COURTS FAVOR NURSES IN BREACH OF CONTRACT LAWSUITS
The pandemic has aggravated the nursing shortage in the United States. Hospitals, nursing homes, and other healthcare facilities are desperate to remedy their staffing shortage and are once again turning to other countries for nurses, like the Philippines where 40% of current U.S. nurses are from.
Eager to work in the U.S., foreign nurses often sign employment contracts without an attorney or adequate knowledge of the contract’s terms and conditions. Employers and employees have unequal bargaining positions, with the employees having little to no power to negotiate.
Typical employment contracts for nurses recruited from foreign countries often specify a 2–3-year term. The contractual term is enforced by a provision for liquidated damages whereby if an employee resigns or otherwise leaves before the end of the term, the employee must pay the employer the specified amount of liquidated damages. It is not uncommon for liquidated damages to be in the amount of $20,000 or more. The employment contract may also contain provisions giving the employer the right to pursue legal action against the employee.
There have been recent cases where Filipino nurses filed claims against their employer and recruitment agencies. They claimed they were paid less than the salaries they were promised in their contracts and were subjected to harsh working conditions—double shifts, grossly inadequate nurse-to-patient ratios. In addition, they claimed that they were prevented from leaving by unfair contractual provisions that required them to pay their employer if they resign or transfer. Further, the employer had a history of pursuing legal action and/or professional disciplinary complaints against nurses who fail to serve out the term of their employment contracts. The nurses also claimed violations of the Trafficking Victims Protection Act (TVPA) because the severe contractual provisions forced them to serve out the term of their contracts.
The courts have generally ruled in favor of the nurses:
1. They have ruled that there was a breach of contract when the employer paid the nurses less than the prevailing wage.
2. The liquidated damages were unenforceable and against public policy. The amount was excessive, especially when measured against the nurses’ salaries. It is also grossly disproportionate to any recruitment expenditures that may have been incurred by the employer and recruitment agencies. The egregious amount is tantamount to a penalty.
3. There was a violation of TVPA’s provision against forced labor because they compelled the nurses to serve out the term of their contracts under threat of serious harm—legal prosecution to enforce the liquidated damages and professional disciplinary complaints against the nurses. This constitutes the precise financial harm and abuse of law or legal process the TVPA seeks to prevent— “any harm, whether physical or nonphysical, including psychological, financial or reputational harm, that is sufficiently serious, under all the surrounding circumstances, to compel a reasonable person of the same background and in the same circumstances to perform or to continue performing labor or services in order to avoid incurring that harm”.