A Dallas County judge ruled from the bench Monday in favor of 10 of 29 nurses sued by Parkland Health when they refused to pay the health system thousands of dollars for leaving their jobs before fulfilling their entire contract.
Dallas County’s safety net health system took 29 nurses to court in February 2023, claiming they broke the signed training repayment agreement provision (TRAP) and owed the health system money because they didn’t continue to work at Parkland for the entire duration of their contract. The suit said each nurse owed around $20,000 for leaving the system early.
Parkland Health has gone after several groups of nurses similarly over the years and attempted to obtain “liquidated damages” from the nurses in what the health system told the Dallas Morning News is an attempt to recoup training and professional development resources.
“Parkland operates a much sought-after program to provide focused training in critical care nursing to recent nursing school graduates,” Parkland Heath said via statement. “This program is funded by taxpayer dollars, and enables appropriate staffing levels to serve our patients. In exchange for the training, the nurses sign an agreement that they will remain employed with Parkland for a specified period of time. If they do not fulfill the employment obligation, the agreement provides that they will pay an agreed amount to Parkland.”
But representatives of the defendants say that the contracts prey upon nurses who lack options and use financial penalties to keep them in positions they no longer want. “My client left during COVID because they weren’t giving her the protective equipment to feel safe while she was doing her job,” says Karina Sanchez-Peralta, a former nurse who represented one of the defendants in the 2023 suit as an associate at Houston firm AZA. “They were short-staffed all the time, and when you have baseline anxiety, it’s not a great formula.”
For a nurse who makes between $50,000 and $80,000 a year, handling a $20,000 penalty to change jobs is a dilemma. The nurses’ legal team said the amount isn’t quite enough to make hiring a lawyer to fight the contract an obvious choice, but it is large enough to scare the nurses into fulfilling their contract and staying longer than they want.
“The former Parkland nurses named as defendants in this lawsuit left before completing the employment obligations they agreed to in exchange for the training. Our preference would have been that they honor their pledge of service to our patients’ benefit. When they chose to leave after receiving the training, but before meeting the obligations they agreed to, Parkland gave them a chance to resolve the disputes. We do not prefer legal action, but after we have exhausted other measures to recover the taxpayer dollars spent on their training, filing a lawsuit was our last resort,” Parkland’s statement reads.
In many cases, the nurses agree to a payment plan and don’t fight their former employer when approached with a lawsuit by health systems enforcing TRAPs. Due to increased awareness of TRAP contracts and battles in other states to make the agreements illegal, 29 nurses decided to lawyer up and take on their former employer.
TRAP contracts have long been controversial; critics see them as a way to avoid non-compete agreements to keep nurses in their jobs. Nurse groups nationwide have fought for legislation to outlaw TRAP agreements. HCA, the largest for-profit health system in the country and parent company of North Texas’ Medical City Healthcare, said in 2023 they would no longer be using TRAP agreements. The Harris County public health system doesn’t use them for its nurses. But Parkland Health took the nurses to court to claw back about $20,000 from each of the 29 nurses.
“It’s terrible optics; ” says Ashley Tremain, managing partner of Tremain Artaza in Dallas, who represented several defendants. “Unfortunately, the law does not invalidate contracts because they have bad optics.”
The Ruling
On Monday, Dallas County Judge Martin Hoffman granted a Motion for Summary Judgment from the bench on behalf of 10 of the nurses, calling the $20,000 in damages an unenforceable penalty. This means the health system can’t recover the funds from nurses in this case. Sanchez-Peralta, who is working the case pro bono, says the ruling will be a boon to nurses who don’t have other options when they leave nursing school than to sign a contract with a health system that includes a TRAP and could impact several of Parkland’s pending TRAP cases.
Judge Hoffman conveniently posts hearings on YouTube and ruled from the bench on Monday on behalf of the nurses, calling the liquidated damages “facially defective.” The ruling indicates that the two parties established the contract under threat of financial pain. The judge considered it an illegal penalty because the $20,000 in damages applied to the nurses if they worked one day at the hospital or one day short of their contract. It didn’t reflect the amount of time worked and wasn’t pro-rated.
“These contracts are non-competes by any other name,” says Tremain. “It’s saying you have to work for us for three years or we will punish you. The courts over the years have said that threatening someone with financial harm if they take a certain action – like leaving a job, or working for a competitor – is no different than explicitly prohibiting them from doing that thing.”
The ruling reflects the changing national conversation around non-compete agreements. Last year, the Federal Trade Commission proposed a rule to ban them, and several states have already done so. Sanchez-Peralta and Tremain say the TRAP trend was prevalent 5-10 years ago but is declining since states have been outlawing the practice and health systems have publicly denounced it.
“This is bad for patients and the public,” Tremain says. “When you go into the ER, you want to know that the person treating you wants to be there and is not working under duress. Forcing them to stay there under threat of a lawsuit isn’t a good recipe for public safety.”
As the judge ruled from the bench in this case, the ruling has not yet been finalized and entered by the court. “Parkland respectfully disagrees with the recent decision announced by Judge Hoffman at the hearing in this case. Parkland will continue to assess its options as the litigation proceeds,” the Parkland statement reads.
Parkland may appeal the ruling, but nothing has been set in motion yet. As for whether or not future nurses will face TRAP contracts, Tremain is both hopeful and pessimistic. “My prediction would be that within the next couple of years, we’re not going to see as many TRAPs because it will become too much of a legal fight to justify the use of the contract,” she says. “But even as the law evolves to favor employee rights, there will always be employers who will try to craft new workarounds, to achieve the same ends.”
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