State TRAPs Legislative Toolkit
No one should have to worry about facing a crushing financial penalty just because they had the audacity to quit their job. But across the country, millions of workers are finding themselves in this exact situation.
Firms ranging from hospitals to roofing contractors are harnessing a predatory tool known as “Stay-or-Pay” contracts in an attempt to evade state and federal worker protections, including state-level bans on non-compete agreements. One of the most common types of stay-or-pay contracts is Training Repayment Agreement Provisions (or TRAPs). Stay-or-pay contracts are forced on workers as a condition of employment, allowing corporations to use the threat of debt collection or litigation to lock workers in place, limiting workers’ mobility and bargaining power. When they do leave, workers are hit with a crushing financial penalty just because a worker had the audacity to quit their job. For the vast majority of workers, the threat of debt, or even debt collection litigation brought by employers, becomes a form of modern-day indentured servitude—keeping them trapped in jobs with low wages and bad working conditions.
But momentum is growing among state and local lawmakers and regulators to crackdown on these practices. The goal of this legislative toolkit is to provide state advocacy organizations and lawmakers with the tools and information needed to protect workers from these nefarious employment terms, and share important lessons learned from previous legislative campaigns.
BACKGROUND
Stay-or-pay contracts take many forms. Use of these functional non-competes has increased rapidly, serving as substitutes for traditional non-competes, which have come under growing scrutiny from federal government agencies and state lawmakers. TRAPs, which have become increasingly common since the COVID-19 pandemic, are often presented as a condition of employment and require workers who receive on-the-job training—regardless of quality or necessity—to pay back the supposed “cost” of this training to their employer when they leave their job. In other types of stay-or-pay contracts, employers have demanded departing employees pay them for not providing a 4-month notice of resignation, the salary of their replacement, liquidated damages, or even “lost profits.”
Legal scholars have expressed concern that TRAPs may be even more effective at limiting or blocking workers from leaving their jobs than traditional non-competes, particularly for low-wage workers who can’t afford to pay their employer a substantial sum to quit. While traditional non-competes aim to limit workers from departing for a competitor, TRAPs and stay-or-pay contracts may be enforced against a departing worker for any reason, including to navigate personal hardship such as a family health crisis or a childcare shortage.
There is both an opportunity and a dire need for state and local lawmakers to take action against these practices. Although the Biden-Harris Administration has successfully deployed a whole-of-government approach to combat TRAPs and stay-or-pay contracts, legal challenges threaten to undo much of this work. Even if federal protections remain, they are often limited in their jurisdictions, allowing entire industries to continue to lock workers in their jobs through the threat of debt. States and localities should build on the work of the Biden-Harris Administration and codify these workplace protections—namely, prohibiting these practices—and vigorously enforce these laws where they exist.
MODEL LEGISLATION
You can find our model legislative template here. For lawmakers updating existing protections or needing to implement these protections piecemeal, we believe that the key points in this bill are:
Defining stay-or-pay
The bill broadly covers any debt owed by a worker to an employer if that worker seeks to leave his or her employment. It takes this approach, rather than focusing narrowly on specific kinds of debts, such as TRAPs, to ensure that employers cannot circumvent these protections by styling the debt in a different manner.
Who is covered
The bill covers both employers and workers, and broadly defines both groups. These definitions are likely more comprehensive than existing state law definitions for “employer,” “employee,” or “worker,” and should be adopted as drafted, rather than substituting in existing definitions. If the bill’s protections only apply to traditional W2 employees, for example, employers may shift their workforce to more independent contractor labor as a strategy to evade coverage.
City and state enforcement
The bill provides for broad public enforcement and for concurrent authority across several offices. At a minimum, these worker protections should be enforceable by both state attorneys general and by state labor commissioners. Additionally, county and municipal governments often have local labor standards or worker protection offices, to which the bill would also give enforcement authority. County and city prosecutors offices are also important stakeholders that the bill empowers to protect workers.
