American Prospect: Federal Agencies Can Disable Employer Debt TRAPs

Advocacy groups offer a road map for how agencies can use existing authority to ban contracts that force workers to pay employers if they leave their job.

PRESS RELEASE: Governing for Impact Urges Biden Administration to Protect Foreign-Educated Nurses from Exploitative “Stay or Pay” Contracts

Legal memo proposes how DOL can protect healthcare workers and patients from restrictive labor practices

WASHINGTON, DC — Today, Governing for Impact (GFI), Towards Justice (TJ), the Student Borrower Protection Center (SBPC), and the American Economic Liberties Project (AELP) issued a memo urging the Department of Labor (DOL) to prohibit employers from issuing restrictive employment contracts on their workers that would require them to pay their employer if they resign, are terminated, or attempt to find another job.

Stay-or-pay contracts force workers to pay their employers if they leave – or are fired from – a job within a certain time frame. Used in tandem with, or in lieu of, non-compete clauses, which prohibit employees from obtaining a new position in their given industry, stay-or-pay contracts have been shown to reduce workers’ mobility and stifle competition. The threat of financial penalties upon resignation or termination dissuades workers from speaking up about unsafe working conditions, which, in the healthcare industry, can lead to increased rates of employee burnout, more toxic work environments, higher incidence of medical error, and poorer patient outcomes.

“The healthcare industry’s use of stay-or-pay contracts has led to egregious violations of worker rights and dangerous increases in workplace and patient safety, ” said Reed Shaw, Policy Counsel at Governing for Impact. “The Department of Labor has a responsibility to take immediate steps to protect our nation’s healthcare workers, whether they are trained here or abroad.”

Stay-or-pay contracts are increasingly common among healthcare employers that recruit foreign-educated nurses (FENs) to work in the United States. These exploitative agreements often require FENs to commit to a single employer for 18 months to three years. If the FEN leaves the employer before the time is up, the employer charges a “breach fee,” which can amount to tens of thousands of dollars. This type of employer practice exploits an already vulnerable workforce, as employers also often mislead FENs as to the immigration consequences if they leave their jobs. 

Stay-or-pay contracts also have adverse impacts on U.S. nurses, who may be forced to accept lower wages and poor working conditions from employers who know that they can always turn to a vulnerable and captive foreign-born workforce instead.

In the legal memo, GFI and its partner organizations recommend that the DOL uses its authority under the Immigration and Nationality Act (INA) to update labor certification regulations to prohibit employers from subjecting their workers to stay–or-pay contracts. The DOL has issued several similar regulations in the past, including, for example, prohibiting immigrant workers from paying the costs of their own labor certification.

About Governing for Impact

Governing for Impact (GFI) is a regulatory policy organization dedicated to ensuring the federal government works for working Americans, not corporate lobbyists. The policies we design and the legal insights we develop help increase opportunity for those not historically represented in regulatory policy implementation work: working people. For additional information about GFI, please visit https://governingforimpact.org/.

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OnLabor: Ending Special Treatment for Union Busters

Fortunately, with one relatively simple step, the Department of Labor (DOL) could immediately improve transparency into the often-obscured persuader industry by rescinding an overlooked and outdated special enforcement policy.

PRESS RELEASE: Governing for Impact Urges Biden Administration to Ban Use of Non-Compete and “Stay or Pay” Contracts in Healthcare Industry 

Legal memo proposes how HHS can protect healthcare workers and patients from the harms of such contracts

WASHINGTON, DC — Today, Governing for Impact (GFI), Towards Justice (TJ), the Student Borrower Protection Center (SBPC), the American Economic Liberties Project (AELP), and the AFT Healthcare labor union issued a memo urging the Department of Health and Human Services (HHS) to issue a new Condition of Participation (CoP) that would ban non-compete clauses and “stay-or-pay” contracts at facilities that receive Medicare and Medicaid funding.

