LOS ANGELES - Today, City Attorney Hydee Feldstein Soto announced that her office has secured a judgment against a healthcare staffing agency for using illegal labor practices against nurse employees the agency hired to place in local client hospitals. The judgment includes a permanent injunction and restitution ranging from $16,000 to $27,000 for the individual nurse employees who were victimized.
Orange County-based First Class Nurses, Inc. (“FCN”), included a “liquidated damages provision” in certain employment contracts, which required nurses to pay damages if they terminated their employment prior to the end of their assignment period. The amount of such damages were purportedly based on the costs of their training and orientation, which violated California’s Labor Code requiring employers to pay for the training of employees, such as nurses, who provide direct patient care.
“Nurses are the heart and foundation of our healthcare system,” said Hydee Feldstein Soto, Los Angeles City Attorney. “Shifting the costs of the orientation and training necessary to do their jobs onto the backs of nurses is not only reprehensible, it’s illegal. I am proud of our office and of our Public Rights branch for securing a swift resolution for the nurses already harmed and an injunction to prevent future harm.”
According to the City Attorney’s complaint, FCN places registered nurses, licensed vocational nurses, and certified nursing assistants in local acute care hospitals on a per diem or travel basis. Hospital clients included Centinela Hospital Medical Center in Inglewood (“Centinela Hospital”) and East Los Angeles Doctors Hospital (“East L.A. Hospital”). When FCN hires a nurse, it enters into an employment agreement with them which specifies, among other things, what hospital the nurse will be assigned to, the duration of the assignment, and the hourly pay rate. For traveling nurses, the assignment period is typically two years and is detailed in FCN’s Travel Assignment Agreement (“TAA”).
For FCN nurses placed at Centinela Hospital and East L.A. Hospital, many of the TAA’s included a liquidated damages clause stating that if the nurse terminated employment with FCN within the assignment period, they agreed to pay a specified amount in damages. For TAAs entered into between 2019 and 2021 for placements at Centinela Hospital, the liquidated damages were between $16,000 to $27,000, which the nurses were obligated to pay. The damages were purportedly based on the costs associated with the training and orientation provided by the hospital.
From 2018 through 2021, FCN filed at least 10 lawsuits against former nurse employees for ostensibly breaching their TAA, seeking payment of the liquidated damages specified in the agreement. FCN also threatened lawsuits against additional former nurse employees. To resolve these claims, at least seven former nurses paid settlements to FCN.
Under a judgment secured by the City Attorney’s Public Rights Branch, FCN agreed to pay restitution to the nurse employees who paid FCN liquidated damages, and to an injunction barring FCN from including this liquidated damages provision in any of its future contracts or seeking to enforce any such provision against its current nurse employees. Additionally, FCN is required to alert all current nurse employees that its liquidated damages provision is void and unenforceable.
City Attorney Feldstein Soto created the Public Rights Branch to protect and enforce the rights of California residents in a wide range of legal matters, including unfair or fraudulent business practices, consumer protection, environmental justice, nuisance abatement and intellectual property.
Civil case #23STCV22811: Judgment
The People of the State of California v. First Class Nurses, Inc.