Private right of action
Private rights of action—the ability for private individuals who have been harmed to enforce their own rights in court—are critical for any worker protection to be meaningfully enforced. Although labor commissioners and attorneys general are powerful public enforcement offices, they have limited staffing and budgets, which practically reduces their ability to protect all workers. Enabling affected workers to represent themselves and similarly situated workers complements the public enforcement powers and ensures greater compliance. The bill’s private right of action includes a fee-shifting provision, which requires any employer who is found by a court to have violated the law to pay for the worker’s litigation costs and attorneys fees. Fee shifting is an important tool that allows low-income workers to find legal representation, since the lawyers can be confident that they will be paid by the losing side. This also incentivizes workers and lawyers only to bring meritorious cases.
LEGISLATIVE TRACKER (2025)
Bills have been introduced to prohibit the use of TRAPs coast to coast, with three states having passed legislation directly affecting the use of TRAPs, including Connecticut and California prohibiting mandatory TRAPs for at least some types of workers, and Colorado limiting the enforceability of TRAPs to narrow circumstances. This legislative tracker contains bills that have been introduced since 2020 to ban TRAPs, highlighting the different styles considered by state lawmakers, and will be updated as additional bills are filed.
State TRAPs Law Tracker
| State | Year | Bill | Status | Summary / Analysis |
|---|---|---|---|---|
| CT | 1985 | Section 31-51r – Execution of employment promissory note prohibited. View Law | Law | This bill prohibits employers from making employees sign a promissory note that states that the employee will reimburse the employer if the employee doesn’t stay at the job for a certain duration of time. It includes reimbursement for training. The bill expands the prohibition to all employers regardless of size whereas the law before only applied to employers who had 26 or more employees. The bill voids any promissory notes that fall in this category, but if included in a broader employment contract, it does not void the entire employment contract. The bill does not prohibit the employer from requiring the employee to pay back money for advances; for any property sold or leased to the employee; requiring compliance with terms for sabbatical leaves for educational professionals; or any agreements entered into by the employer and the employees’ collective bargaining rep. |
| CA | 2020 | AB 2588 View Law | Law | This bill requires the employer to pay for the expenses incurred for employer-required training or educational programs. The bill is narrow as it pertains to hospitals and those employees who provide direct patient care. There is a private right of action allowing injunctive relief, damages, and any other attorneys fees/costs. |
| CO | 2022 | HB 22-1317 View Law | Law | This bill limits the enforceability of TRAPs to narrow circumstances, specifically in which the training provided is clearly distinct from normal, on-the-job training, the employer’s recovery is limited to the reasonable costs of the training and decreases over the course of the two years subsequent to the training proportionately based on the number of months that have passed since the completion of the training, and recovery for the costs of the training would not violate federal law. |
| CA | 2023 | AB 747 View Bill | Bill | This bill prohibits an employer from requiring an employee to pay for a debt if the employee’s work relationship with the employer is terminated. Sec. 3 subdivision (c) allows this if the training-related costs are incurred pursuant to a union-affiliated apprenticeship program, or if the employee has to maintain a professional license required by the state. Interesting, but a good thing about this bill is that it includes independent contractors, which are sometimes left out of the definition of “employee”. |
| CT | 2023 | S.B. No. 21 View Bill | Bill | This bill would prohibit all employers from requiring an employment promissory note as a condition of employment, where the current law only applies to a business who has twenty-six or more employees. |
| ME | 2023 | LD 741 View Bill | Bill | This bill prohibits employers from charging employees with the cost of an employer-provided or required training as it is not a loan, advance, or debt. It does exclude state licenses or other transferable credential that is generally recognized by the relevant industry, which is similar to other bills above. |
| NJ | 2023 | A4960 View Bill | Bill | This bill prohibits an employer from requiring, as a condition of employment, any employee or prospective employee to enter into training repayment agreement. The bill stipulates that any agreement which is a training repayment agreement is void and that no employee is obligated to make payments under that agreement. |
| NY | 2023 | A6819/S6794 View Bill | Bill | This bill prohibits the use of employment promissory notes, and has a great opening public policy statement describing why this is important to have this type of law in place (e.g. free job mobility, employers incurring the costs of trainings they require). |
| PA | 2023 | House Bill 608 View Bill | Bill | This bill prohibits TRAPs explicitly and has a provision that allows a civil penalty of $25,000 per violation of the act. Any subsequent violations are subject to an additional penalty of $25,000 per employee. The bill excludes cash advances, payment for equipment sold or leased to an employee, educational sabbatical leave contracts, or TRAs entered into as part of a collective bargaining agreement. The bill prohibits using TRAPs as a condition of employment, for employees or prospective employees. |
| CO | 2024 | HB24-1324 View Law | Law | The bill grants the attorney general rule-making authority over restrictive employment agreements. |
TALKING POINTS AND FACT SHEETS
Protect Borrowers’ fact sheet on TRAPs:
TRAPs can now be found in nearly every industry in America
The use of TRAPs has exploded among workers in high-demand sectors like computer programming, entry-level finance, health care, retail and hospitality, and transportation, and can now be found in nearly every industry in America.
