New York urged the American Arbitration Association to refuse cases from companies seeking hefty financial penalties from workers who quit their jobs, a practice the state attorney general warned can violate human-trafficking law.
(Bloomberg) — New York urged the American Arbitration Association to refuse cases from companies seeking hefty financial penalties from workers who quit their jobs, a practice the state attorney general warned can violate human-trafficking law.
“We request that the AAA consider the serious implications of proceeding with these arbitrations and not allow its arbitration program to be used as a tool by employers to further labor trafficking violations,” labor lawyers in the office of New York Attorney General Letitia James said in a letter to the organization Wednesday.
According to the state, hospitals and staffing agencies have long sought to fill jobs by recruiting nurses from other countries, and requiring them to sign employment contracts with unlawful fees of as much as $25,000 if they quit or are fired within three years.
The state attorney general’s labor bureau and civil enforcement section chiefs urged the arbitrators to halt proceedings in one such case brought by Advanced Care Staffing LLC against nurse Benzor Shem Vidal. The company seeks a “substantial penalty fee” because he quit before completing three years on the job under terms of a contract that appear to be invalid and illegal under federal law, the state lawyers wrote in their letter.
Advanced Care has not responded to inquiries about the dispute.
Read More: Nurses Who Faced Fines, Lawsuits for Quitting Are Fighting Back
The American Arbitration Association, which describes itself as the world’s biggest private provider of alternative dispute resolution services, said in an emailed statement it would review the letter from the state, but declined to comment on the Advanced Care case.
“The AAA will comply with any court order directing that an arbitration proceed or not proceed in a particular manner,” a spokesperson said.
In a December order, the arbitrator handling Advanced Care’s case against Vidal wrote that the nurse had not provided “sufficient factual or legal support for the argument that the arbitration agreement is unconscionable under New York law.”
Hundreds of health-care employees have been sued by staffing agencies for trying to quit or refusing work, according to US state court dockets reviewed by Bloomberg Businessweek last year. In recent years, several workers facing such litigation have filed cases of their own, accusing companies of resorting to illegal coercion to trap foreign workers in assignments that burnt-out American caregivers no longer want.
Forced Arbitration
Vidal, who came to New York from the Philippines for the Advanced Care position, filed a pending federal lawsuit in September alleging that the company placed him to work at a facility in “brutal and dangerous conditions,” including caring for 40 patients at once, and used a forced arbitration clause to threaten him with serious financial harm if he tried to leave the company.
James’ office said in the letter to AAA that last fall it had settled investigations of a healthcare company for allegedly imposing an illegal $20,000 “repayment fee” on foreign nurses recruited to work in the US.
The attorney general’s letter comes among heightened scrutiny of both mandatory arbitration clauses, in which workers sign away their right to pursue cases collectively or in open court, and “employer-driven debt” arrangements, in which employees are required to compensate bosses for costs like training, or are financially penalized if they quit within a certain amount of time.
Last June, the Consumer Financial Protection Bureau announced an inquiry into employer-driven debt set-ups, which its director said may “have the potential to trap employees” in their jobs.
“The use of debt to keep workers trapped and the use of arbitration to facilitate that debt collection is a widespread problem,” said Vidal’s attorney, David Seligman, who directs the legal non-profit Towards Justice and is urging more attention to the issue by state and federal regulators. “AAA and the other arbitration providers shouldn’t be in the business of facilitating these types of schemes.”
The case is Vidal v. Advanced Care Staffing, 22-cv-05535, US District Court, Eastern District of New York (Brooklyn).
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