How Poor Treatment of Contractors Erodes Brands in Healthcare and Beyond

Scott Baradell laid it out plainly in a recent Yahoo Finance article. Contractors represent the brand. Yet many organizations treat the compliance gauntlet they must run as an afterthought. The result? Nearly four in 10 walk away for good. Not a minor operational hiccup. A brand wound that festers.

In healthcare especially the stakes run high. Hospitals leaned hard on contract labor during shortages. Expenses jumped 202% from 2019 to 2022, the American Hospital Association reported. Traveling nurses, locum tenens physicians, credentialed vendors became indispensable. They fill gaps. They carry the load. And the first impression they receive often comes through a broken onboarding machine.

But the pattern stretches across construction, energy, and healthcare alike. In oil and gas, contractor establishments now account for more than two-thirds of the U.S. extraction workforce, per Bureau of Labor Statistics analysis. Construction firms report hiring struggles at 92%, according to the National Center for Construction Education and Research. Contractors aren’t peripheral. They are the workforce.

Before they touch a patient, weld a pipe, or step onto a site, they face drug tests, background checks, safety certifications, medical clearances, insurance proofs, site orientations. Legitimate requirements. Nobody questions a surgical vendor rep needing vaccinations or a pipeline welder submitting to screening. The friction arises elsewhere.

TEAM, a compliance services provider, surveyed 600 contractors across those three sectors. Ninety-four percent blamed process failures for delays. Not the tests themselves. Waiting on results. Sudden new demands after initial steps. Handoffs that go silent. Contractors incur travel costs, lost wages. Frustration mounts. And 39% simply don’t return.

Tim Jenney, president of TEAM, captured the tension. “You can have strong compliance standards and still run a process that respects people’s time.” Simple in theory. Rare in practice.

The brand risk compounds because contractors talk. They share experiences on forums, in professional networks, during future bids. A disorganized clearance process becomes the dominant memory of the organization. That memory travels. It influences who accepts future assignments. It shapes reputation among the very talent pool already stretched thin.

Healthcare organizations feel this acutely. Staffing shortages persist. Reliance on contractors continues. Yet misclassification lawsuits add another layer of exposure. The U.S. Court of Appeals for the Fourth Circuit upheld a $9 million judgment against Medical Staffing of America, doing business as Steadfast Medical Staffing, and its owner. The case involved roughly 1,100 nurses deemed employees under the economic realities test, not independent contractors. Five of six factors pointed toward employee status: extensive control over work methods, limited profit or loss opportunity, minimal capital investment, non-itinerant nature of the work combined with noncompete clauses, and services integral to the business. Only skill level favored contractor status. The Independent Contractor Compliance report detailed the 103-page opinion.

A separate complaint filed in Colorado state court targeted Owl and Eagle Health and Wellness LLC. Two physicians alleged misclassification, wage theft, and more. The clinic allegedly dictated hours, enforced quality standards, controlled payments, supplied facilities and training, set dress codes, appointment lengths, note deadlines. Control appeared total. The complaint argued the arrangement failed Colorado’s test for genuine independent contractor status. Such cases underscore the thin line between proper contractor engagement and disguised employment.

New regulatory moves intensify the pressure. New Jersey adopted final independent contractor regulations in May 2026, codifying the ABC test across several labor statutes. The rules take effect October 1, 2026. Employers must prove all three prongs: freedom from control, work outside the usual course of the hiring entity’s business, and the worker engaged in an independently established trade. The New Jersey Department of Labor announcement framed the change as removing guesswork while protecting legitimate arrangements. Companies in healthcare and staffing that rely on contractors now review relationships against these sharpened standards.

The federal landscape shifts too. The Department of Labor proposed updates to independent contractor status under the Fair Labor Standards Act, Family and Medical Leave Act, and related laws. Economic realities remain central. Misclassification that deprives workers of overtime, benefits, or protections carries steep costs. Recent enforcement actions, including a Pennsylvania home health company facing potential millions in overtime liability, illustrate ongoing scrutiny.

Yet the compliance bottleneck article highlights a fixable problem separate from classification disputes. Organizations can maintain high standards without alienating the people who meet them. The prescription sounds straightforward. Map the entire contractor journey from initial contact to cleared status. Measure actual time spent at each stage. Identify silent handoffs and surprise requirements. Assign clear ownership. Front-load every prerequisite. Offer real-time visibility into progress.

Contractors who experience smooth processes return at higher rates. They speak favorably. They become extensions of the brand rather than reluctant participants. In an industry starved for talent, that difference matters.

Executives have long obsessed over employee experience as brand proxy. Phone manners. Customer interactions. On-site conduct. The logic applies equally to contractors. Perhaps more so. Their engagement often proves shorter, more transactional, yet highly visible to patients, clients, and partners. A frustrated traveling nurse who vents about endless redundant paperwork damages perception in ways internal memos cannot repair.

Data from the TEAM survey drives the point home. Eighty-three percent of contractors reported discovering additional requirements after believing they had completed the list. Out-of-pocket expenses added insult. The process felt designed for the company’s convenience, not mutual efficiency. And once burned, many chose not to return. Brand equity eroded quietly, assignment by assignment.

Forward-looking healthcare systems and contractors in related fields now audit these workflows with the same rigor once reserved for patient satisfaction scores or regulatory audits. They treat the clearance experience as a touchpoint worthy of design thinking. They communicate transparently. They eliminate unnecessary duplication. They respect time.

The alternative grows costlier. Higher turnover among contractors. Repeated recruiting and credentialing expenses. Reputational hits that shrink the available pool. Legal risks if friction slides into misclassification territory. In a sector where demand for specialized skills outpaces supply, organizations cannot afford to alienate the professionals they need most.

Baradell’s piece and the supporting Entrepreneur version, published the same day, arrived at a moment of regulatory flux and persistent labor shortages. New Jersey’s ABC test rules. Federal proposals. High-profile judgments. All signal tighter accountability. Yet the core message remains practical, not purely legal. Treat contractors with the respect their role demands. The brand they represent is yours.

Executives who ignore that reality invite avoidable losses. Those who act gain loyalty, efficiency, and a stronger talent pipeline. The choice reveals itself in retention numbers, referral quality, and ultimately the consistency of care or service delivered. Contractors don’t merely fill slots. They embody the organization to those who matter most.