Why Gig Nursing Platforms Need Misclassification Protection Now

Contractor classification for gig nursing platforms remains complex and evolving. Multiple enforcement agencies, state laws, and private litigation create compliance obligations that vary by jurisdiction.

The classification environment for gig nursing

If you're running a gig nursing platform, you're searching for one thing: clarity on how to classify your nurses without exposing the business to legal liability.

The reality is more complicated. Multiple enforcement channels—the DOL, state labor departments, state attorneys general, and private class-action attorneys—apply different classification standards.

Regulations shifted in 2024 and 2025. A June 2025 enforcement pause creates uncertainty about which DOL guidance applies. State laws like New York's Article 29-K add layer-specific obligations.

The cost of misclassification is material: back wages, liquidated damages, civil penalties, and class-action exposure. Your contracting practices, rate-setting approach, and use of noncompete clauses all signal something to an investigator or court—and not all signals point the same direction.

We've worked with gig healthcare platforms navigating this environment for years. We've learned through 40,000+ customers globally and 1.5M+ workers supported that compliance is not one-size-fits-all. The classification frameworks are complex, enforcement is real, and the stakes are high.

This article is written for compliance officers, platform operators, and legal teams at gig nursing platforms who need to understand the current regulatory landscape, the tests that courts and agencies apply, and what a defensible compliance approach actually looks like.

The honest truth: there's no perfect solution to classification risk. But there's a difference between "we hope this works out" and "we've documented our reasoning and built the process to match the applicable legal test." This article helps you move from uncertainty to strategy.

What is worker misclassification?

Worker misclassification happens when a business treats an employee as an independent contractor.

The distinction matters because it determines liability. Employees are entitled to minimum wage and overtime pay under federal law. Employers must provide tax withholding and federal labor protections. Independent contractors receive none of these employer-provided protections.

If a platform misclassifies nurses, the platform owes years of unpaid overtime, liquidated damages equal to back wages, and interest and civil penalties from regulators.

How regulators decide: the economic reality test

Under the Fair Labor Standards Act (FLSA), the test is not what a contract says. The test is whether the worker depends on the platform or has a real independent business.

The US Department of Labor examines seven factors:

1. Control over work — Does the platform control how the work is done?

2. Profit or loss — Can the worker earn more by working smarter, or only by working more hours?

3. Investment — Who pays for tools, equipment, and materials?

4. Skill required — How specialized is the work?

5. Permanence — Is this a temporary project or an ongoing relationship?

6. Integral work — Is the work central to the platform's business?

The stricter ABC test

Many states use an even stricter test called the ABC test. Under this test, a worker is presumed to be an employee unless the company proves all three conditions:

• (A) The company does not control the worker

• (B) The work falls outside the company's main business

• (C) The worker operates as a self-employed person in that trade

For gig nursing platforms operating in jurisdictions that apply the ABC test, prong (B) may present challenges, since dispatching nurses to hospitals is the platform's core business. Whether this affects the classification of any particular engagement depends on the specific facts and the jurisdiction's application of the statute.

Why nursing is high-risk under both tests

Gig nursing platforms typically:

• Decide which shifts are available

• Set the rates hospitals pay (and what nurses earn)

• Restrict nurses from working directly for hospital clients through noncompete clauses

• Require nurses to meet the platform's credentialing standards

• Control which facilities nurses can access

Two major developments changed enforcement in 2024–2025

The Department of Labor's approach to classification

The DOL applies a multi-factor framework to evaluate contractor classification under the Fair Labor Standards Act (FLSA). The framework examines seven factors, including:

1. Control over work

2. Profit or loss

3. Investment in equipment or materials

4. Degree of skill required

5. Permanence of the work relationship

6. Integral nature of the work

7. Other factors relevant to the specific engagement

No single factor is automatically decisive. The DOL evaluates all factors together, with the "economic reality" of the relationship determining classification status.

Want a reliable test alternative? Deel's misclassification assessment analyzes your contractor relationships against employment law standards derived from hundreds of court cases, providing over 90% accuracy on whether your classification approach withstands legal scrutiny. Try it out below.

Misclassification enforcement and litigation risk

Gig nursing platforms can face misclassification exposure through:

• DOL investigations under the FLSA and economic reality framework

• State enforcement actions under state-specific classification tests (like the ABC test in California, Massachusetts, and other states)

• Private litigation including class-action wage claims under the FLSA and applicable state wage laws

The cost of misclassification liability—including back wages, liquidated damages, penalties, and attorney fees—is material. Depending on the facts and applicable jurisdiction, courts and enforcement agencies may weigh platform control over rates, scheduling, discipline, and contractor exclusivity as factors supporting employee status rather than independent contracting. Platforms should consult with employment counsel to evaluate their specific exposure.

