Training Repayment Agreement Provisions, or “TRAPs,” are the latest way employers are using anti-worker contract provisions to trap workers into low-paying jobs with poor working conditions. It’s student debt, but from employers in the workplace instead of in schools.
Deep in the pages of long employment contracts, employers slip in provisions that impose huge fees on workers for bogus on-the-job “trainings” if they try to leave before an arbitrarily determined date set by the employer. The training in question can range from pre-job required education to even basic orientation programs. If workers bound by a TRAP attempt to leave their job, employers can threaten them with sky-high interest rates on the “training” money owed, attorney fees, or collection fees.
Our Work on TRAPs:
In response to the Federal Trade Commission’s (FTC) proposed rule to ban all non-compete clauses, the Student Borrower Protection Center submitted a comment applauding certain aspects of the proposal. The comment also outlines additional changes that are within the FTC’s authority to deliver on President Biden’s Executive Order on Promoting Competition in the American Economy protecting workers from employers using unfair methods of competition, and unfair and abusive practices to lock them in undesirable jobs.
A former employee filed a class-action lawsuit against a tech-training and employee-staffing agency, Smoothstack, Inc. (Smoothstack). This new lawsuit alleges that Smoothstack steals wages from employees and pushes them to sign predatory Training Repayment Agreement Provisions (TRAPs), putting them on the hook for tens of thousands of dollars in debt if they tried to leave or were fired from low-wage tech jobs working on projects for some of the largest corporations in the world.
Read our joint letter with American Economic Liberties Project, Open Markets Institute, and Towards Justice to Transportation Secretary Pete Buttigieg warning the Department of Transportation about how aviation companies are turning to TRAPs to lock aerospace workers in below-market salaries and suppress their ability to move to better-paying airlines.
Former cargo pilot filed a class action lawsuit alleging that Ameriflight, the nation’s largest Part 135 cargo airline, indebted pilots with unlawful training costs of up to $30,000 beginning in early 2020.
Our report outlines the results of an investigation into the role of “Training Repayment Agreement Provisions” (TRAPs) as a form of shadow student debt. The investigation reveals that TRAPs have become more prominent in use by major employers, which often control a large market share of their respective industry, affecting millions of workers every day.
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.
To lock workers into these debts, employers rely on a restrictive employment covenant called a “training repayment agreement provision” (TRAPs). Often buried deep inside workers’ employment contracts and used as a precondition to taking a job, TRAPs require workers who receive on-the-job training—often of dubious quality or necessity—to pay back the “cost” of this training to their employer if they leave their job before an arbitrary, fixed amount of time.
The Growing Threat of Employer-Driven Debt: Read our letter to the CFPB on TRAPs here
Read our joint letter with Open Markets Institute warning the Consumer Financial Protection Bureau about the risks these arrangements pose for both workers and markets, and called on the federal financial regulator to take immediate action.
New evidence indicates that employers nationwide are increasingly leveraging shadow student debt to trap workers into unfair contracts and substandard working conditions. In particular, a growing number of industries and employers are using bait-and-switch tactics to force workers to take on loans and debt through nefarious “training repayment agreements provisions” (TRAPs).
TRAPs in the News:
Beware the Contract Clause Loading US Workers With Debt
Nurses, retail workers, and other employees can owe thousands of dollars just for quitting their job—or getting laid off.
A PetSmart Dog Groomer Quit Her Job. They Billed Her Thousands Of Dollars For Training.
The chain claims it needs to recoup its costs for employees who leave early. Workers say the real aim is to hold their wages down.
‘Free’ Job Training Can Cost a Fortune for Employees Who Quit
Workers are required to repay thousands, even tens of thousands, in training costs if they leave too soon. In industries from pet grooming to finance, some have tried to fight back.
PetSmart offered free training. But it saddled employees with debt.
PetSmart requires employees to pay for dog grooming training and tools by taking on debt to the company, a California lawsuit alleges. The full debt is forgiven only if the employee stays at PetSmart for at least two years.