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Press Press Releases PetSmart Traps Low-Wage Pet Groomers in Abusive Training Debts; Groundbreaking Lawsuit Seeks to Block Retail Giant’s Predatory Lending Scheme

PetSmart Traps Low-Wage Pet Groomers in Abusive Training Debts; Groundbreaking Lawsuit Seeks to Block Retail Giant’s Predatory Lending Scheme

New Lawsuit Alleges Unlicensed PetSmart “Grooming Academy” is a For-Profit College Operating Illegally in California, All Groomer Debt Owed to PetSmart in California is Unenforceable

July 28, 2022 | San Mateo, CA — Today, BreAnn Scally, a former PetSmart pet groomer filed a groundbreaking class action lawsuit against the retail pet supply giant, alleging that the firm is engaged in a scheme to trap trainee pet groomers in their low-wage jobs by levying thousands of dollars in abusive and unenforceable debts against them. These illegal debts arise from Training Repayment Agreement Provisions (TRAPs)—contracts that put workers on the hook to repay employers for costs associated with worker training or education. Although these predatory contract terms have existed for decades, TRAPs have become more common across the economy, as companies look for new ways to undermine worker bargaining power. Ms. Scally is represented by Towards Justice and Jubilee Legal, with support from the Student Borrower Protection Center (SBPC).

Today’s lawsuit alleges that PetSmart uses a TRAP to limit groomers from seeking out better working conditions, locking low-wage workers for years into high-volume groomer jobs that can be grueling and dangerous. For groomers who quit within two years of training, PetSmart may use debt collectors to pursue them for training debts that can total more than $5,000.

The complaint alleges that, whether PetSmart’s TRAPs are analyzed under employment or consumer law, they are illegal. If the training PetSmart provides its employees is primarily job training for PetSmart’s own benefit, then employment law prevents that cost from being passed off on workers. And if the training provides groomers with transferable skills for personal use, then PetSmart is operating an unapproved for-profit college illegally in California, and seeking to collect on an unlawful and unenforceable debt. Either way, the effect is that workers may be trapped in their jobs against their will, unable to exercise their fundamental right to control who they work for.

A copy of the complaint in Scally v. PetSmart, filed today in Superior Court of the state of California, is available here.

A copy of a sample PetSmart TRAP is available here.

“PetSmart needs to come up with a better way for employees to want to become better groomers instead of trapping them with unfair debt,” said BreAnn Scally, a former PetSmart groomer in Salinas, California and the plaintiff in Scally v. PetSmart. “I had gotten my credit score up, and now I have to start all over again. It’s brought me back down to square one.”

“PetSmart is just another company cynically engineering new forms of student debt as a tool to trap workers,” said SBPC executive director Mike Pierce. “Rather than compete on wages and benefits in a tight labor market, PetSmart turned to contractual tricks to lock its employees into a hamster wheel of financial harm. Today’s action should send a clear warning to anyone interested in turning on-the-job-training into a debt trap: keep your paws off working people’s livelihoods.” 

“The ability to move between jobs for better working conditions or higher pay is one of the best tools workers have to protect themselves and seek out a better life,” said Rachel Dempsey, an attorney at Towards Justice. “Debt traps like PetSmart’s exploit employer power to punish workers for exercising their basic right to choose where they work.”

“PetSmart runs its Grooming Academy like an old-fashioned company store, keeping its employees on a short leash by keeping them in debt,” said Sparky Abraham, founder at Jubilee Legal. “PetSmart’s employee debt TRAP is unlawful, and it’s past time for them to clean up their act.”

NEW REPORT SHOWS RAPID RISE IN TRAPS ACROSS THE ECONOMY

Today, the SBPC also released a new report documenting the widespread and accelerating use of TRAPs by employers across the economy, including trucking companies, hospital operators, retailers, and financial services firms. The SBPC estimates that major employers rely upon TRAPs in segments of the U.S. labor market that collectively employ more than 1-in-3 private-sector workers.

A copy of SBPC’s new report on TRAPs, TRAPPED AT WORK, is available here.

Firms ranging from hospitals to roofing contractors are harnessing risky and lightly regulated credit products to stifle competition and trap working people in low-paying, substandard employment conditions. These firms’ weapon of choice is “shadow” student debt, or non-traditional forms of credit used to finance higher education and job training. By trapping workers into shadow student debt, employers belie the promise of on-the-job training and ensure that workers will face massive financial consequences if they exercise their right to find work elsewhere.

NEW CAMPAIGN SEEKS TO CONNECT WORKERS HARMED BY TRAPS WITH FEDERAL REGULATORS

In conjunction with today’s lawsuit and this report, the SBPC is partnering with United for Respect to launch a new campaign to connect individual workers—including current and former PetSmart Groomers—with federal regulators.

Earlier this year, the CFPB announced a public inquiry into “employer-driven debts,” including TRAPs. Today, SBPC launched a new campaign to connect PetSmart groomers and other workers with the federal financial regulator, setting the stage for a federal crackdown on these abusive contracts.  

Workers harmed by employer-driven debt, including TRAPs, can share their story with the CFPB here.

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About Student Borrower Protection Center

The Student Borrower Protection Center (SBPC) is a nonprofit organization focused on alleviating the burden of student debt for millions of Americans. The SBPC engages in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance economic opportunity for the next generation of students.

Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.

About Towards Justice

Towards Justice is a nonprofit legal organization that uses impact litigation, policy advocacy, and collaboration with workers and worker organizations to build worker power and advance economic justice.

Learn more at towardsjustice.org or follow Towards Justice on Twitter @TowardsJustice.

About Jubilee Legal

Jubilee Legal is a debtor and consumer rights law practice based in Oxnard, California, and focused on helping people understand their rights, overcome the stigma of debt, and exercise collective power in the financial system.

Learn more at jubilee.legal or follow Jubilee Legal on Twitter @JubileeLegal.

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