Your full-time nursing staff are your steady foundation for care, however exhaustion and burnout are an ever-present risk. Without flexibility and the opportunity for rest, the likelihood of increased turnover can rise.
Findings from a report, Evolving Contract Labor Opinions in the Healthcare C-Suite, reveal the critical and worsening reality of nurse turnover in healthcare facilities:
- 86% of surveyed hospitals and health systems experienced 10% or more of their nursing staff quitting in 2023.
- +50% of the surveyed hospitals and health systems saw 20% or more of their nursing staff quit in 2023.
Healthcare executives are rightfully concerned about the financial impact of relying on travel nurses and traditional staffing agencies to cover these contingent staffing gaps. However, leveraging independent contractor nurses on a PRN or per diem basis can often help facility operators save on staffing costs.
Increasing frustration with mandatory overtime policies and burnout is one of the main drivers of nursing shortages. In turn, these ongoing shortages fuel the persistent increase in overall healthcare facility costs and margin pressure. Independent nurse contractors offer an option.
Many facilities are creating an adaptable safety net around their core team. Temporary nurses protect staff from burnout while maintaining safe ratios.
For managers exploring alternatives, this may be the right time to initiate conversations and build leadership buy-in around a more sustainable approach, such as testing independent contractor nurses as a way to provide surge capacity, prevent turnover from burnout, and reduce overtime costs.
What is an independent contractor nurse?
An independent contractor or 1099 nurse is a licensed clinician (RN, LPN/LVN, or CNA) who provides nursing services on a self-employed basis rather than as a traditional W-2 employee.
These nurses own their own business, meaning they determine when, where, and how often they work and are directly responsible for managing their own taxes, insurance, and professional expenses.
Freelance nurses typically work short-term, shift-based assignments in healthcare facilities to cover staffing gaps arising from census fluctuations, leaves of absence, or the ongoing nurse staffing shortages.
They are not employees, and therefore, facilities do not provide benefits, set ongoing schedules, or direct the nurse’s availability outside the contracted shift. Instead, the relationship is limited to the specific tasks and time frame agreed upon for each assignment.
This model allows facilities to access qualified clinicians when additional support is needed while offering nurses flexibility and autonomy in choosing their work arrangements.
Are independent contractor nurses counted as employees?
No, due to a different legal classification as independent contractors, they are not W-2 employees. Healthcare facilities do not pay Social Security or Medicare taxes on behalf of these workers. Independent contractors are responsible for paying these taxes themselves in their entirety. They must also file income taxes if their net earnings from self-employment exceed $400.
Since they are self-employed, 1099 nurses don’t receive employee benefits, such as medical coverage.
Independent contractor nurse pros and cons
Working with freelance nurses offers healthcare facilities significant advantages, although these clinicians cannot make up the entire nursing workforce.
Advantages of contract nursing
Per diem staffing on an as-needed basis allows healthcare facilities to contain costs and maintain safe clinician-to-patient ratios. Meeting these goals is significant in the context of alarmingly high nurse turnover rates.
Lower costs
Although per diem nurses typically earn higher hourly rates, contracting independent nurses lowers costs for facilities in several ways.
- Facilities only pay contract nurses for the hours they work; they don’t pay them regular salaries and don’t have to pay taxes or employee benefits for these workers.
- Contracting nurses only when needed—instead of maintaining high staffing levels at all times—helps facilities avoid challenges related to a fluctuating patient census.
- Facilities can also avoid asking staff nurses to work overtime, which is at least 1.5 times the regular pay rate.
- Specifically with Nursa, facilities don’t pay the excessive hire-away fees that staffing agencies and other staffing platforms typically charge.
Safe clinician-to-patient ratios
The primary purpose and goal of any healthcare facility is to provide patients and residents with safe and high-quality care, and facilities can only achieve this goal with adequate staffing levels.
The 1099 nursing workforce model also allows facilities the flexibility to cover increased demands for healthcare services, such as during seasonal patient spikes, or even crisis situations.
Although these are noteworthy advantages of contracting independent nurses, facilities can benefit in other ways as well.
Low commitment and low risk
As mentioned regarding cost, facilities only commit to one shift at a time with contract nurses. Therefore, if a facility is unhappy with a particular clinician, the facility need not contract that individual again, or they can even block them from requesting shifts in the future.
On the other hand, if the nurse or nursing assistant is a good fit, the facility can offer the clinician full-time employment. In other words, contracting an independent nurse is like giving a potential employee a trial run before making a long-term commitment.
Decreased burnout among staff nurses
Covering staff vacancies and maintaining adequate nurse-to-patient ratios translates into a lower prevalence of burnout among staff nurses, which in turn reduces turnover rates.
Limitations of contract nursing
Despite numerous advantages, contract nursing cannot fully meet all of a facility’s staffing needs. Contract nursing is an effective temporary solution to address staffing shortages when a solid base of in-house nurses is in place.
In other words, it provides much-needed extra hands-on-deck capacity for an otherwise functioning system.
Here are some reasons contract nurses cannot constitute the entire workforce of a facility:
Limited roles
Contract nurses cannot enter healthcare facilities for single shifts to take on leadership roles. They cannot reasonably work as charge nurses, preceptors, or case managers.
Effective teamwork is developed over time as healthcare team members learn about each other’s strengths, weaknesses, preferences, and pet peeves. Effective collaboration is also based on trust, which depends on time spent together and shared experiences. Therefore, it is difficult for long-term clinicians to work as effectively with contract nurses as they may with other staff members.