Stay-or-pay contracts force workers to pay their employers if they leave – or are fired from – a job within a certain time frame. Used in tandem with, or in lieu of, non-compete clauses, which prohibit employees from obtaining a new position in their given industry, stay-or-pay contracts have been shown to reduce workers’ mobility and stifle competition. The threat of financial penalties upon resignation or termination dissuades workers from speaking up about unsafe conditions for themselves and their patients and increases rates of employee burnout and toxic work environments, which can lead to medical error.

“Stay-or-pay contracts have contributed to dangerous conditions and pose significant risks to patients and to healthcare workers across the country, ” said Reed Shaw, Policy Counsel at Governing for Impact. “HHS has the authority to act to make our hospitals and other healthcare facilities safer. ”

Non-compete and stay-or-pay contracts are most frequently used in less desirable hospitals with unsafe working or patient care conditions. HCA Healthcare, the largest for-profit healthcare employer in the world with 184 hospitals and 2,000 sites of care in the US and UK, is one example.  

Although the company claims to have ceased the practice, as recently as 2022, newly hired registered nurses at a number of HCA Healthcare hospitals were required to sign contracts that obliged them to take out a $10,000 promissory note for training program costs. Similar contracts are used at Tenet Healthcare and MedStar Health, for which the payback amounts range from $5,000 to $50,000. 

In the legal memo, GFI and its partner organizations explain how the Centers for Medicare and Medicaid Services at HHS could invoke its statutory authority to regulate the use of traditional non-compete clauses and stay-or-pay contracts in the healthcare industry. HHS has issued numerous rules to update CoPs in the past for facilities that accept Medicare and Medicaid, in response to issues like technological advancements and staffing issues. 

The Supreme Court recently affirmed HHS’ authority to set Medicare CoPs in Biden v. Missouri, in which the court upheld the administration’s vaccine requirement for healthcare workers. A CoP rule that would disallow or regulate stay-or-pay agreements for healthcare workers would be well in line with the scope of the HHS Secretary’s CoP-setting authority “in the interest in the health and safety” of patients.

Bloomberg: ‘Restrictive’ Pilot, Trucker Contracts Spur Push for Crackdown

The Biden administration is facing new pressure to investigate and take action to ban “exploitative” employment contracts in the airline and trucking industries.

PRESS RELEASE: Organizations Urge Biden Administration to Protect Workers from Exploitative “Stay or Pay” Contracts

Labor, legal groups ask Department of Labor to clarify that such contracts can violate the Fair Labor Standards Act

WASHINGTON, DC — Today, Governing for Impact (GFI), Towards Justice (TJ), the Student Borrower Protection Center (SBPC), the American Economic Liberties Project (AELP), and 16 other organizations sent a letter to the Department of Labor (DOL) urging the agency to clarify that “stay or pay” contracts – in which workers are forced to repay employers if they leave their job within a certain time frame – can violate the Fair Labor Standards Act (FLSA). Stay-or-pay contracts are an increasingly common form of employer-driven debt. They operate as de facto non-compete agreements, and have been shown to reduce workers’ mobility, limit workers’ organizing power, and encourage unsafe working conditions. 

“Stay-or-pay policies trap workers in low-wage jobs and unlawfully force them to take on thousands in debt that deprives workers of unconditional minimum wage and overtime pay,” said Rachael Klarman, Executive Director at GFI. “The Fair Labor Standards Act is designed to protect workers from exactly these types of harms, and we urge the Biden Administration to ensure it is enacted as intended.” 

“We’re proud of our work fighting around the country with nurses, pilots, pet groomers, physical therapists and so many others challenging the predatory stay-or-pay contracts that keep them trapped in their jobs and shift corporate costs onto workers,” said David Seligman, Executive Director of Towards Justice. “If employers want to retain their workers, they should do so by paying them more and treating them better, not saddling them with debt indenturing them to their bosses. The Biden Administration should do even more to clarify that these coercive contracts violate our most hard-fought labor protections, including the minimum wage laws.”