New York Article 29-K

New York Public Health Law Article 29-K pertains to temporary healthcare services agencies. The scope of application and whether it extends to out-of-state platforms requires verification against the statute and NY Department of Health guidance.

Key regulatory tests: The scorecard for gig nursing platforms

The DOL's seven-factor framework

The DOL evaluates contractor classification using the following factors:

No single factor is automatically decisive. The DOL examines all factors together to assess the economic reality of the relationship.

Current enforcement note: As of June 2025, the DOL's enforcement posture and the specific weight applied to each factor remain uncertain due to the enforcement pause. Platforms should consult legal counsel about current enforcement priorities in their jurisdiction.

The ABC test result

Most gig nursing platforms cannot satisfy the ABC test. They fail on point (B): the work is not outside their usual business. Connecting nurses to hospitals is the business.

Why dispatch software alone is not enough

Dispatch tools provide useful functions:

• Route shifts

• Manage scheduling

• Process payments

• Track time and attendance

But dispatch tools do not provide contractor classification screening. They do not ensure compliant hiring.

How dispatch tools work

A dispatch tool sits between the platform and the contractor. It processes the transaction but does not examine whether the worker is truly an independent contractor.

The gig nursing platform still hires the nurse. The platform still:

• Sets the rate framework

• Maintains the contractor list

• Decides which facilities are available

• Enforces credentialing standards

All of these facts are visible to a DOL investigator or a plaintiff's attorney. A dispatch tool does not hide them or change them. The legal test looks at economic reality, not at which software processes the payment.

Why dispatch tools alone don't address the legal test

The economic reality test examines whether the worker depends on the platform or operates independently. Dispatch software addresses logistics—routing shifts, processing payments, tracking time. It does not change the underlying economic relationship between the platform and the worker. If that relationship reflects employment characteristics, adding a software layer does not transform it into independent contracting.

Dispatch tools vs. Deel Contractor of Record

What dispatch tools typically provide

Common shift-routing and payment-processing platforms typically offer:

• Shift routing and assignment

• Scheduling and calendar management

• Time tracking and attendance

• Payment processing and invoicing

How a CoR model differs

A Contractor of Record model adds:

• Classification assessment using questionnaires and expertise

• Contracting with the worker on behalf of the platform

• Assumption of contractual responsibility for covered classification liability (subject to the agreement)

• Tax documentation collection and compliance support

This comparison describes the particular category of dispatch tools commonly used for routing and payments in gig healthcare. Other workforce software vendors may offer different features.

What Deel Contractor of Record does

• Evaluates worker classification through a structured, jurisdiction-specific assessment informed by local legal expertise

• Becomes the contracting party with the contractor

• Issues compliant contracts and collects tax documentation

• Manages the relationship in one platform (contracts, payroll, equipment requests, time off)

• Assumes contractual responsibility for covered misclassification liability per the applicable agreement

How a Contractor of Record model actually works

The difference: CoR vs. dispatch software

In a CoR arrangement, the CoR vendor becomes the contracting party—not your platform.

The vendor:

• Engages the contractor through a compliant onboarding process

• Applies classification screening

• Collects tax documentation

• Issues contractor agreements that reflect the actual engagement

This is the risk-management value: The CoR vendor is not simply processing payments for whoever you send. It applies a compliance layer that scrutinizes classification before engagement begins.

CoR is different from EOR

This distinction is important:

Deel's Contractor of Record:

• The worker remains an independent contractor

• Deel holds the contracting relationship

• Deel applies classification screening

• The worker keeps contractor flexibility and cost structure

Deel's Employer of Record:

• Deel makes the worker a legal employee

• Deel handles taxes, benefits, and employment compliance

• The worker becomes a W-2 employee of Deel

Choose CoR if you need contractor flexibility. Choose EOR if contractor classification is inappropriate.

Why jurisdiction matters

Classification rules vary by state:

• California and Massachusetts apply strict ABC tests (among the strictest in the country)

• Other states apply more flexible economic realities tests

A good CoR provider applies jurisdiction-specific screening and onboarding, adapted to the rules where you operate.

Deel's Contractor of Record

Deel's Contractor of Record solution is designed for platforms that have determined contractor classification is appropriate for their workforce model.

