Temporary Staffing Agency Law – What You Need to Know

On May 17, HF 2521 was signed by the Governor and will be officially law on July 1. HF 2521 was a LAI supported bill that would regulate and place new restrictions on the temporary staffing agency industry for the first time in Iowa. The law was passed with unanimous support by both chambers and had little opposition.

The following is a breakdown of the law and what that could mean for LAI members moving forward.

• Annual Registration – Temporary staffing agencies, officially known as health care employment agency in the law, will need to register annually with DIA and pay an annual registration fee of $500.
• Up to Date on Personnel Requirements, Documents, and Reports - Health care employment agencies must have the health requirements and qualifications of personnel in health care entities up to date. Further, the agency must document that each agency worker meets the minimum, licensing, certification, training, health requirements, and continuing education standards for the agency worker’s position in the health care setting. Finally, the agency must report, file, or provide any required documentation to external parties or regulators which would traditionally be the responsibility of the health care entity.
• General Liability Insurance -Agencies must maintain professional and general liability insurance to insure against loss, damage, or expense incident to a claim arising out of the death or injury of any person as the result of negligence or malpractice in the provision of services of the agency or agency worker.
• Ban of Non-Compete Clauses and Contract Buy Out - An agency shall not be able to restrict in any manner the employment opportunities of agency workers, such as non-compete clauses, and forbids any contract between an agency worker or health care entity that requires payment of liquidated damages, employment fee, or other compensation for hiring an agency worker to be an employee of a health care entity.
• Quarterly Reports to DIA – Agencies will need to submit quarterly reports to DIA that includes the following:
  • A detailed list of average amount charged to the health care entity for each individual agency worker category.
  • A detailed list of the average amount paid by the agency to agency workers in each individual agency worker category.
  • Penalties for Health Care Employment Agencies – The bill would place penalties on non-compliant agencies who do not follow the above requirements including potential revocation or denial of license and increasing fines of $500 for a first offense and $5,000 for every offense thereafter depending on failure to comply. Additionally, entities that have their license revoked or denied cannot apply for two years. DIA will have the authority to enforce these penalties.

As noted, this law goes into effect on July 1, 2022. The provisions of the law related to a ban on non-compete clauses and contract buy-outs will go into effect immediately. A subsequent bill, HF 2589, amended the original bill to put retroactivity of the ban on non-compete clauses and contract buy-outs for all contracts signed after January 1, 2019. What that means for you as a provider is that after July 1, 2022 the legal protections of the law makes the noncompliant portions of contracts signed after January 1, 2019 unenforceable. 

It is recommended that LAI members notify health care employment agencies that their current contracts are noncompliant and that they need to be renegotiated and reentered with the noncompliant portions of the contract taken out. LAI wants to emphasize that members should take steps to cancel current contracts, even with the retroactive language now in place with HF 2589. There is a strong possibility that the constitutionality of the retroactive language will be challenged in court by the health care employment agencies, so members will not want to rely on retroactive provisions to gain the protections of the new law. 

Full implementation of the law may take longer for items such as agency registration with DIA, requirements that personnel are up to date on records and trainings, and general liability insurance. While all health care employment agencies will be liable on July 1 for all parts of the law, full implementation of the new law and enforcement likely will not begin until administrative rules are implemented to provide further details and information. Since this is the first time that health care employment agencies will be regulated in Iowa, there will be some growing pains. LAI will engage in the rulemaking process and provide members assistance with questions if needed.