The Serious Risks of Using 1099 Caregivers in CCRCs

Continuing Care Retirement Communities (CCRCs) are built on trust. Residents and families expect a safe place where professional caregivers provide dependable support as needs change. But when a CCRC allows or relies on 1099 independent contractors instead of W-2 employees or staff from a licensed agency, it can open the door to major legal and financial risks.

1. Confusion Over Who the Employer Really Is

Independent contractors are self-employed. That means the CCRC is not supposed to control how they work day to day. But in senior care, it’s almost impossible not to. If the CCRC sets schedules, assigns residents, or gives instructions, then by law those workers may actually count as employees.
Under a rule by the U.S. Department of Labor (“DOL”) effective March 11, 2024, the test for classifying someone as an independent contractor is stricter. DOL+2Mass Senior Care+2
If that happens, the CCRC may owe back pay, overtime, taxes, penalties, and even damage claims.

2. Licensing and Regulatory Trouble

Most states have strict rules about who can provide hands-on care inside senior communities. If a CCRC allows 1099 caregivers to work with residents without being employees or part of a licensed home-care agency, it may be violating state regulations.
For example: an article in McKnight’s Long Term Care News notes that staffing agencies paying caregivers as contractors may put nursing-home clients at increased risk. mcknights.com
Inspectors can issue fines, suspend licenses, or cite the facility for operating outside its approved staffing plan.

3. Insurance Gaps and Liability Exposure

Another big problem is insurance. Many independent caregivers don’t carry liability or workers’-compensation coverage. That leaves the CCRC exposed.
If a resident is injured, or a caregiver gets hurt on site, the facility’s insurance company may deny coverage because the worker wasn’t an employee. Families could sue the CCRC for negligence, even if the caregiver worked “independently”.

4. Quality and Safety Concerns

Without proper supervision, 1099 caregivers may not follow care plans or training standards. They might skip background checks, mishandle medications, or make unsafe choices.
Because independent contractors report to themselves, not the facility, the CCRC has less control and less accountability—but it still bears the responsibility if something goes wrong.
Families may claim breach of contract or neglect if the CCRC allows unqualified caregivers to provide care inside the community.

5. Contract and Reputation Risks

A CCRC’s contracts and marketing often promise that residents will receive “qualified, supervised, and insured” care. If the community uses unsupervised 1099 caregivers instead, that can be seen as false advertising or breach of contract.
One mistake—especially if it becomes public—can damage the facility’s reputation and make it harder to attract new residents.

Real-World Examples of What Could Go Wrong

• Labor audit: The IRS or DOL reviews worker files and rules that independent caregivers were actually employees. The CCRC owes back taxes and penalties.
• Regulatory citation: State inspectors find that caregivers inside assisted-living units aren’t on the facility’s official payroll, leading to violations and fines.
• Insurance denial: A resident fall causes serious injury, but the insurer refuses to pay because the caregiver wasn’t covered.
• Family lawsuit: A family sues after a medication error by a contractor, arguing the CCRC failed to properly supervise caregivers.

Safer Alternatives

To protect residents and the community:

• Use W-2 employees or partner with licensed home-care agencies that employ and supervise caregivers.
• Make sure all caregivers pass background checks, complete training, and have liability insurance.
• Review contracts, policies, and marketing materials to ensure they match how care is actually provided.
• Stay up to date on DOL and state labor rules so your staffing and classification stay compliant.

Bottom Line

Using 1099 caregivers in a CCRC may look cheaper or more flexible, but the legal, financial, and reputational risks are serious. The safest and most professional approach is to use trained, insured, and supervised W-2 caregivers—giving residents, families, and the community real peace of mind.

Key Links

• DOL Final Rule: Employee or Independent Contractor Classification under the FLSA (effective March 11 2024) — https://www.dol.gov/agencies/whd/flsa/misclassification/rulemaking DOL+1
• McKnight’s article: Staffing agency use of ‘contractors’ opens nursing home clients to new risks — https://www.mcknights.com/news/staffing-agency-use-of-contractors-opens-nursing-home-clients-to-new-risks/ mcknights.com
• DOL Fact Sheet 13: Employee or Independent Contractor Classification Under the FLSA — https://www.dol.gov/agencies/whd/fact-sheets/13-flsa-employment-relationship DOL