Some Firms Are Demanding Steep Repayments If Staff Depart
Published on November 24, 2023 at 12:30AM
At 26, nurse Benzor Vidal moved from the Philippines to America for work, but quit his unsafe, understaffed nursing home job after 14 weeks. His employment contract stipulated he could owe $20,000+ in damages if he resigned early. The New York Times Magazine digs deeper: This type of contract provision is known as a "stay or pay" clause, and it used to be common only for certain high-paying roles or in certain specialized industries. For airline pilots and software engineers, for example, it has been a longstanding practice at some companies to require employees to stay at their jobs for a defined period of time in order to recoup costs related to hiring and training. But the line between recouping costs and penalizing workers for leaving can be blurry, and companies have increasingly taken advantage of that ambiguity. Workers' rights advocates say that, in many cases, stay-or-pay clauses no longer accurately reflect the company's costs but instead appear to be inflated financial penalties designed to discourage quitting. The use of stay-or-pay clauses has grown rapidly over the past decade, and it has seemingly exploded since the start of the pandemic, as companies try to retain workers in a tight labor market. The clauses have spread far beyond the handful of roles and industries where they originated and are now used by thousands of mid- and low-wage employers -- something that came to light when workers began filing lawsuits challenging the practice. These contract terms have been applied to bank workers, salespeople, dog groomers, police officers, aestheticians, firefighters, mechanics, nurses, federal employees, electricians, roofers, social workers, paramedics, truckers, mortgage brokers, teachers and metal polishers. Legal experts believe stay-or-pay clauses might now be in industries that employ a third of all American workers.
Published on November 24, 2023 at 12:30AM
At 26, nurse Benzor Vidal moved from the Philippines to America for work, but quit his unsafe, understaffed nursing home job after 14 weeks. His employment contract stipulated he could owe $20,000+ in damages if he resigned early. The New York Times Magazine digs deeper: This type of contract provision is known as a "stay or pay" clause, and it used to be common only for certain high-paying roles or in certain specialized industries. For airline pilots and software engineers, for example, it has been a longstanding practice at some companies to require employees to stay at their jobs for a defined period of time in order to recoup costs related to hiring and training. But the line between recouping costs and penalizing workers for leaving can be blurry, and companies have increasingly taken advantage of that ambiguity. Workers' rights advocates say that, in many cases, stay-or-pay clauses no longer accurately reflect the company's costs but instead appear to be inflated financial penalties designed to discourage quitting. The use of stay-or-pay clauses has grown rapidly over the past decade, and it has seemingly exploded since the start of the pandemic, as companies try to retain workers in a tight labor market. The clauses have spread far beyond the handful of roles and industries where they originated and are now used by thousands of mid- and low-wage employers -- something that came to light when workers began filing lawsuits challenging the practice. These contract terms have been applied to bank workers, salespeople, dog groomers, police officers, aestheticians, firefighters, mechanics, nurses, federal employees, electricians, roofers, social workers, paramedics, truckers, mortgage brokers, teachers and metal polishers. Legal experts believe stay-or-pay clauses might now be in industries that employ a third of all American workers.
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