When Chelsea Rutters day care center closed at the start of the pandemic, she watched the families of her students scramble to find new child care. With her own job now uncertain, Rutter agreed to watch some of the toddlers at her home in Seattle.

The arrangement seemed like a perfect solution. The kids would stay in the care of a teacher they knew and trusted, while Rutter would have some job security amid the economic downturn. There was just one potential problem.

According to Rutter, if any of the families wanted to hire her to be their nanny, they were supposed to pay a $5,000 penalty to her employer, Bright Horizons, one of the largest for-profit child care providers in the country.

Parents and guardians fill out a thicket of forms when they enroll a child in day care. On at least some versions of Bright Horizons informed consent form, they must agree to pay the company if they end up poaching a worker. The $5,000 placement fee applies if the family chooses to employ a worker within 6 months of his or her departure from Bright Horizons.

Rutter decided to work for the families anyway, and she doesnt believe Bright Horizons ever went after them for money. But she felt certain the company used the clause to prevent workers from getting more attractive job offers.

Now she is suing Bright Horizons in a proposed class action lawsuit in Washington state court, arguing that the agreement illegally suppresses workers wages.

Youve got to compete, said the 30-year-old Rutter, who left Bright Horizons last year and now works as a freelance writer and editor. If you dont want [workers] to go, then you have to pay to keep them. You cant keep them just by creating a penalty barrier in the middle.

Bright Horizons did not respond to requests for comment. Its not clear how widely the company uses the agreement, though it appears to be standard in the companys forms for backup care , which families use when their regular child care arrangements have fallen through.

Rutter said the purpose of the clause became clear when COVID-19 upended the countrys child care system, driving up demand for in-home nannies and giving caregivers some newfound leverage. She claims in her lawsuit that the poaching fee keeps wages at Bright Horizons lower than they would be otherwise, violating Washington states new prohibition against noncompetition agreements.

The law , which was enacted in 2020, renders such clauses void and unenforceable when applied to workers earning less than roughly $100,000 in a year. It also allows workers to seek remedies in court if they believe an employer has violated it.

Noncompetes and no-poach agreements have a long history in the United States. In the Reconstruction South, some state laws forbade planters from hiring workers away from one another, in order to keep wages down in the new post-slavery labor market. Regulators have recently taken aim at such agreements because of their potential to limit workers mobility.

In 2019, four fast-food chains Dunkin, Arbys, Five Guys and Little Caesars agreed to stop using no-poach agreements in a settlement with 14 states. Each company had been requiring franchisees not to hire employees from other franchisees under the same brand.

Washington state has been one of the most aggressive in going after noncompete and no-poach agreements. A recent study by economists looking at the state attorney generals enforcement campaign found that pay for low-wage workers rose more than 3% when franchise companies removed their no-poach clauses.

The Bright Horizons agreement functions a little differently, in that the competing employers are not other day care centers but rather the companys own clients. Child care workers develop close relationships with students and their parents. Hiring a nanny or even a part-time babysitter is an emotional decision for families. When they find the right caregiver, they are reluctant to part ways.

Rutters attorney, David Seligman, whose nonprofit firm Towards Justice filed the lawsuit against Bright Horizons, said the families of Bright Horizons students would be the most likely of anyone to offer them new jobs. He argued that it doesnt matter whether the company routinely enforces the clause its mere presence would discourage job offers, thereby keeping a lid on workers pay.

One of the key pieces of leverage that a worker has is the ability to go work somewhere else, Seligman said. Even the threat of doing that gives workers the bargaining power to obtain better wages and decent working conditions.

Recent data suggests employers are facing increased competition for child care workers. Even though U.S. employment overall has surpassed pre-pandemic levels, there are still fewer child care workers now than in early 2020. Many workers appear to have left the field for more lucrative options. The industry is notoriously low-paying, with an average U.S. wage of a little more than $13 per hour , according to the Bureau of Labor Statistics.

Bright Horizons said in its most recent annual report that increased competition for workers, particularly for teaching staff, could slow its growth and hurt enrollment at its centers. We may continue to experience difficulty in attracting, hiring and retaining qualified teachers due to tight labor pools, the company said.