Content of the material
- Do travel nurses qualify as independent contractors?
- Where do independent nurse contractors work?
- How much money do travel nurse agencies earn by placing you in a contract?
- How it Works
- Dear Donna replies:
- Nurse.com Job Seeker
- Why do travel nurses earn less by working with a travel nurse agency?
- Manage Legal Issues
- Why do some employers treat nurses as independent contractors?
Do travel nurses qualify as independent contractors?
According to the IRS:
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.
The main focus here should be on the part of this statement that says, “payer has the right to control only the result of the work…” Note the emphasis added on “only.”
The IRS also states the following:
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.
In the case of nurses and the vast majority of allied health workers much more than just the outcomes of work are controlled by the contracted facility. For example, in the case of travel nurses, the hospital will determine the hours worked as well as break times. The nurse will be using supplies and equipment belonging to the hospital. In addition, there are managers and doctors at the hospital who are supervising the nurse’s work. Moreover, nurses must seek the permission of a physician for decisions outside the nurse’s scope of practice which is a frequent occurrence. Unfortunately, these factors, taken a a whole, will disqualify someone as an independent contractor.
Where do independent nurse contractors work?
Many independent nurse contractors provide specialized care in patient homes, but they can also work in community clinics, wellness centers, schools, businesses or hospitals.
Some places hire nurses as independent contractors to save on labor costs, since they don't have to pay as many benefits for contractors as they do for employees. As you compare nurse contractor opportunities, evaluate how the job description compares to the IRS definition of contract work.
How much money do travel nurse agencies earn by placing you in a contract?
A travel nurse agency will earn anywhere from 10-25% per contract. The agency then needs to factor in costs like credentialing, insurance, legal fees and overhead costs. In the end most agencies will take-home between 3-5% per contract. So, if a travel nurse works a 13-week contract valued at $45,000, the agency will earn between $1,350 and $2,250 for that one contract.
It’s wise to consider working with an agency that has low overhead costs (such as some of the smaller agencies) because they’ll be able to get you a higher rate, since they don’t have as many costs to cover as some of the larger agencies.
How it Works
It would work like this: instead of being hired by a standalone staffing agency, nurses could become independent contractors and get hired directly by hospitals on an on-demand basis. For instance, the app CareRev is already offering this service. According to CareReve’s website, the platform is one that “seamlessly connects healthcare facilities and local, flexible healthcare professionals.” A facility posts open shifts and then healthcare professionals can book the shifts directly from the app, without any staffing agency, contracts, or max or minimums involved.
Because the healthcare workers that use the service are acting as independent contractors, that also means that they will have zero protections or benefits from either the facility they work at or a staffing agency. The nurse as an independent contractor is then responsible for:
- Deducting and paying their own taxes
- Purchasing all insurance coverage, including health insurance, other medical insurances, and liability insurances
- Setting up their own retirement plan
Additionally, the nurse may not have access to any employee-only benefits or services, such as mental health or wellness resources, educational benefits, and training. Some reviews of the app have also warned that there are no placement protections and nurses have been placed in unsafe staffing conditions and working placements outside of the scope of their practice.
On the flip side, some nurses have raved about the flexibility the app provides. It doesn’t require signing with a travel agency, they can book shifts only as they want or need them, and if they aren’t in need of benefits, it’s an easy way to make their own schedule and build the income that they want.
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Dear Donna replies:
Any nurse can work as an independent contractor to hospitals and other healthcare facilities. I recommend that you first consult a nurse attorney to help you draw up a contract that you would want to present to those you contract with. A nurse attorney can also advise you of liability issues you need to be concerned about and answer questions you have about your nurse practice act and your ability to work as an independent contractor. You’ll need to set up a business entity, too, such as acorporation.
Find a nurse attorney through The American Association of Nurse Attorneys
You also need to check with your nursing liability insurance carrier to be certain you will be covered or find a carrier who will cover you. Then youll need to learn how to sell and market so you can promote yourself to prospective clients and be ready to explain why they should use an independent contractor. Many healthcare employers have only worked with staffing agencies and not with individual independent contractors. So you may have to explain the difference to them and assure them of the legitimacy of what youre offering.
I also recommend that you check with your local professional associations (your state nurses association, your specialty association, and/or the state chapter of the National Association for Health Care Recruitment) to learn about trends and issues related to independent nurse contractors in your state.
Once you start doing this, youll also need to learn to keep financial and expense records, file tax papers, and possibly pay estimated taxes through the year. An accountant can help you with this.
Consider attending my upcoming seminar How to Start Your Own Business or Consulting Practice in Atlantic City, N.J., on March 11. I cover all of the above subjects and so much more. Find out more at http://events.nursingspectrum.com/event.cfm?EID=570&type=Seminar.
Donna Cardillo, RN, MA, well-known career guru, is Nursing Spectrums Dear Donna and author of Your First Year as a Nurse: Making the Transition from Total Novice to Successful Professional. To ask Donna your question, go to www.nurse.com/asktheexperts/deardonna. Find a Dear Donna seminar near you: Call (800) 866-0919 or visit http://events.nursingspectrum.com/Seminar.
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Why do travel nurses earn less by working with a travel nurse agency?
A question you might be asking is, why would I earn 10-15% less working with a travel nurse agency, than if I just travel nursed on my own?
Well, like any business, there are overhead costs associated with running a travel nurse agency. Some of those include matching employer taxes on each employed nurse, providing health insurance, paying legal fees and covering the costs of employee salaries and office expenses.
Smaller agencies will have less overhead costs and can often pay their nurses more than larger travel nurse agencies.
Are you looking for a new way to recruit nurses for your open positions? Starting in the Spring of 2022, Nurse.com Recruiting will offer an AI-driven candidate matching solution to help your organization recruit nurses with the right skills for your roles.Join Our Waitlist
Manage Legal Issues
To shield yourself from liability for accidents, property damage and medical malpractice, you’ll need to incorporate your business. Your employer might have paid your nursing malpractice insurance or indemnified you against liability, but you’ll now need to protect yourself with malpractice insurance. Without it, a medical error could give rise to a lawsuit that bankrupts you. Take a few hours to meet with an attorney to discuss common legal issues in your field of nursing. For example, some states won’t allow nurses to incorporate as professional corporations, forcing them to choose other corporate structures instead. Then ask the attorney to help you draft legally sound contracts addressing common issues such as payment for services and consent to medical procedures.
Why do some employers treat nurses as independent contractors?
So why does the treatment of nurses and healthcare professionals as independent contractors persist? One reason is that it’s easier for the payer, i.e. the agency or the hospital. For example, when an agency treats the nurse as an independent contractor, they don’t have to deal with payroll taxes, worker compensation, disability, or unemployment. They also don’t have to deal with the complicated compensation package that travel nurses receive which splits money up over various categories and provides various services like travel nurse housing and travel arrangements.
Instead, the agency simply pays an hourly rate to the nurse, and the nurse is responsible for everything else. And for the independent contractor, handling everything else presents a huge burden.