California Bill Targets Exploitative Worker Contracts in Nursing Industry

California Considers Bill to Ban Worker "Stay-or-Pay" Contracts

The California Nurses Association (CNA) has expressed strong support for Assemblymember Ash Kalra's (D-San Jose) proposed legislation, A.B. 692, which aims to eliminate "stay-or-pay" contracts. These agreements compel employees to pay a financial penalty or alleged debt to their employer if they choose to leave their job prematurely.

One prevalent form of these contracts includes "training repayment agreement provisions" (TRAPs), which require employees to reimburse their employers for training costs if they depart before completing a predetermined work period. TRAPs are frequently utilized with newly licensed nurses, immigrant nurses, or those working in regions dominated by a few healthcare corporations.

CNA President Michelle Gutierrez Vo, RN, remarked, "TRAPs and other stay-or-pay contracts exploit nurses at the beginning of their careers. It is wrong to force new nurses to pay for orientation and basic on-the-job training, locking them into two- or three-year contracts that would force them to pay thousands of dollars if they leave before their term is up. A.B. 692 would stop employers from using debt to trap nurses and other workers in unsafe or exploitative working conditions."

Assemblymember Kalra added, "Placing a de-facto 'exit fee' on a worker who chooses to leave a job is deceitful and unethical. By ending these exploitative stay-or-pay contracts, AB 692 will empower workers to leave jobs where they may be facing poor working conditions, whether that means safety hazards, harassment, or otherwise toxic work environments."

Employers often market these debt contracts as part of enhanced education and training programs, new graduate contracts, or "residency" programs for registered nurses. Through TRAPs, employers transfer the financial responsibility for essential on-the-job training or orientation to employees.

According to a 2024 study, approximately 1 in 12 workers in the United States are subject to TRAPs. These agreements can be used by employers to discourage whistleblowing, undermine union activities, and trap workers in undesirable jobs.

Michelle Gutierrez Vo, RN, further criticized the practice, stating, "It is shameful that health care employers are taking advantage of newly licensed nurses and other workers. TRAPs are a bait-and-switch for new nurse graduates, making them pay for their own orientation and on-the-job training. TRAPs also have a chilling effect on new nurses who want to advocate for their patients and to improve hospital conditions for their patients and their coworkers."

California Nurses Association/National Nurses United is the largest and fastest-growing union and professional association of registered nurses in the nation with more than 100,000 members in more than 200 facilities throughout California and more than 225,000 RNs nationwide.