Tennessee State Capitol Building
Tennessee State Capitol Building Nashville, Tennessee State U.S.A. (Credit: 4nadia / Getty Images)

Tennessee soon will join other states in reining in questionable business practices of temporary healthcare staffing agencies and their effects on assisted living communities and other types of long-term care facilities.

SB 702, passed by the Tennessee Legislature and awaiting Gov. Bill Lee’s (R) signature, requires temporary healthcare staffing agencies to register with the state Health Facilities Commission. It also establishes certain basic operating requirements for those agencies and eliminates certain provisions in contracts between agencies and both temporary workers and long-term care facilities.

The purpose of the bill is to get at practices on the part of some staffing agencies that “are making it very difficult for facilities to maintain the staff they need to provide services,” Christopher C. Puri, Tennessee Health Care Association outside legal counsel and an attorney with the Bradley law firm in Nashville, TN, told McKnight’s Senior Living. 

The bill applies to contracts between agencies and assisted living communities and nursing homes. It follows a report from the Tennessee Comptroller’s Office of Research and Education Accountability on the effects of the use of temporary staffing agencies by assisted living communities and nursing homes on state costs. 

Recommendations from that report included the adoption of policies requiring healthcare staffing agencies to register with the state, as well as expanding the state’s law against price-gouging to include direct care services provided by those agencies.

SB 702 considers the report recommendations in requiring temporary staffing agencies to comply with state and federal regulations applicable to employees at healthcare facilities, including background checks. Agencies also will be required to provide documentation that temporary workers meet all licensing, certification, training and continuing education standards that are applicable to facility staff members. 

The bill also will prohibit contract buy-out provisions and noncompete clauses, as well as liquidated damages, employment fees or other compensation in contracts if a direct care worker is hired as a permanent employee of a healthcare facility. 

In addition, the legislation will prohibit agencies from soliciting or recruiting healthcare facility staff or from requiring employees to solicit other employees.

The Tennessee Health Care Association / Tennessee Center for Assisted Living championed the bill. In testimony before the state legislature, THCA / TCAL Director of Government Affairs Reina Reddish said that the bill is a result of “some bad behaviors” on the part of temporary staffing agencies.

“As regulated as we are, we needed to have some regulations around them so their behaviors and the staff they are sending to us, we can have some assurances they have the quality and the background we need them to have,” Reddish said. 

All of the requirements and restrictions on staffing agencies are effective upon becoming law, except for the registration, reporting requirements and administrative penalties, which are delayed until July 1, 2024, to allow time for rulemaking by the state agency.

Other state, national efforts against price gouging

Oregon recently introduced a bill that would make temporary staffing agencies more transparent and affordable. Other states also are experiencing extreme stress, with many seeking to lighten the burden either by regulation or legislation.

Massachusetts and Minnesota have laws setting maximum rates that temporary staffing agencies can charge. During the pandemic, Massachusetts increased the maximum allowed rates, and Minnesota allowed temporary waivers of the maximum rates.

Several other states, including Iowa, Louisiana and Pennsylvania, have passed laws requiring healthcare staffing agencies to register with their states and pay annual fees. Ohio similarly introduced a bill requiring agency registration and annual fees.

Sen. Kevin Cramer (R-ND) last fall introduced the Travel Nursing Agency Transparency Study Act, requiring the Government Accountability Office to report to Congress on the business practices and effects of hiring agencies across the healthcare industry during the COVID-19 pandemic.

Last year, LeadingAge and the American Health Care Association / National Center for Assisted Living formally asked for a Federal Trade Commission investigation into agency practices.