New Nurses Trapped by “Stay-or-Pay” Contracts

Paying to work, ‘TRAP’ped by debt

HCA imposed TRAPs on nurses who worked at their five hospitals in California: Good Samaritan Hospital in San Jose; Regional Medical Center in San Jose; Los Robles Regional Medical Center in Thousand Oaks; Riverside Community Hospital in Riverside; and West Hills Hospital & Medical Center in West Hills (no longer under HCA ownership).

As a condition of employment at an HCA hospital, new nurses were generally required to complete the Specialty Training Apprenticeship for Registered Nurses (StaRN) Residency Program. Until the spring of 2023, HCA required RNs hired through the StaRN program at its facilities to sign a TRAP agreement as part of their new-hire paperwork. The TRAPs required nurses to repay a prorated portion of the StaRN’s “value” if they did not work for HCA for two years. If a nurse left HCA before the end of the two-year period, the TRAP loan was typically sent to a debt collection agency, called Benefit Recovery Group.

Although HCA claimed that the training was worth tens of thousands of dollars, nurses report that it was little more than job orientation. In June 2023, the California Nurses Association filed a lawsuit against the company for its abusive use of TRAPs. They claimed that HCA’s use of debt repayment agreements was an express violation of California Labor Code Sections 232.5, 1102.5, 2802 and 2802.1. After years of investigation, the California Attorney General filed an enforcement action against HCA on July 24,2025.

California Labor Code

Section 2802 of the California Labor Code requires employers to “indemnify employees for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties. It specifically prohibits an employer from requiring a worker to repay training costs unless the training is:

• necessary to legally practice the profession at issue, or
• undertaken by the worker voluntarily and not mandated by the employer.

An additional provision of the Labor Code expressly applies to training debt incurred by workers providing direct patient care in hospitals and applicants for such positions. These protections apply to all industries and may not be waived by employee agreement.

Under the terms of the newly announced settlement, HCA must:

• pay approximately $83,000 to provide full restitution to California nurses who made payments on their TRAP debt to HCA.
• stop imposing TRAPs on nurse employees and attempting to collect on the approximately $288,000 in outstanding TRAP debt they incurred when they signed TRAP agreements with HCA; and
• pay $1,162,900 in additional penalties to the State of California. 

HCA will also pay additional penalties under settlements filed in Colorado and Nevada.

Assembly Bill 692, which is currently pending before the California legislature, would prohibit employment contracts that require workers to pay their employers a debt if they leave their job, regardless of whether that worker was fired, laid off, or quit. AB 692 was co-sponsored by the California Nurses Association.

The big picture

Employer-driven debt schemes are not limited to California or the healthcare industry. They may include agreements where any employer provides training, equipment, or supplies to a worker, but requires the worker to reimburse the employer for these expenses if the worker leaves their job before a certain date. Employer-driven debt has also grown in the trucking, aviation, and the retail and service industries, ensnaring even low-wage Pet Smart dog groomers in California.

The settlement comes on the 15th anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted to protect consumers from abusive financial services practices. Dodd-Frank also authorizes state attorneys general to enforce its provisions and thereby promote stability, accountability, and transparency in the United States financial system. In 2023, the Consumer Financial Protection Bureau (CFPB) published a report highlighting the risks employer-driven debt poses to workers.
As scholars of workers’ rights might point out, employer-driven debt schemes pose an existential threat to workers’ basic freedom of contract – the ability to choose when, where, for how much, and to whom to sell their labor. In American history, this may be more familiar from slavery, the post-Civil War system of tenant farming or the later industrial story of “owing your soul to the company store.”