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, collection fees, or the ability to withhold final paychecks and retirement balances.
Our Work on TRAPs:
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.
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:
Freight haulers draw rookie drivers by promising to get them licensed. The obligation that follows, one lawyer says, amounts to indentured servitude.
Under these agreements, workers who quit their jobs or are fired within a set time period are required to pay their employers money, ostensibly, to offset the costs of training.
The Biden administration plans to crack down on employer-mandated training repayment agreements that can saddle workers with thousands of dollars in debt when they leave jobs.