On April 23, 2024, the Federal Trade Commission (FTC) issued a final rule that bans the use of traditional and de facto non-compete agreements, which includes stay-or-pay contracts. Stay-or-pay contracts take many forms. Use of these de facto non-competes has increased rapidly, serving as substitutes for traditional non-competes, and have come under growing scrutiny from federal government agencies and state lawmakers. One of the most common types of stay-or-pay contracts is Training Repayment Agreement Provisions (or TRAPs). TRAPs are often presented as a condition of employment and require workers who receive on-the-job training—regardless of quality or necessity—to pay back the supposed “cost” of this training to their employer when they leave their job.
Read our press release on the ban of TRAPs: Advocates Applaud the Federal Trade Commission’s Blanket Ban on TRAPs and Stay-or-Pay Contracts
Read American Economic Liberties Project’s press release on the ban of non-competes: FTC’s Ban on Restrictive Non-Competes Will Boost Wages, Unleash Entrepreneurship
See our fact sheet below for more background on TRAPs.