Trapped at Work

In May of 2022, 34-year-old Jhane Engnan started working as a nurse at a skilled nursing facility in Petersburg, Virginia. Engnan had come to the United States from the Philippines in pursuit of her “American dreams”—but at Petersburg Healthcare Center, part of the CommuniCare Family of Companies, she found a reality that was anything but dreamy. She was assigned 20 to 25 patients at a time and spent each shift praying that she wouldn’t make mistakes.¹ 

After five months, Engnan decided that the toll chronic understaffing was taking on her mental health was too great, and she gave her notice. Two days after her final shift, she was informed that she owed CommuniCare $14,222.24.² A week later, CommuniCare sued her for $100,000, claiming breach of contract, fraud, and other costs. “I feel like a criminal for quitting my job,” Engnan said.³ 

Stories like Engnan’s have become increasingly common across the country, particularly in healthcare. Today, employers in a wide range of fields rely on predatory “stay-or-pay” contracts that charge workers a fee for quitting, often ranging from thousands to tens of thousands of dollars.⁴ Among those are industries like healthcare, transportation, and retail, in which jobs are disproportionately held by women, workers of color, and early career workers.⁵ 

Stay-or-pay contract terms are especially harmful in healthcare because they can prevent nurses from speaking out about poor working conditions and unsafe nurse-patient staffing ratios, or from coming together with their colleagues to form a union and advocate for better pay and workplace environments. This article discusses the rise of restrictive contract language and the dangers it poses for healthcare workers, especially those who are just entering the workforce; it also outlines what unions and advocacy groups can do to fight back and protect healthcare professionals.

“Stay-or-Pay” Contracts: Modern-Day Indentured Servitude

Employers’ use of restrictive contract terms has grown increasingly common since the 1990s.⁶ The most common type of stay-or-pay contract is a training repayment agreement provision (TRAP).⁷ TRAPs are often forced on workers as a condition of employment and require workers who receive on-the-job training—regardless of the quality or necessity of that training—to pay back the supposed cost if they leave their job before the end of a specified term.

Researchers found that the use of TRAPs rose from 4.1 percent in 2014 to as much as 8.7 percent in 2020, including a sharp rise among younger workers.⁸ This would mean that today, millions of workers are unable to leave their jobs without triggering tens of thousands of dollars of contingent loan obligations. This should raise an alarm.

TRAPs and other stay-or-pay contracts allow employers to use the threat of debt collection or litigation to lock workers in place, limiting their mobility and bargaining power, and imposing crushing financial penalties when a worker dares to leave. And even if the contract is not enforced, its presence has the intended effect of pressuring workers into staying.

This scheme may sound familiar. Because TRAPs are often structured to prevent workers from transitioning to competing employers, they substitute for traditional noncompete clauses, which have come under growing scrutiny from federal government agencies and state lawmakers. But TRAPs may be even more effective at limiting or blocking workers from leaving their jobs than traditional noncompetes, particularly for low-wage workers who can’t afford to pay their employer a substantial sum to quit.⁹ And while traditional noncompetes aim to limit workers from departing for a competitor or starting a competing business, TRAPs may be enforced against a departing worker no matter what they do after their job. Even if a worker leaves to take care of a sick family member or changes careers or industries completely, they still have to pay.

The debt created by TRAPs also poses a unique, unavoidable danger to workers because at the moment the worker is required to sign the contract, the debt is already inextricably linked to their employment. According to workers sharing their experiences with the Consumer Financial Protection Bureau, in many instances by the time they learned they would have to sign a TRAP in order to start a job, they had already left their previous employment; the result was a deeper imbalance of power and decreased ability to negotiate the terms.¹⁰ And once these workers began employment, their ability to afford to quit and repay the TRAP debt was controlled by the issuer of the debt. For the vast majority of workers with TRAPs, the threat of debt or debt collection litigation brought by employers amounts to a form of modern-day indentured servitude, keeping them trapped in jobs with low wages and bad working conditions.

Stay-or-Pay Innovations

As regulatory and media scrutiny of TRAPs has increased (see “Putting the Spotlight on TRAPs”), some employers have turned to contracts that use different language but are often functionally equivalent. They may require employees to pay either a flat fee (called “liquidated damages”) or an unspecified (and therefore unlimited) amount of money to recoup what the employer characterizes as expenses related to employee training, finding and training a replacement employee, or vague harms like “loss of goodwill.”

