Stipulating that a locum tenens physician is not entitled to workers’ compensation is increasingly vital to preserving their independent contractor status, as federal and state regulators escalate efforts to eradicate the misclassification of workers by employers. The U.S. Department of Labor has signed memorandums of understandings with labor commissioners and other agency leaders from 20 states in an attempt to coordinate enforcement efforts under its Misclassification Initiative. The DOL is similarly collaborating with the Internal Revenue Service.

“Misclassification deprives workers of rightfully-earned wages and undercuts law-abiding businesses, ”said Dr. David Weil, Administrator of the DOL’s Wage and Hour Division, in announcing an agreement to reduce misclassification of employees that it signed with the state of Wisconsin in January.

To date, fines and enforcement actions have focused largely on recovering lost wages and restitution for unemployment insurance that workers had been denied because employers classified them as independent contractors instead of employees. But workers’ compensation is also a benefit to which regulators could argue that independent contractors—including perhaps locum tenens physicians—could be entitled if they are reclassified as employees. Already, some workers’ compensation insurance firms are refusing to cover physician staffing firms—at least without an exorbitant increase in premium—if they cannot audit their independent contractors. We know of at least one firm that jettisoned its locum tenens staffing arm to focus on consulting instead so as to avoid paying a prohibitively expensive workers’ compensation premium.

Locum tenens physicians are the epitome of independent contractors in that employers, or rather their contracting hospitals or provider groups, do not dictate how they perform their duties. Physicians provide care in accordance with state medical board regulations governing the practice of medicine as well as hospital medical staff by-laws.

If your workers’ compensation insurer pressures you to cover locum tenens physicians or to require your agency to do so, you must reply that they are self-directed professionals—if you hope to preserve their independent contractor status and avoid a significant increase in your costs and your liability.