NEW YORK – The U.S. Department of Labor has asked a federal court to halt improper employment practices by a Virginia-based IT staffing agency that allegedly bind employees to their jobs, extract large sums if they leave the firm, and forbid them from engaging in protected activities under federal law.
Filed today in the U.S. District Court for the Eastern District of New York by the department’s Office of the Solicitor against Smoothstack Inc. and its co-founder Boris Kuiper, the complaint alleges that the employers trap employees by demanding payments up to $30,000 if they leave Smoothstack before completing 4,000 hours—approximately two years—of billable work. This practice reportedly causes some employees to earn less than the federal minimum wage, violating the Fair Labor Standards Act (FLSA). The department’s Wage and Hour Division is conducting an ongoing investigation.
“Federal law requires employers to pay employees for their work, not the other way around. Our lawsuit alleges Smoothstack Inc. and co-founder Boris Kuiper brazenly disregarded the law by creating a system that traps workers in jobs through outrageous and illegal contracts,” said Solicitor of Labor Seema Nanda. “All employers should be on notice that the Department of Labor will use everything in its power to protect workers from employers who weaponize employment contracts to exploit workers and chill them from exercising their federally protected rights.”
The department alleges that for at least three years, Smoothstack and Kuiper have violated FLSA’s minimum wage and overtime requirements by requiring employees to sign contracts committing approximately two years of billable work to retain their wages already earned. If workers resign or are terminated for cause or breach their contract, Smoothstack and Kuiper allegedly demand up to $30,000 for purported training costs, future lost profits, and administrative expenses. The suit claims Smoothstack routinely pursues legal action against former employees for amounts often exceeding their earned wages.
Additionally, the suit alleges violations of FLSA’s anti-retaliation provisions and interference with departmental investigations. It describes how employees were unlawfully restricted from engaging in FLSA-protected activities under threat of nearly $30,000 penalties or job loss due to broad non-disparagement, non-disclosure, and confidentiality clauses forbidding discussions about employment terms or grievances.
Smoothstack also reportedly requires employees first inform them if contacted by government investigators and forbids providing information unless legally compelled.
The suit further alleges that even after termination, defendants control employees' ability to assert FLSA rights through separation agreements containing unenforceable provisions such as waiving FLSA rights or limiting disclosure of violations—a tactic obstructing federal investigations.
The department seeks an injunction prohibiting Smoothstack and Kuiper from using training repayment agreement provisions reducing employee wages below federal minimums and ending broad contract clauses threatening retaliation against protected activities under FLSA.
Headquartered in McLean, Smoothstack Inc. recruits IT professionals nationwide at career beginnings with promises of paid training and client assignments.
Senior Trial Attorney Amy Tai in New York's Regional Office of the Solicitor is litigating this case.
The FLSA mandates most U.S. employees be paid at least federal minimum wage for all hours worked plus overtime pay at no less than time-and-a-half regular rates for over 40 hours per week while prohibiting employer retaliation against exercised rights.
For more information about worker protections enforced by Wage and Hour Division: contact toll-free helpline at 866-4US-WAGE (487-9243), confidentially available regardless of origin; assistance provided in over 200 languages; check owed back wages online; ensure accurate work hours/pay via free Android/iOS Timesheet App (also Spanish).
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