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Training Repayment Agreement Provisions (TRAPs)

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 Advocacy on TRAPs:

Read Our Letter to the FTC Calling for a Ban on TRAPs, Highlighting Their Growing Use

In a letter to the Federal Trade Commission (FTC), 20 organizations highlighted new research on the growing use of Training Repayment Agreement Provisions (TRAPs). This new research was published as the FTC continues its work on its proposed rule that would ban traditional and de facto non-competes, including TRAPs.

Read our comments in Response to the FTC’s Proposed Ban on Non-Compete and De Facto Non-Compete Clauses

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.

The Growing Threat of Aviation Training Repayment Agreement Provisions: Read our letter to the DOT on TRAPs here

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.

Advocates Call on the CFPB to Protect Workers Against Predatory Employer-Driven Debt

In a letter to the Consumer Financial Protection Bureau, the SBPC and the Open Markets Institute warn the Consumer Financial Protection Bureau (CFPB) about the risks that emerging forms of employer-driven student debt pose for workers and markets. Employers are increasingly using new types of shadow student debt such as TRAPs to trap workers in substandard working conditions. 

The letter outlines how the CFPB can use its existing authorities to hold companies accountable for using student debt as a tool to undertake abusive labor practices.

Our Investigations into TRAPs:

Stay-or-Pay: Federal Actions to End Modern-Day Indentured Servitude Across the Economy

This report by Governing for Impact, Towards Justice, American Economic Liberties Project, and SBPC provides a groundbreaking policy roadmap outlining a broad range of executive actions that agencies across the federal government must take to curb so-called “Stay-or-Pay” contracts. The Biden administration has already taken action against some of these practices, including through the Federal Trade Commission’s proposed rule prohibiting traditional and certain de facto non-compete clauses, the Consumer Financial Protection Bureau’s inquiry into employer-driven debt, and litigation by the Department of Labor and the National Labor Relations Board. The following slate of recommendations spans additional agencies and builds on previous requests from workers and advocates by adding supporting legal analysis and further policy details.

You can find a factsheet with summaries of each policy memo here.

Trapped at Work: How Big Business Uses Student Debt to Restrict Worker Mobility

This report outlines the results of an investigation by the Student Borrower Protection Center (SBPC) 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. Although employers argue that these provisions are a useful way to recoup the cost of teaching useful skills to employees who may depart sooner than anticipated, TRAPs are instead often used to trap people in poor working environments and low-paying jobs. In other words, TRAPs function in the real world as a penalty for leaving a job. And, even if this TRAP is not enforced, its presence has the power to accomplish the intended consequence of pressuring workers into staying.

The New Non-Compete: The Training Repayment Agreement Provision (TRAP) As A Scheme to Retain Workers Through Debt

Until now, civil rights groups, unions, government agencies, and academics have focused scrutiny on non-compete agreements that prevent workers from working for competitors. This criticism is deserved, and a number of state governments have passed statutes limiting traditional noncompete agreements or banning them outright, such as California’s ban. But firms seeking to keep wages down without causing mass exodus are already using TRAPs as workarounds to non-competes because TRAPs seem more justifiable but have the same end result.

Student Debt In Disguise: How Employers are Using Predatory Debt to Hurt Workers and Hold Back Competition

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).

Our Legal Challenges to TRAPs:

Judge Rules That Requiring Workers To Pay For Training Benefiting Employers Violates The Law

A federal judge denied a motion to dismiss in Fredericks v. Ameriflight, a lawsuit brought in January 2023 challenging cargo airline Ameriflight’s use of a TRAP to threaten workers with thousands of dollars in alleged training costs if they leave their jobs before the end of their contracts. The case is one of the first class actions in the country to test the legality of TRAPs—which have proliferated across the economy as a new form of non-compete agreement—under minimum wage and non-compete laws.

Former PetSmart Groomer Caught in Predatory Training Repayment Agreement Provision (TRAP) Denied Access to Justice, Seeks Leave to Appeal District Court Decision Ending Ground-Breaking Class Action

A former PetSmart groomer who brought a high-profile class action lawsuit against the giant pet retailer for using illegal TRAPs, filed for leave to appeal a decision by a federal district court forcing her to resolve her dispute through individual arbitration, effectively ending the case on behalf of groomers across California lawsuit.

“Unconscionable” Debt-for-Training Scheme Funnels Low-Wage Tech Workers to Fortune 500 Companies; Groundbreaking Class-Action Lawsuit Seeks to Void Predatory Training Repayment Agreement Provisions

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.

Major Cargo Airline Company Accused of Illegally Trapping Pilots in Up to $30,000 of Training Debt Amidst Supply Chain Crisis

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.

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

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.

TRAPs in the Spotlight:

Advocates Commend U.S. Labor Department for Taking Action to Protect Workers from Predatory Employer-Driven Debt

Read our response to the the U.S. Department of Labor (DOL) filing its first-ever lawsuit against a company for allegedly using a “stay-or-pay” contract that required employees to pay the employer if they leave their job before the end of a contract.

Federal Enforcement Officials Issue Sharp New Warning to Industry: “Workers Face Risks from Employer-Driven Debt”

Read our response to the Consumer Financial Protection Bureau (CFPB) released new findings highlighting the risks workers face from employers’ increasing use of predatory debt to trap people in abusive jobs and poor working conditions. 

FTC Stands With Workers and Borrowers Through Proposed Blanket Ban On Non-Compete Clauses

Read our response to the FTC proposed ban on non-compete agreements, including “de facto” non-compete agreements like TRAPs. This proposed rule follows years of outcry from workers, labor unions, consumer advocates, and other experts about the harms of coercive employment contracts—delivering a massive win for workers across the country. 

Consumer Financial Protection Bureau Launches First-Ever Federal Inquiry into Employer-Driven Debt

Read our response to the Consumer Financial Protection Bureau (CFPB) launched a first-of-its-kind federal inquiry into employers’ growing use of debt as a predatory tool to trap people in abusive jobs and poor working conditions.

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.

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