One such example occurred in California. With a workload that was upward of 40 patients a day and breaks that lasted only a few minutes, one doctor working for Concentra considered quitting. But when he spoke with his boss, he was told that Concentra would enforce the stay-or-pay provisions of his contract. The contract requires employees to give 120 days’ notice when quitting or pay a fee equivalent to their salary for the remainder of that period. The doctor found a way to stick it out for another four months, but during that time he turned down multiple job offers from companies that simply could not hold a position open that long.¹¹ 

Filipino nurse Benzor Shem Vidal found himself in a similar situation when he accepted a job with Advanced Care Staffing (ACS), a nursing agency based in Brooklyn, New York. Vidal had left a job to work for ACS, so when he was asked to sign a stay-or-pay contract, he felt like he “had no choice.”¹² The contract required him to work for the nursing agency for at least three years or pay $20,000 plus the company’s future profits, attorneys’ fees, and arbitration costs.¹³ After four months of ACS failing to address his concerns, which included being assigned more patients than he felt he could responsibly care for and working under grueling conditions, Vidal resigned. The company sued him for more than $24,000, including $9,000 for future profits. This was more than he had been paid by the company during his employment. Vidal sued ACS, and the US Department of Labor later joined the case. Because the penalty was greater than the amount Vidal had earned, the Department of Labor argued that the company had violated federal minimum wage requirements.¹⁴ 

Deepening the Healthcare Staffing Crisis

While the use of TRAPs has generally increased across the economy, they are particularly prevalent in the healthcare industry. The COVID-19 pandemic revealed a healthcare system that was unprepared for a global health crisis, and hospitals and healthcare facilities experienced large staffing turnover; nearly one in five healthcare workers quit or otherwise left their jobs.¹⁵ Workers have continued to grapple with the ongoing staffing crisis as working conditions remain challenging and worker burnout has worsened. More than 138,000 registered nurses have left the workforce since 2022.¹⁶ Instead of offering competitive jobs that retain highly skilled, qualified nurses and healthcare workers with increased salaries, better benefits, reasonable patient loads, and meaningful training opportunities, hospitals and healthcare companies are turning to TRAPs and other stay-or-pay contracts to coerce nurses to stay.

This looming threat of debt is real: in July 2020, while much of the country was banging pots and pans on their doorsteps to cheer on healthcare workers, it was reported that Parkland Memorial Hospital in Dallas was suing nearly two dozen nurses who had left the hospital before completing their two-year agreements, including one who had agonized before deciding to leave in 2015. In her exit survey, she wrote, “As a single working mom, I found it increasingly difficult to work long hours & weekends away from my daughter. My absence was negatively impacting her well-being so I made a hard choice to leave a job & facility I love. I loved working @ Parkland & the skill & their staff is the absolute best!” Parkland sued her for $19,248.¹⁷

Parkland Memorial Hospital is far from the only hospital or healthcare staffing company to use TRAPs to prevent nurses from departing or to punish those who do. When the Consumer Financial Protection Bureau launched the first-ever public inquiry into the harmful effects of TRAPs and other stay-or-pay contracts in 2022, one healthcare union surveyed more than 1,100 union and nonunion nurses about their experiences with these contracts. Among registered nurses in hospitals with one to five years of experience, nearly 45 percent reported having been in a TRAP. In contrast, of registered nurses with 11 to 20 years of experience, only 24 percent had ever been in a TRAP.¹⁸ Given the broader labor analysis indicating that early career workers, women, and workers of color are more likely to have a TRAP, it is not surprising that TRAPs in healthcare are most common among new nurses and foreign-educated nurses, both of which are more likely to be women or workers of color.¹⁹

The Scarring Effect of TRAPs on New Nurses

Despite being fully licensed, all new graduate nurses at Mission Hospital in Asheville, North Carolina, were required to complete the $10,000 StaRN “training” program as a condition of employment, and to repay up to the full cost if they left Mission Hospital within two years. In October 2020, nurses in the StaRN program earned a rate of $24 an hour, more than $8 lower than the hourly median wage for RNs in the state. In addition, they were classified as temporary employees, making them ineligible for benefits.²⁰

