts Staffing Association engaged with the Joint Labor and Workforce Committee to stress that, as businesses that are highly regulated under existing law, registered staffing agencies should be entitled to a presumption of good faith and legitimacy and clients using such agencies should not be held jointly liable unless an employee can show that the agency committed a wage theft violation and that the client knew or should have known of such violation.
The legislature and interested parties continued discussions about this bill up until the very end of the legislative session when the lack of an agreement led to the bill being declared dead.
Nevada: Court Rules That Nevada Cannot Ban Construction Staffing, Citing Economic Harm
A year after Nevada enacted legislation (AB 227) banning staffing agencies from employing workers in skilled construction jobs, a state court has announced that it will strike down the ban—urged by state labor unions—on the grounds that it would cost thousands of Nevada jobs.
During four days of hearings held in December and January, ASA, People Ready, Square One Solutions, and contractor Norman Ventures testified that the law would cause irreparable economic harm to staffing agencies, contractors, and workers by effectively outlawing the flexible labor they had relied on for over 40 years. The court agreed, granting the industry’s request that the law be enjoined. The law had been under a temporary restraining order since Oct. 1, 2021, when AB 227 was slated to go into effect.
The court announced its decision in a pre-trial conference call in May. During the call, counsel for ASA and the defendant state contractors board agreed that the extensive testimony presented during the hearings made it unnecessary to conduct a full trial and that the court’s ruling granting the injunction should therefore be treated as a final order. Defendant unions said they likely would agree pending their review of the court’s formal opinion. If all parties agree, the court is expected to issue a final order making the injunction permanent.
AB 227 was the first law of its kind ever enacted by a state—and would set a terrible precedent if upheld. For decades, unions have been hostile to temporary work and have proposed various restrictions—but never an outright ban. The Nevada unions claimed AB 227 was needed to address worker misclassification, nonpayment of employment taxes, and other abuses. But they presented no evidence that any staffing agency licensed by the Nevada labor commissioner had engaged in such abuses. Nor did they propose reasonable alternatives, short of a ban, for addressing abuses that might exist. The record suggests that the unions’ real motive was to take skilled jobs from staffing agencies and fill them through their own hiring halls, which ASA argued was not a valid legislative purpose.
The state contractors board and unions will have 30 days from the entry of a final court order to file an appeal. If an appeal is filed, ASA is confident that the court’s decision will be upheld. If defendants elect not to appeal, they likely will go back to the legislature seeking new legislation. From the outset of these proceedings, ASA and its allies have repeatedly asserted that they could support reasonable rules to protect workers and ensure quality, and will work with all parties to that end. But the industry will continue to vigorously oppose any effort to reinstate AB 227’s ill-conceived and unconstitutional ban on construction staffing.
New Hampshire: ASA Defeats Predictive Scheduling Bill
HB 1094 would have required businesses, including staffing agencies, to provide employees with notice of work schedules and changes in schedules. ASA submitted written testimony describing the challenges that this bill would pose to staffing firms and requested that temporary employees be excluded from its requirements, similar to the way they are excluded from Oregon’s predictive scheduling law.
Given strong opposition, the committee voted to declare the bill “inexpedient to legislate,” thereby killing it for the year.
New Jersey: ASA, NJSA Mitigate Temporary Worker Rights Bill; Advocacy Efforts Continue
Following months of opposition by ASA and its affiliated chapter New Jersey Staffing Alliance, SB 511, legislation that provides certain protections and rights for temporary workers, was passed by the Senate and sent to the governor for his consideration.
In its original form, the legislation would have covered all temporary workers. ASA and NJSA were successful in getting professional, administrative, and secretarial employees carved out. Nevertheless, SB 511 would
- Require that all temporary employees be paid at least the same pay and benefits as the client’s permanent employees performing the same or substantially similar work.
- Prohibit staffing firms from charging a fee when providing workers with transportation.
- Limit conversion fees.
After passage became all but certain, ASA and NJSA turned their attention to the governor and a potential conditional veto. We are urging him to veto the bill and direct the legislature to allow staffing agencies to charge for optional transportation; remove the limitation on conversion fees; and remove the wage parity provision. Discussions are ongoing.
New and Updated ASA Legal Resources
In an effort to keep members apprised of the latest legal developments, ASA regularly publishes topical issue papers. During the first half of 2022, we published the following:
- Impact of Viking River on California PAGA Claims: The U.S. Supreme Court’s recent decision in the case of Viking River Cruises Inc. v. Morianahas significant implications for staffing companies operating in California. The case involves the enforcement of employer arbitration agreements that cover employee claims under California’s Private Attorneys General Act. Questions remain as to whether employers can require employees to arbitrate such claims as a condition of employment, and the effect of the decision on nonindividual claims. This issue paper, authored by California litigation expert Sarah Kroll-Rosenbaum, examines these complex issues.
- Antitrust Considerations for Staffing Agencies Seeking to Retain Their Employees: This paper discusses important recent developments with respect to civil and criminal antitrust enforcement against staffing agencies and other employers—enforcement that pertains to companies’ efforts to protect their employees from being recruited by others, and that could require modification of some staffing agencies’ contracts with clients, managed service providers, or subcontractors.
- Online Health Care Job Platforms—Worker Misclassification Risks: A growing number of app-based online job platforms that place health care workers may be avoiding payroll taxes and other employee-related costs by misclassifying nurses and nurse aides as independent contractors instead of as employees. This practice exposes caregivers and health care facilities to liability and poses competitive and potential reputational harm to the health care staffing industry. To combat this problem, ASA is spearheading an effort to educate staffing agencies, health care facilities, and health care workers about the risks of misclassification—and to encourage enforcement action to investigate potentially unlawful practices.
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