“Stay-or-pay contracts, including those with Training Repayment Agreement Provisions or TRAPs, reveal an ugly truth about some of the biggest corporations in America: exploiting workers is cheaper and easier than investing in their talent,” said Mike Pierce, Executive Director of the Student Borrower Protection Center. “Fortunately for workers and honest businesses, the Biden Administration has the legal tools necessary to drive stay-or-pay contracts out of the economy.”

“De facto non-compete agreements like stay-or-pay agreements are just another way that employers take advantage of their power over workers, preventing them from leaving for better opportunities,” said Erik Peinert, Research Manager and Editor at Economic Liberties. “The Biden administration has called for a whole of government approach to banning non-competes, and it is critical that the Department of Labor use every authority at its disposal to do so.”

Estimates suggest that stay-or-pay contracts are growing increasingly common in low-wage industries – with serious impacts on worker safety, mobility, and financial security. PetSmart, for example, requires low-wage dog groomers to sign stay-or-pay contracts as part of their hiring process. If workers quit within two years, PetSmart may use debt collectors to pursue up to $5,000 in training costs. Many of the largest trucking companies also require drivers to pay back up to $6,000 for so-called “training” – despite evidence that this training is often conducted in dangerous conditions and provides limited transferable skills. Stay-or-pay contracts are also common in the airline industry: pilots that leave cargo airline company Ameriflight within 18 to 24 months of service can owe the company up to $30,000.

In a letter to the DOL’s Wage and Hour Division (WHD), GFI, TJ, SBPC, AELP, and 16 other organizations requested an Administrator’s Interpretation clarifying how stay-or-pay contracts violate the FLSA. Specifically, the groups argue that stay-or-pay contracts can constitute unlawful “kick-backs” to employers and deprive workers of minimum wage and overtime pay that must be paid “free and clear” of conditions or obligations to repay.

While the Department of Labor is currently pursuing FLSA litigation against particularly egregious stay-or-pay contracts, official agency guidance would put employers on notice and help employees vindicate their rights under the law. Such an interpretation would be well within the authority of the WHD, which has issued numerous similar interpretations to clarify employee rights and obligations under the FLSA. 

“We applaud the DOL’s recent actions to combat exploitative stay-or-pay contracts – but there’s more it can do,” said Reed Shaw, Policy Counsel at Governing for Impact. “Without a check on unlawful employer power, stay-or-pay contracts reduce competition in the labor market, trap workers in low-wage jobs, and limit organizing power. We encourage the Department of Labor to clarify FLSA regulations and protect American workers.”

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About Governing for ImpactGoverning for Impact (GFI) is a regulatory policy organization dedicated to ensuring the federal government works for working Americans, not corporate lobbyists. The policies we design and the legal insights we develop help increase opportunity for those not historically represented in regulatory policy implementation work: working people. For additional information about GFI, please visit https://governingforimpact.org/.

Axios: Unions press feds for more workplace mental health protections

Two of the country’s biggest unions have joined a coalition calling on federal regulators to protect workers’ mental health the way they enforce standards for physical health and safety.

Why it matters: The press comes amid widespread post-pandemic burnout, growing awareness of the country’s worsening mental health and some of the strongest pro-union sentiment in decades.

Driving the news: letter sent Wednesday to the Occupational Safety and Health Administration from David Michaels, who led the agency under President Obama, argues that “the agency’s grant of authority from Congress includes the power to protect workers’ mental health from workplace hazards.”

PRESS RELEASE: Governing for Impact and Former OSHA Head Urge Biden Administration to Take Executive Action To Protect Workers’ Mental Health

With mental health crisis surging across U.S., new letter outlines how President Biden can combat workplace mental health hazards without Congress

Contact: Rachael Klarman, Executive Director, press@governingforimpact.org 

WASHINGTON, DC — Today, Governing for Impact (GFI), former OSHA administrator Dr. David Michaels, and 7 organizations released a letter urging the Biden Administration to take executive action to protect workers from mental health hazards in the workplace. The memo calls on the Occupational Safety and Health Administration (OSHA) to issue guidance for employers outlining some types of workplace mental health hazards that could constitute violations of the Occupational Safety and Health Act, such as infrequent rest breaks, long work hours, unsafe work conditions, and many others. It also calls on OSHA to take enforcement actions against current offenders and develop an enforceable workplace standard to protect workers from mental health hazards.

