A Brooklyn, NY, healthcare staffing agency, Advanced Care Staffing, and its CEO are under fire from the Department of Labor for allegedly requiring employees to sign contracts that required them to work for the company for three years or repay their wages.

The company has placed workers at settings such as skilled nursing facilities in New York, New Jersey and Connecticut for more than 10 years, according to its website.

According to the complaint filed in the District Court for the Eastern District of New York, “the contracts warn employees that if they leave ACS’ employ before three years’ time, they will face ACS and its lawyers in an arbitration behind closed doors.” 

Under the contracts, according to the complaint, “the pay that ACS promises its employees may be converted into nothing more than a loan that employees must repay with interest and fees, leaving some employees with no compensation at all, much less the wages required by the [Fair Labor Standards Act].”

The Labor Department is seeking an injunction prohibiting the company and its CEO, Sam Klein, from reducing workers’ wages below federal minimums, whether by demanding that they enter into contracts requiring them to cover ACS’ future profits, attorneys’ fees or costs associated with arbitration, or by enforcing such contracts. In addition, the Labor Department is seeking back wages and liquidated damages for affected employees.

Not only did ACS force employees to sign the contract; the company made good on threats, the Labor Department alleges. The complaint described a case in which ACS reportedly pursued arbitration, demanding that a registered nurse, who resigned after raising repeated safety concerns, pay the company more than the nurse earned, to subsidize ACS’ future profits.

Additionally, according to the Labor Department, ACS’ contracts and arbitration demands “have a chilling effect on employees’ ability to exercise their rights, including the protection to be free from an unsafe or hazardous workplace, and to obtain the wages they are owed.”“Federal law forbids employers from clawing back wages earned by employees, for employers’ own benefit,” Solicitor of Labor Seema Nanda said in a statement. “Employers cannot use workers as insurance policies to unconditionally guarantee future profit streams. Nor can employers use arbitration agreements to shield unlawful practices.”