How it works:

• You describe the role, location, and work setup in a classification questionnaire

• Deel's team of local experts reviews your situation and makes the classification assessment

• Deel contracts with the contractor, signs all required agreements, and collects tax documentation

• You manage the engagement in one platform: contracts, payroll, equipment requests, and time off

The critical difference: When you work with Deel's Contractor of Record, Deel assesses eligible engagements and assumes contractual responsibility for covered misclassification liability, subject to the applicable agreement, eligibility criteria, and your conduct. You get contractor flexibility with Deel's compliance support, subject to these terms.

Global coverage: Deel's Contractor of Record operates in eligible markets, so you can hire contractors fast—often in under seven days—without setting up a legal entity in every location. If you plan to open a legal entity in a market later, Deel provides an interim hiring solution while you build that infrastructure.

Quick implementation: Unlike traditional Agents of Record, Deel sets up international contractor hiring in days, not weeks or months. Your HR team focuses on talent, not paperwork.

Build vs. buy: How to manage classification risk

You have two options: build an in-house compliance program or adopt Deel's Contractor of Record.

The build option

Build means:

• Hire multi-state labor attorneys

• Create state-by-state classification protocols

• Develop internal contractor onboarding that creates defensible records

• Maintain processes as rules change

• Staff this function on an ongoing basis

For a platform operating in three or four states with a stable contractor base, this may be manageable.

For a platform with many states, a growing contractor base, or plans to expand internationally, complexity grows rapidly. And if you're facing an immediate hiring need—you need talent fast but cannot approve full-time headcount—building a compliance system takes time you don't have.

Why timing matters now

The regulatory environment is complex:

• State regulations like New York's Article 29-K create compliance obligations

• The DOL's June 2025 enforcement pause creates uncertainty about federal enforcement

• Courts continue to evaluate contractor classification in litigation

• Private class-action litigation poses ongoing risk

Building an in-house system while regulations and enforcement priorities are uncertain is complex. If you have immediate hiring needs, establishing new compliance infrastructure takes time.

The buy option: Deel Contractor of Record

Deel's Contractor of Record provides an alternative to building in-house compliance infrastructure. You get:

Classification assessment and contracting support

Deel uses a classification questionnaire and local experts to assess eligible engagements and contracts with the contractor on your behalf. Deel assumes contractual responsibility for covered misclassification liability subject to the applicable agreement, eligibility criteria, and your conduct.

Speed

You hire contractors in days, not weeks or months. This solves immediate hiring challenges: bring in talent fast while you work on headcount approval or plan to open a legal entity.

Interim solution for future growth

Deel operates in eligible markets. If you plan to open a legal entity in a market later, Deel provides a way to hire contractors compliantly today while you build that infrastructure.

One platform

Manage everything—contracts, payroll, equipment, time off—in one place, subject to Deel's feature availability in your jurisdiction.

Contractor experience support

Your contractors can access payments, multi-currency options, and other features through Deel's platform.

The trade-off is vendor cost versus the cost of building equivalent infrastructure internally. Deel's offering is subject to the terms of the applicable agreement, eligibility criteria, and supported markets.

Self-assessment checklist

Before you choose, evaluate:

• Current risk: Assess your contractor relationships against the seven-factor test and your state's test

• High-risk states: Which states matter most for your business and enforcement risk?

• Current tools: Do your dispatch tools include any compliance screening, or just payment processing?

• Internal capacity: Can your legal and HR teams manage multi-state classification compliance?

• Expansion plans: Are you moving into new state markets? Request a compliance assessment before you do

One important caveat

The regulatory environment for classification is currently uncertain. As of June 2025, the DOL paused enforcement of the March 2024 rule and reverted to pre-2021 guidance. This creates ambiguity about which standards will govern DOL investigations.

Platforms should monitor DOL guidance and consult with legal counsel regularly, rather than calibrating compliance to any single administration's posture. Courts and state enforcement agencies apply standards independent of federal administrative direction. A compliance program should address the legal risk from multiple enforcement channels, not rely on a single regulatory approach.

Contractor classification risk: The path forward

Gig nursing platforms face real constraints:

• Legal tests for contractor classification are demanding

• Enforcement is active now

• The cost of misclassification (back wages, liquidated damages, penalties, class-action exposure) is material

Dispatch software routes shifts. Deel's Contractor of Record adds classification screening and compliant onboarding to help mitigate risk.

These tools serve different purposes.

Ready to eliminate misclassification risk with Deel?

If you're facing any of these situations—misclassification concerns, an interim hiring need while you open a legal entity, or difficulty approving headcount—Deel's Contractor of Record provides an alternative approach to managing contractor classification.

Book a demo below to learn more about Deel's Contractor of Record.