Nurses just entering the profession often lack the bargaining power to negotiate for higher wages or better benefits; healthcare employers exploit this even further by locking these workers into employment contracts meant to prevent them from leaving for better opportunities. In recent years, multiple nurses who have had a TRAP enforced against them, or were threatened with one, have testified before regulatory agencies investigating their use.²¹ Their experiences suggest that less desirable hospitals with unsafe working or patient care conditions utilize TRAPs because they are unwilling to compete on wages and benefits.²² Nurse unions and advocacy organizations have highlighted how workers laboring under TRAPs and noncompetes routinely receive lower wages than employees who are free to depart and work for competitors.²³

While TRAPs present an immediate threat to inexperienced nurses, the downstream effects may also harm them for years to come. In the aftermath of the Great Recession, research found that young workers who entered the labor market during times of depressed wages and salaries experienced a “scarring” effect that could lead to a lifetime loss in earnings.²⁴ Nurses who enter the workforce without a TRAP are able to pursue higher-paying jobs as they become available, while nurses with TRAPs may remain stuck in lower-paying positions for years. This can be exacerbated if future employers base their salary offers to newly hired healthcare professionals on previous earnings.

Hospitals in some instances advertise employer-required TRAPs as a form of enhanced training and education for new graduate nurses, going as far as calling them “residency” programs for RNs.²⁵ This advertising allows hospitals to take advantage of new nurses’ desire to receive mentorship and hands-on training. Unfortunately, few of these programs deliver on their promise to provide these benefits.

Targeting Nurses from Abroad

Eager for the opportunities that a move to the United States might bring, Filipina ED nurse Novie Dale Carmen accepted an offer from staffing agency Health Carousel to work at a hospital in Pennsylvania. She soon found herself working long hours in a chronically understaffed unit where she had to provide intensive care for up to six patients at once. She learned that her pay of $25.50 an hour was far below the more than $35 an hour that the other nurses in her hospital received and less than half of the $52 an hour that Health Carousel was being paid for her contract. The staffing agency also exerted an unusual amount of control over Carmen, prohibiting her from discussing her working conditions with other staff or even leaving town without permission.

Depressed and feeling trapped, Carmen decided to leave her job. When Health Carousel demanded $20,000 in “liquidated damages,” she paid them with money her boyfriend had been saving for years to buy a house. In 2021, Carmen and several of her former colleagues sued Health Carousel for its abusive employment practices.²⁶ This year, the company agreed to a $6 million settlement with the nurses.²⁷

Many hospitals attempt to address the shortage of nurses willing to work under unsafe conditions by recruiting foreign-educated nurses. The largest group is Filipino exchange nurses, who are especially desirable because they’re trained in English in programs modeled on the American medical system.* Just 1 percent of the US population, Filipinos make up a much larger proportion of the nursing workforce, with 1 in 20 nurses in the United States trained in the Philippines as of 2019.²⁸ Foreign-trained nurses typically come on EB-2 or EB-3 visas, which are employment-based “preference immigrant” visas for skilled workers and professionals in a range of fields.²⁹

One reason hospitals are more aggressively turning to foreign-educated nurses is cheap labor. American registered nurses earned a median annual wage of $93,000 in 2024, according to the US Bureau of Labor Statistics.³⁰ But, as Novie Dale Carmen and her fellow Health Carousel nurses learned, Filipino nurses might be paid much less: according to their lawsuit, they earned roughly $60,000 a year, less than two-thirds the national median.³¹ Lawyers representing nurses working on EB-3 visas in other cases have claimed that some employers use deceptive practices in determining wages for nurses, including basing their pay on more rural, low-cost areas rather than where the nurses are actually employed.³²

Foreign-educated nurses may also face threats regarding their immigration status if they speak up about patient-staffing ratios, pay, benefits, or other concerns with the hospital. Nurses in multiple lawsuits claim their employer threatened to report them to immigration authorities if they left their job and failed to repay the TRAP debt immediately, despite the fact that these nurses’ EB-3 visas permit them to work elsewhere.³³

