Excessive “Buy Out” Clauses Turn Foreign Nurses into Indentured Servants
Many of the foreign nurses and physical therapists in New York City were recruited by staffing agencies with the promise of good pay and working visas. In return, the foreign workers signed employment contracts requiring them to work for a certain number of years. If they leave before the end of the contract term, they must pay a “buy-out” fee or "liquidated damages" to the recruiter.
These types of fees are enforceable as “liquidated damages” if the amounts are reasonably related to the actual costs incurred by the recruiters. The reasonable costs may include money spent on visa applications, travel and lodging for the foreign worker.
A problem arises when the “buy out” fees are much higher than the recruiters’ actual costs. Excessive “buy out” fees are not only unenforceable penalties. Courts have held that they may create illegal contracts of indentured servitude if they unduly coerce the employee to continue working for the recruiter.
We have brought several lawsuits challenging the enforceability of “buy out” fees ranging from $20,000 to $30,000. In each case, federal judges in New York agreed that the fees were unenforceable penalties because they were not reasonably related to the actual costs incurred by the recruiter to bring the nurse or physical therapist to this country. In some cases, the nurses and physical therapists had paid for most of the costs themselves, including their own visa processing, airfare and lodging.
We have also brought claims for damages and injunctive relief against recruiters who abused foreign workers and used the “buy out” fees to deter them from leaving. The abuses included not paying the agreed upon wages, not paying overtime, refusing to process the appropriate visa applications, and filing fraudulent visa applications.
In one case, Judge William F. Pauley III held that our complaint stated a claim for violations of both the Trafficking Victims Protection Act and the Racketeering Influenced and Corrupt Organizations Act (RICO). See Javier v. Beck, No. 13-CV-2926 (WHP), 2014 WL 3058456 (S.D.N.Y. July 3, 2014).
In another case, Judge Jesse M. Furman entered judgment against a foreign labor recruiter for violations of the Trafficking Victims Protection Act and common law fraud. See Macolor v. Libiran, 14-CV-4555 (JMF) (S.D.N.Y. Apr. 13, 2016).
Foreign workers who have been abused and threatened by their employers should know that the U.S. justice system will protect them. Do not simply acquiesce to your employer’s threats. Get legal advice and stand up for your rights.
To schedule a free and confidential consultation, call John Howley, Esq. at (212) 601-2728.
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