Anti-Worker Ruling Aims to Allow Employers to Use Training Repayment Agreement Provisions Akin to Modern-Day Indentured Servitude
August 20, 2024 | WASHINGTON, D.C. — Moments ago, a federal judge in Texas struck down the non-compete ban enacted by the Federal Trade Commission (FTC). The rule included a prohibition on de facto non-compete clauses such as Training Repayment Agreement Provisions (TRAPs), which saddle employees with debt over the purported costs of on-the-job training should they depart a job.
As a result, the nationwide non-compete ban will no longer go into effect as planned on September 4, 2024.
In response, Chris Hicks, Senior Policy Advisor at the Student Borrower Protection Center (SBPC) issued the following statement:
“Another day, another extreme judge taking cues from the far-right and ignoring precedent and the rule of law. The FTC’s non-compete ban is a lawful and necessary solution for protecting workers from coercive employment. This judge’s ruling will allow predatory corporations fixated on profit above all else the freedom to shake down workers for every last cent simply for trying to live healthy and happy lives. But make no mistake: this court order does not prevent the FTC from taking action against companies that use abusive worker contracts. The FTC must continue to protect workers from TRAPs and other non-competes.”
Further Reading
Coalition Press Release on Non-Compete Ban Final Rule: Advocates Applaud the Federal Trade Commission’s Ban on TRAPs and Stay-or-Pay Contracts that Function as Non-Competes
Coalition Press Release on FTC Non-Compete Rule Proposal: FTC Stands With Workers and Borrowers Through Proposed Blanket Ban On Non-Compete Clauses
SBPC Fact Sheet on TRAPs: FACT SHEET: Training Repayment Agreement Provision (TRAPs), Stay-or-Pay Contracts and the Economy
SBPC report on TRAPs: Trapped at Work: How Big Business Uses Student Debt to Restrict Worker Mobility
Lawsuit against PetSmart for its use of TRAPs: Scally v. PetSmart
SBPC blog on TRAPs: “Student Debt In Disguise: How Employers are Using Predatory Debt to Hurt Workers and Hold Back Competition”
Open Markets Institute and SBPC joint blog on TRAPs: “The Nation’s Top Consumer Watchdog Can End Predatory Practices Trapping Workers in Employer-Driven Debt”
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About Student Borrower Protection Center
Student Borrower Protection Center (SBPC) is a nonprofit organization focused on eliminating the burden of student debt for millions of Americans. We engage in advocacy, policymaking, and litigation strategy to rein in industry abuses, protect borrowers’ rights, and advance racial and economic justice.
Learn more at protectborrowers.org or follow SBPC on Twitter @theSBPC.