Legislation passed this session in the Iowa General Assembly adopts new requirements and restrictions for health care employment agencies that provide health care entities with agency workers who provide nursing or other services to consumers through person-to-person contact. There is an exception of physicians and nurse practitioners. A “health care entity” is a licensed or certified facility, organization, or agency operated to provide services or supports to meet the health or personal care needs of consumers.

The new legislation requires a health care employment agency:

• To register annually with the Iowa Department of Inspections and Appeals (“DIA”)
• Refrain from restricting agency workers from pursuing employment opportunities, including with the health care entity they’ve been placed
• Refrain from including in contracts with health care entity clients no-hire clauses preventing the client from hiring the agency worker
• Refrain from including in any agreement with an agency worker or health care entity client any liquidated damages, employment fees, or other penalties or fees if the agency worker is hired by the health care entity
• Ensure agency workers comply with all health requirements and requirements of personnel providing services in health care entity settings
• Document agency workers meet all licensing, certification, education, training, and health requirements for their position and provide documentation to regulators and other external parties which would otherwise be the responsibility of the health care entity if the covered worker was directly employed by it
• Maintain professional liability insurance covering agency workers with limits of no less than $1 million per occurrence and $3 million in the aggregate

A health care employment agency providing agency workers to Medicare or Medicaid certified health care entities must also submit quarterly reports to DIA outlining the average amount charged to the entity and the average amount paid to the agency workers. Any health care employment agency that violates the restrictions on “no-hire,” liquidated damages, or other clauses restricting the employment opportunities of agency workers or who knowingly provides an agency worker who has illegally or fraudulently obtained a license, certification, registration, or background check will have its registration to do business in Iowa revoked and the agency and the agency’s managing entity will be restricted from doing business in Iowa as a health care employment agency for two years.

The new requirements are effective July 1, 2022; however, later legislation which was ultimately passed by both the House and Senate, but which has yet to be signed by Governor Reynolds, makes the provisions restricting agencies from including or enforcing non-competes, “no-hire” clauses, and liquidated damages provisions effective for contracts entered into on or after January 1, 2019.

The legislation is broadly drafted and while physicians and nurse practitioners are not considered “agency workers” all other individuals providing nursing or services requiring person-to-person contact with consumers are considered “agency workers.” This would appear to include physician assistants, nurses, aides, and radiology and lab techs. The definition of a “health care employment agency” is also quite broad including agencies that provide temporary, temporary-to-hire, direct contract, or other contract or employee placements. It is unclear whether the new legislation will apply to health care providers who may enter into shared staffing or employee lease arrangements with other providers who are considered health care entities under the new legislation.