1099 vs W-2 Staff in Senior Living: What You Need to Know for 2026

When it comes to staffing senior living communities and post-acute care facilities, the employment model matters for compliance, quality, stability, and long-term risk. Below, we compare 1099 independent contractor staffing with W-2 employee staffing and explain why many facilities are shifting toward W-2 or agency-based W-2 staffing.

What Are 1099 vs W-2 Staffing Models?

• 1099 (Independent Contractor): Workers are paid as contractors, not employees. They manage their own taxes (self-employment tax), insurance, licensure costs, scheduling, and sometimes travel or liability insurance. Facilities hire them on a per diem, per-shift, or assignment basis.

• W-2 (Employee or Agency-employed Staff): Workers are classified as employees. The agency or employer handles payroll taxes, withholdings, workers’ compensation, unemployment insurance, and often provides benefits such as payroll tax matching, liability/professional insurance, and consistent oversight.

In a W-2 agency model, the staffing firm manages compliance, credentialing, scheduling, and standards and delivers staff under employment status that meets labor and regulatory requirements.

Why 1099 Staffing Has Grown and Why It’s Risky

What Attracts Facilities and Staff to 1099

• On paper, 1099 can appear to reduce administrative burden for the facility by paying per shift rather than managing full payroll, benefits, and long-term employment overhead.

• For some clinicians, 1099 offers flexibility to work part time or choose when and where they work. 

Why Many Senior Living Operators Are Moving Away from 1099

Legal and Compliance Risk

• In 2023, the National Labor Relations Board broadened the definition of joint employer, making it easier for facilities to be considered co employers of agency or contract staff even when workers are labeled as 1099. This increases liability for facilities using 1099 staffing. 

• Worker misclassification can lead to audits, back pay, penalties, legal fees, and exposure to labor law violations. 

Higher True Cost and Hidden Liabilities

• While 1099 contractors may demand higher hourly rates, those rates often include premiums because the contractor handles their own insurance, taxes, and liability, which can make per-shift cost higher than expected.
• Facilities may also face variable quality, because 1099 workers may not be subject to the same oversight, background checks, ongoing training, or adherence to facility protocols that W-2 staffing firms enforce. 

Inconsistent Care and Staff Turnover

• Contractors often work multiple assignments or prioritize flexibility, which can result in inconsistent staffing, reduced commitment to a specific facility, frequent turnover, and disruption of team cohesion. These issues negatively impact resident care and facility stability.
• Limited institutional loyalty can also lead to lower engagement, less investment in facility culture, and unpredictable performance. 

Administrative & Tax Burdens for Contractors — Hidden Costs

• Independent contractors must pay the full self-employment tax (Social Security + Medicare), often 15.3%, and handle quarterly estimated tax payments, state filings, liability insurance, malpractice coverage, and workers’ comp if needed. 
• For facilities, mixing 1099 and W-2 staff complicates scheduling, supervision, liability, and consistency of care standards.

Why W-2 Staffing (or W-2 Agency Staffing) Is Often the Safest & Smartest Choice in 2026

✅ Compliance and Legal Safety

With the NLRB’s 2023 final rule on joint employer status, W-2 staffing reduces the risk that a facility will be legally deemed a co employer, which can carry significant liability.

✅ Better Staff Quality, Oversight and Consistency

W-2 staffing firms typically manage background checks, licensure verification, compliance training, and ongoing employee oversight. This leads to consistent standards, stronger alignment with facility protocols, and greater reliability. 

This structure supports higher quality care, more predictable staffing, and reduced risk of errors or protocol breaches.

✅ Stability, Retention and Engagement

W-2 employment, which includes benefits, regular pay, liability coverage, and professional oversight, tends to result in higher engagement, lower turnover, and stronger commitment to the facility. This is especially important in senior living and post-acute care environments.

✅ Predictable Costs and Reduced Hidden Liabilities

Instead of paying higher per-shift premiums or risking back-pay, audits, or legal exposure, W-2 staffing gives facilities better predictability of labor costs and safer compliance.

✅ Better Resident Outcomes and Reputation Protection

Consistent, trained, and committed staff support continuity of care, strengthen relationships with residents, and protect facility reputation. These outcomes are difficult to achieve with transient or inconsistent 1099 staffing models. 

What Has Changed Recently (2024–2026) That Makes W-2 Even More Important

• The 2023 final rule from the NLRB expanded what constitutes a “joint-employer.” That means even staffing agencies using 1099 models may expose facilities to legal liability if the facility exerts control over schedules, protocols, or supervision.

• Regulatory and enforcement scrutiny over misclassification continues to intensify. Data from 2025 estimates that misclassifying workers as 1099 instead of W-2 remains one of the most costly compliance errors  for both employers and workers.

• Healthcare staffing firms and agencies are increasingly promoting W-2 on-demand staffing models as safer and more stable alternatives, particularly for long term or repeat staffing needs. 

What Senior Living Operators Should Ask Themselves

• Is the staffing need ongoing or a one-time fill? Ongoing needs typically benefit from W-2 or agency staffing.

• Can contractors meet all compliance, credentialing, and liability requirements, including workers’ compensation, insurance, license verification, supervision, and training?

• Do we want continuity, cultural alignment, and long-term investment in our care standards?

• Are we willing to risk legal exposure, audits, back pay, or penalties in exchange for short term flexibility? 

If your answers lean toward long-term stability and compliance rather than short term convenience, a W-2 staffing approach is typically the stronger choice. 

Conclusion

Using 1099 independent contractors may seem attractive for short-term flexibility. However, in today’s regulatory and operational environment, especially in senior living and post-acute care, the risks tied to compliance, turnover, quality, and liability often outweigh the benefits. 

For organizations focused on resident care, staff consistency, and long-term stability heading into 2026, W-2 staffing, particularly through experienced staffing agencies, offers a more reliable and compliant solution. 

If you are evaluating your staffing strategy for the year ahead, consider both the immediate costs and the hidden liabilities associated with 1099 staffing and whether a transition to W-2 staffing could better support quality, retention, and compliance.