Employment contracts that require nursing home workers to pay their employers’ attorneys fees if they lose an arbitration dispute are “unduly coercive” and would “chill” workers’ willingness to fight for relief, the Department of Labor is arguing in support of a federal lawsuit.
A decision in the case could define how far employers can go in trying to force workers into arbitration over broken contracts, as well as whether they have the right to seek legal fees in such cases.
Attorneys for the department’s solicitor’s office and its Fair Labor Standards Division weighed in Monday in Vidal vs. Advanced Care Staffing, a 2022 case on appeal to the US Second Circuit.
Registered nurse Benzor Shem Vidal began working for a Brooklyn nursing home in 2022 after being recruited from the Philippines by Advanced Care Staffing, an agency that required him to sign an employment contract pledging three years to the company.
After he was placed in the job, Vidal claims that he was asked to work under unsafe conditions, with a caseload double what Advanced Care had described to him. According to court documents, “he grew increasingly worried that he was ‘putting [his] personal health, the health of [his] patients, and [his] professional license at risk,” and resigned from the agency after three months. That was in violation of his contract, which required him to give the agency three years of service or pay back his wages.
Advanced Care notified Vidal he would have to face the staffing agency’s claims for damages from a broken contract with an arbitrator, and that he’d have to pay a filing fee of $1,900, as well as $450 per hour, and a case management fee of $750 if he lost the case.
Vidal brought his lawsuit in September 2022, alleging that the arbitration requirement was invalid under the Fair Labor Standards Act, the Trafficking Victims Protection Act and New York law.
In February, a US District Court judge granted his motion for an injunction; Advanced Care appealed the ruling to the Second Circuit.
The Department of Labor is also pursuing its own civil case against Advanced Care, arguing that employers cannot use workers as insurance policies to “unconditionally guarantee future profit streams.” It cited Vidal’s accusations in its previous filings.
In this week’s brief supporting Vidal, the feds said the possible cost of arbitration forced Vidal to risk a judgment for more than he could afford to pay. That, Labor attorneys wrote, is impermissible under Supreme Court precedent.
“The Court should take this opportunity to clarify that an arbitration provision such as the one at issue here — a so-called ‘loser pays’ provision that would force an employee to pay his employer’s attorney’s fees if he loses in arbitration — prevents the employee from vindicating his substantive rights under the Fair Labor Standards Act, and thus is unenforceable,” they argued.
“Furthermore, the Court should clarify that ‘loser pays’ provisions such as the one at issue here violate the FLSA because they chill workers like Vidal from being willing to bring FLSA claims, thereby precluding them from effectively vindicating their FLSA rights.”
Vidal’s attorney in August sought to have his case related to a similar one brought by Cherry Lyn Miclat against Advanced Care, as well as the Department of Labor’s own civil case.
“All three cases arise from the same transactions or events: Defendants’ alleged use of labor contracts that result in forced labor and/or wage theft. All three cases involve immigrant nurses recruited from the Philippines by Defendants,” Vidal’s attorneys claimed. “The alleged forced labor and/or underpayment schemes in all the cases stem from Defendants weaponizing arbitration to trap nurses in their jobs and/or punish them for leaving.”
It was unclear Thursday whether that motion had been granted or a hearing had been scheduled. The Department of Labor did not reply to a request for comment by deadline.
While deeming cases related is procedural in nature and forces attorneys to share information revealed through the discovery process, it can be a precursor to consolidating cases for trial,” they wrote.