Limited oversight
During initial job interviews, orientation periods, and stand-up meetings, among other opportunities, healthcare managers continually evaluate staff. Since contract nurses may only work at a given facility for one shift, opportunities for healthcare managers and nurse leaders to get to know them well and evaluate their work are limited.
Compliance considerations for staffing with 1099 nurses
Working with 1099 nurses can be a compliant and low‑risk option—but only if facilities respect the legal distinction between contractors and employees. Keeping key compliance risks and considerations in mind helps you clarify the distinction for your managers and for legal issues.
Misclassification risks
How much control you exert over the worker is a telling difference. Suppose a “contractor” is treated like a staff nurse (fixed schedule, mandatory meetings, detailed supervision).
The U.S. Department of Labor (DOL) and the Internal Revenue Service (IRS) may decide they are actually an employee—triggering back taxes, penalties, and potential wage claims.
Control and independence
Independent contractors, as the name suggests, are independent. They control when and where they work. Facilities can define the scope of work for each shift, but should make sure to avoid:
- Expecting ongoing schedules or offering guaranteed hours
- Requiring training or meetings that are not shift-specific, without additional pay
- Using traditional performance management processes meant for employees, such as verbal/written warnings, performance improvement plans, or including independent contractors in internal recognition programs,
Tax and benefit obligations
Contractors take full responsibility for their own taxes, including income, Social Security, and Medicare taxes, as well as their own benefits. Facilities do not:
- Withhold payroll taxes
- Offer employee benefit plans
- Represent 1099 nurses as “staff” for HR or benefits purposes
Documentation and contracts
Clearly document that clinicians are engaged as independent contractors:
- Written agreements that outline the independent contractor relationship and the scope of each engagement
- Proof of licensure, certifications, and any required insurance
- Records of the shifts worked and rates paid, that are consistent with a 1099 relationship
State laws and accrediting bodies
Some states have worker‑classification rules that are stricter than federal standards. Facilities compare their 1099 practices with applicable state laws, pay rules, and any Joint Commission or other accrediting requirements to ensure full alignment.
Nursa supports compliance in 2 major ways.
- Explicitly classifies the clinicians on the platform as independent contractors
- Structures engagements as discrete, shift-based assignments
This clarity reduces the risk of misclassification.
(This section is informational and not legal advice. Facilities should consult their legal or HR compliance teams when designing 1099 staffing strategies.)
Best practices for incorporating 1099 independent nurses
A well-planned strategy and thoughtful leadership help integrate per diem nurses smoothly into your facility’s workflow, and maximize the benefits of contract nursing staff.
1. Familiarize staff with 1099 classification
Before contracting per diem clinicians, ensure leaders understand the difference between independent contractor status and W-2 employment.
2. Notify the team: Per diem clinicians on board
A flexible staffing strategy works best when per diem clinicians are able to ease the burden on the full-time nursing team. Establish a straightforward procedure for all to know when 1099 clinicians are brought into the facility.
3. Establish a simple orientation and onboarding process
Developing a clear protocol for onboarding per diem nurses ensures they quickly adapt to your facility’s standards and workflows despite their brief assignments.
Independent contract nurses step right into the shift. However, facilities can use ShiftReady, a free mobile-friendly tool to share essential training materials with clinicians.
4. Take advantage of Nursa’s features for facilities
Nursa offers support for both facilities and clinicians, making the job of providing healthcare smoother and safer. Many features provide advantages all around.
- Credentialing: The facility outlines the requirements when posting a vacant shift, and clinicians include credentials in their profiles. The Nursa technology automatically verifies nurse credentials before accepting an application. You find the exact expertise and skills you need.
- Shift instructions: To reduce confusion for clinicians, consider including shift instructions to your post. Go into “Schedule Settings”, and use the automatic options or write your own specific instructions.
- Favorites list: Create a pool of preferred, high-performing clinicians and select them on the app under the “Data” menu. This provides the selection of clinicians for the Auto-Schedule feature.
- Auto-Schedule: Automatically schedule your trusted clinicians from your Favorites list, whenever they apply for a posted shift.
- NIA Shift Creator: Create shifts on-the-run with NIA (Nursa Intelligence Assistant), an AI feature that turns a simple voice description, a photo of a hand-written note, or a spreadsheet into a post. You still review shift information and pay rate before posting, but the NIA Shift Creator cuts down the time involved.
5. Integrate per diem nurses into daily workflows
To unlock the full value of per diem support, intentionally connect these clinicians to the unit’s everyday communication and care routines.
- Designate a go-to contact person for each shift so per diem nurses receive fast answers, resolve issues quickly, and stay focused on patient care.
- Bring per diem clinicians into pre‑shift huddles so they understand priorities, high‑risk patients, and how your team likes to work.
- Set simple norms for communication and escalation so everyone knows how to raise concerns, hand off patients, and prevent missed tasks.
Done well, this makes independent contractor nurses a reliable, high‑impact option for facilities looking to stabilize staffing quickly.
1099s: The flexible layer you don’t want to miss
No question about it—contracting independent nurses offers healthcare facilities adaptable and practical advantages, from lowering labor costs to closing dangerous staffing gaps.
Are you considering ways to bring independent contractor nurses into your staffing mix?
Nursa connects skilled nursing facilities, hospitals, health systems, and community organizations with qualified local nurses and nursing assistants available for per diem nurse staffing. Post open shifts in minutes, review interested clinicians, and fill gaps on your terms.
Ready to see what an on-demand 1099 workforce could do for your unit’s coverage, budget, and burnout rates? Explore how Nursa can become your flexible staffing layer.
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