In the current political climate, the threat of involving immigration authorities or taking legal action presents a severely heightened risk for nurses. Nurses whose employers are using their immigration status to force them to stay in the job or to otherwise silence them may be able to file claims for violations of the Fair Labor Standards Act and the Trafficking Victims Protection Act, as well as other federal and state protections. In 2022, New York Attorney General Letitia James announced a settlement with Albany Med Health System after finding that it required foreign-educated nurses to pay up to $20,000 if they resigned or were fired within the first three years of employment at the hospital. If a nurse failed to pay the fee, the contract provision threatened legal action and reporting to immigration authorities.³⁴ James also found that the stay-or-pay provisions in these contracts violated the Trafficking Victims Protection Act because of their threat of serious legal and financial harm to coerce the nurses to continue working.³⁵

Fighting Debt TRAPs

After they were sued for more than $100,000 by CommuniCare, Jhane Engnan and four of her former colleagues worked with the Asian American Legal Defense and Education Fund and two law firms to file an unfair labor practice charge with the NLRB.³⁶ It was one of the first challenges to a stay-or-pay contract. The AFT supported the effort, working to ensure all nurses are protected and know their rights as workers.

The NLRB took administrative action against CommuniCare, arguing that the employer was coercing employees to stay by making an example of the nurses.³⁷ Afterward, the company agreed to drop its lawsuits against the five nurses. It also agreed to rescind its use of stay-or-pay contracts nationwide, to remove them from their employee handbooks, to make current or former employees whole for lost wages or other benefits and for the costs of defending against the lawsuits, and to pay damages to current or former employees who were deprived of better employment opportunities.³⁸

Under the Biden administration, workers across the country saw new protections developed to address the growing use of TRAPs and other stay-or-pay contracts. Now, these federal protections are in grave danger as the second Trump administration has begun to implement its blatantly anti-worker agenda. But as federal protections erode, unions and advocates have continued to successfully challenge these harmful practices.

The AFT has been working alongside its partners to eliminate stay-or-pay contracts. Together, they are supporting nurses as they file unfair labor practice charges with the NLRB and file lawsuits against hospitals and staffing companies that use them. As a result, numerous hospitals and healthcare companies have agreed to end the use of these contracts.³⁹

Unions and advocacy organizations are also protecting workers from stay-or-pay contracts at the state level. In early 2025 alone, multiple states passed or considered legislation that would restrict the use of these contracts. In April, Republican and Democratic state lawmakers in Indiana worked together to pass SEA 475, which prohibits hospitals from imposing stay-or-pay provisions in physician employment contracts if the terms require the workers to remain at a facility for more than three years.⁴⁰ In Colorado, SB 25-083 prohibits hospitals and healthcare staffing companies from charging medical professionals any damages for departing their jobs; the bill passed with bipartisan support and was signed into law on June 3.⁴¹ These new protections build on legislation passed in California in 2020 that bars employers from requiring direct care workers, including nurses, to pay for employer-mandated training.⁴²

Other states have gone beyond limiting TRAPs and other stay-or-pay contracts to just certain types of workers. In March, Wyoming passed a bill that voids noncompete clauses and prohibits any employer from imposing stay-or-pay contracts lasting longer than four years; it also requires employers to prorate the amount that can be collected every year of employment.⁴³ In June, New York passed the Trapped at Work Act, which prohibits employers from imposing TRAPs on employees.⁴⁴ And in September, California passed a bill that bans the use of nearly every type of stay-or-pay contract, creating the most sweeping prohibition on these contracts in the country.⁴⁵

In Massachusetts,⁴⁶ Ohio,⁴⁷ and Vermont,⁴⁸ bills that aim to ban employers from using TRAPs across all workforces and industries are building momentum, moving through committee hearings and picking up bipartisan support (as of the end of September). These bills, and others like them that protect workers’ voice and their ability to organize and improve working conditions, are important targets for union advocacy.

Unions can focus on education and advocacy efforts to make sure that healthcare workers are aware of the protections available to them. They can also monitor to ensure that restrictive contracts are not being used to suppress union organizing or other efforts to improve working conditions.

Unchecked, TRAPs and other stay-or-pay contracts can leave healthcare workers buried in debt just for escaping intolerable working conditions, taking a better opportunity, or having to quit a job to navigate personal hardships. But while workers may feel powerless under these circumstances, they don’t have to stay trapped. Union members can—and do—play a unique role in bringing awareness to this form of worker coercion and exploitation and holding employers accountable.