Liquidated Damages or Human Trafficking? How a Recent Eastern District of New York Decision Could Impact the Nationwide Nursing Shortage

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U.S. healthcare facilities have been recruiting foreign-educated nurses for several decades, but a recent Eastern District of New York (E.D.N.Y.) decision may drastically alter the typical recruiting strategies of healthcare employers. As the nationwide nursing shortage worsens, desperate employers have turned to countries like the Philippines, offering term contracts to guarantee nurse employees for at least two or three years under threat of exorbitant liquidated damages for early resignation. However, in September 2019, an E.D.N.Y. judge ruled not only that such liquidated damages provisions are unenforceable, but also that, when compounded with evidence of employer intent to use these damages to keep employees working, they constitute forced labor, a form of human trafficking prohibited under the Trafficking Victims Protection Act.

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