“From truck drivers to warehouse workers, people across the economy are facing increased work-related stress, and it’s fueling America’s mental health epidemic,” said Rachael Klarman, Executive Director at GFI. “The Biden administration can use its existing authority to fight back and protect Americans from abusive workplace practices that pose hazards to worker health.”

The Occupational Safety and Health Act requires employers to “furnish to each of [their] employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.” In the letter sent today, Dr. Michaels and GFI outline why mental health hazards can – and do – pose such risks to employees, and are therefore squarely within OSHA’s authority to regulate.

“When Congress passed the Occupational Safety and Health Act, it intended to protect workers from newly-understood hazards, including risks to mental health,” said Reed Shaw, Policy Counsel at GFI. “OSHA has the statutory authority and expertise to protect workers from these hazards – and it should use it.”

The effects of workplace conditions on mental health are being felt by Americans across the country. In 2021, 76% of workers reported experiencing at least one symptom of a mental health condition – a 17% increase in just two years. Black and Latinx workers are disproportionately harmed, as they are both more likely to experience symptoms and more likely to leave a job for mental health reasons than their white peers. 

“As a former Administrator of OSHA, I take seriously its mission to protect the health, dignity, and safety of American  workers,” said Dr. David Michaels, who served as OSHA Administrator from 2009 to 2017. “I believe that addressing mental health hazards in the workplace is squarely within the agency’s mandate, and I hope to have the opportunity to work with the Biden administration to enact those recommendations.” 

The physical and physiological impacts of work stress are well-documented. Long-term stress causes heart disease, high blood pressure, muscle pain, poor sleep, and suicide. Workplace stress also takes an economic toll. Workers facing mental health issues can become less engaged at work, communicate less frequently with coworkers, and struggle with daily functioning – challenges that cost the economy over $47 billion annually in lost productivity.

In the letter directed to OSHA, Dr. Michaels and GFI urged the agency to:

Immediately address mental health hazards by issuing guidance that identifies best practices, encourages employers to mitigate hazards, and outlines how employment practices could constitute violations of the Occupational Safety and Health Act. Issuing guidance would send clear signals to agency employees and, most importantly, the regulated community about their obligations under the law.

Initiate enforcement actions against companies where job conditions or activities pose a threat to mental health that could cause death or serious physical harm, and where there are feasible means to eliminate or materially reduce the hazard.

Develop occupational safety and health standards to protect workers from mental health hazards. Such a standard (or a set of industry-specific standards) would provide more comprehensive support to American workers. An occupational safety and health standard “requires conditions, or the adoption … of … practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment.” Thus, OSHA can issue occupational safety and health standards regulating practices that contribute to mental health hazards. 

To read the letter to OSHA, please see here.

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About Governing for Impact

GFI is a regulatory policy organization dedicated to ensuring the federal government works for working Americans, not corporate lobbyists. The policies we design and the legal insights we develop help increase opportunity for those not historically represented in regulatory policy implementation work: working people. For additional information about GFI, please visit https://governingforimpact.org/.

About Dr. Michaels

David Michaels PhD, MPH is an epidemiologist and professor at the George Washington University School of Public Health. He served as Assistant Secretary of Labor for OSHA 2009-2017, and served as Assistant Secretary of Energy for Environment, Safety and Health 1998-2001. He joined the faculty at GW in 2001.

The Hill: How the Clean Air Act paves the road to expanding electric vehicle chargers

The transition to electric vehicles is a critical part of the global fight against climate change. But while national sales have surged in the last several years, limited charging infrastructure remains a massive barrier to the transition to electric vehicles. The nation’s foremost air pollution statute offers a potential solution. 

Law360: Biden Admin Must Take Action on Worker Surveillance

Companies across the economy are increasingly using electronic surveillance to track and monitor their workforce – with serious impacts on worker power and health.