A recent lawsuit against several hospitality staffing agencies is sending ripples through the gig economy, with potential implications for the nursing home industry, which also relies heavily on temporary staffing.
The lawsuit, filed in California by The Party Staff, a traditional hospitality staffing agency, accuses competitors Qwick, Instawork, Tend, and Nowsta of misclassifying workers as independent contractors to avoid legal obligations like minimum wage, overtime pay, and workers’ compensation insurance. This practice, often called the “gig” model, allows platforms to significantly reduce labor costs, undercutting traditional agencies that comply with employment laws.
“When companies misclassify workers, they make it very difficult for law-abiding companies to compete, and they drive an economic race to the bottom,” said Shannon Liss-Riordan, attorney for The Party Staff, in an interview with Reuters.
This legal battle highlights a growing concern in the nursing home sector, where the use of gig workers has been met with criticism from providers and traditional nursing agencies. Critics argue that the gig model compromises the quality of care and creates a precarious workforce.
“The gig model in healthcare raises serious concerns about continuity of care, accountability, and the potential for exploitation of workers,” says Dr. David Grabowski, a professor of healthcare policy at Harvard Medical School. “It’s essential to ensure that temporary staff in nursing homes are properly trained and supervised to protect residents.”
The Department of Labor (DOL) has been actively cracking down on misclassification in various industries, including healthcare. In 2024, the DOL ordered two nursing home staffing companies to pay over $2.4 million in back wages to 341 workers for violating overtime pay regulations.
Adding fuel to the fire, a federal court recently dismissed a motion to block a new DOL rule that clarifies the criteria for classifying workers as employees or independent contractors. This ruling could further restrict the use of the gig model and force companies to re-evaluate their classification practices.
The lawsuit against the hospitality staffing agencies, coupled with increased regulatory scrutiny, signals a potential turning point in the gig economy. For the nursing home industry, this could mean a shift away from the gig model and a renewed focus on ensuring fair labor practices and quality care for residents.