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