The Sun published claims two women at Caremark, Walsall, were "entertaining clients" on an adult website while being paid to arrange home care.
The Care Quality Commission told the BBC "this behaviour is completely unacceptable" and inspectors will check Caremark is caring for people properly.
Caremark said it was "shocked" and was investigating the allegations.
The company arranges home care for elderly, ill and disabled adults throughout the UK, using 75 offices. The office in Walsall is understood to be part of the company's Wolverhampton franchise.
The Sun newspaper named two women it alleged were using anonymous online profiles to attract clients on the adult website. The paper said they were charging Â£1.49 a minute to show their bodies and perform sex acts.
Andrea Sutcliffe, the CQC's chief inspector of adult social care, said: "In light of this new information I have asked my inspectors to look into the matter further to ensure that people are being properly looked after - which is what staff employed by Caremark are paid to do."
Kevin Lewis, chief executive of Caremark, said the incident appeared to have taken place in an administration office and an investigation was under way.
He said: "We are shocked at the alleged actions of two members of staff employed by the Wolverhampton franchisee. I have spoken to the owner to understand what has happened and what actions have been taken.
"At no time was the care of clients put at risk as the services provided by Caremark are delivered at the clients' home."
Chris Williams, owner of the Caremark franchise involved in the allegations, said he was "shocked and surprised".
"This is clearly not the kind of behaviour we would tolerate in our business," he said.
"I am undertaking a full investigation into the circumstances of the incident and we are currently speaking to all those involved."
The health watchdog is investigating claims staff at a care firm sold sex chats while topless from their office.