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USA: Reconsidering Repayment Agreements with Foreign Employees

Authors: Amy L. Peck and Aimee Guthat on May 10, 2024

It is not unusual for employers to require foreign employees to sign repayment agreements that require the employee to repay some or all required immigration process costs if the employee terminates employment before the end of the contract term. Employers often use the contracts as a deterrent to employees leaving as soon as the immigration benefit is secured, not intending to enforce or collect damages. Employers may want to reconsider this retention strategy.

Civil claims brought under the Trafficking Victims Protection Act (TVPA) have argued that these repayment agreements, also known as claw-back or “damages for quitting” contracts, are akin to forced labor under the TVPA as employees are effectively unable to quit because of the prohibitive costs. Repayment contracts can be used in any industry but are especially prevalent with nursing staffing agencies. The TVPA claims, in theory, can be brought by any plaintiff who feels burdened by a reimbursement agreement.

The claims also typically allege that the TVPA covers employers who threaten to report foreign national employees who wish to terminate employment to immigration authorities. Whether or not a threat occurred, it is notable that an employer has a legal obligation with certain types of visas to notify USCIS and DOL upon termination of employment. Employers that fail to provide the obligatory notice may continue to be liable for wage obligations under the underlying immigration petition. This legal obligation alone will not be enough to protect employers from TVPA claims.


  1. Employers should review any repayment agreement executed with immigration-sponsored employees. Many employers with these provisions do not intend to enforce or collect damages but use the contracts as a deterrent to employees leaving as soon as the immigration benefit is secured. Immigration sponsorship can be very expensive and employers often want some cost contribution in return for the investment if the employee terminates the contract early. If there is no intention to enforce the contract, then it may be better to discontinue the practice.
  2. Employers should review repayment contracts with employment counsel to confirm compliance with state laws and TVPA concerns.
  3. Employers should be careful about how they communicate to employees regarding the reporting of voluntary employment termination prior to the end of the contract term to immigration officials. Notifying USCIS and DOL of the termination of a work visa-sponsored employee is legally required, but problems can arise if this is communicated in a way that appears threatening to the employee. Review offer letters to make sure that any immigration provision does not have unnecessary language about reporting to immigration officials.
  4. TVPA allows civil lawsuits against companies that benefit from trafficking even if they are not direct participants, for example, by contracting with staffing agencies that may use restrictive reimbursement or damages clauses. It is a best practice to review vendor contracts to ensure compliance.

Courts have held that the TVPA allows compensatory damages, liquidated damages, emotional distress damages, punitive damages, and reasonable attorney’s fees in a civil case.

Please contact a Jackson Lewis attorney with any questions.