by CUPA-HR | October 22, 2024
On October 17, the Department of Labor’s (DOL) Office of the Solicitor (SOL) issued a Special Enforcement Report on “coercive contractual provisions.” The report lists several provisions they have seen included in employment contracts that the department believes “may discourage workers from exercising their rights under worker protection laws.” The report demonstrates recent actions taken by SOL to combat such provisions, but it does not include new enforcement actions against employers that use these provisions.
In the report, SOL claims the provisions discussed are coercive, violate the law and have significant impacts on the most vulnerable workers. The report details seven types of contractual provisions they find especially concerning:
- Contractual provisions requiring workers to waive statutory protections, including those requiring workers to waive their rights to bring claims and recover damages under the Fair Labor Standards Act
- Contractual provisions that purport to require employees to agree that they are independent contractors
- Indemnification-type provisions and related counterclaims purporting to shift liability for legal violations to workers or other entities
- “Loser pays” provisions attempting to require employees to pay the employer’s attorney’s fees and costs if the employees do not prevail in litigation or arbitration
- “Stay or pay” provisions, including some training repayment assistance provisions, that purport to require workers to pay damages to their employer for leaving a contract early
- Confidentiality, non-disclosure and non-disparagement provisions
- Company policies that purport to require workers to report safety concerns to their employer before contacting any government agencies
The report emphasizes that the Department of Labor is “not bound by private contracts or arbitration agreements between workers and employers” and thus “has a unique role to play in fighting the use of these ‘fine print’ or ‘coercive’ contractual provisions.” It provides examples of cases where the courts have found such agreements unenforceable or where DOL has pursued an injunction in federal court seeking an order blocking one or more contract provisions.
Importantly, the report is largely a restatement of current law and, for the most part, does not outline new enforcement actions against employers for using these provisions. Instead, the report outlines the work SOL has done recently to fight against the coercive contractual provisions, including cases and amicus briefs filed against employers using such business practices.
CUPA-HR will continue to monitor for additional resources from the Department of Labor that may impact contractual labor provisions.