Surveys show the Prevalance of TRAps is skyrocketing
Earlier this year, academics released new findings about the prevalence of TRAPs, uncovering a rise in survey respondents indicating they have worked under a TRAP, from 4.1 percent in 2014 to 8.7 percent in 2020.
TRAPs are used in industries employing over 1/3 of private-sector workers
Protect Borrowers estimates that major employers rely upon TRAPs in segments of the U.S. labor market that collectively employ more than one-in-three private-sector workers.
45% of Nurses with 1-5 years of experience are bound by TRAPs
A 2022 survey conducted by National Nurses United reported that almost 45 percent of responding new nurses with between one and five years of experience were bound by TRAPs, often with repayment amounts exceeding $10,000.
RESOURCES AND INFORMATION
Academic research into TRAPs and stay-or-pay contracts
- Thise article published in the Alabama Law Review provides one of the most thorough legal reviews of TRAPs and other employer-driven debt tools: Unconscionability in Contracting for Worker Training
- This article published in Northwestern University Law Review highlights how the use of TRAPs has grown as states and localities have banned non-compete agreements: The New Noncompete: The Training Repayment Agreement Provision (TRAP) As A Scheme To Retain Workers Through Debt
- This article published on ProMarket offers the first empirical evidence of the growing use of TRAPs: First Evidence on the Use of Training Repayment Agreements in the US Labor Force
Advocacy tools and resources
- American Economic Liberties Project memorandum provides model legislation and relevant context for state lawmakers seeking to protect workers, small businesses, and consumers from the harmful effects of noncompete agreements and more: Better Wages and Working Conditions: How States Should Tackle Noncompete Agreements, “TRAPs,” and Other Restraints On Worker Mobility
- National Nurses United on how TRAPs and stay-or-pay contracts harm healthcare professionals, including a groundbreaking membership survey into these contracts: Caught in a TRAP
- Student Borrower Protection Center (Now known as Protect Borrowers) released a foundational report on the growing use of TRAPs, closely examining their rise in retail, healthcare, and transportation industries: Trapped at Work: How Big Business Uses Student Debt to Restrict Worker Mobility
Research and action from federal agencies
- The Consumer Financial Protection Bureau report highlighting the risks employer-driven debt poses to workers, and how it can impede worker mobility, particularly when it comes to obtaining higher wages: Consumer Risks Posed by Employer-Driven Debt
- The Federal Trade Commission’s final rule that would prohibit nearly all TRAPs and abusive stay-or-pay contracts that function to prevent a worker from seeking or accepting other work or starting a business after the employment: FTC Announces Rule Banning Noncompetes
- The National Labor Relations Board guidance for employees on their workplace rights related to TRAPs and their first-ever case against an employer’s use of TRAPs:
- The U.S. Department of Labor has taken action to protect workers from both TRAPs and stay-or-pay contracts:
EXAMPLE SUPPORT and OPPOSITION LETTERS and TESTIMONY
Advocates working to ban TRAPs and stay-or-pay contracts have developed great resources that can be used as a guide for letters of support and testimony, such as this New York coalition letter.
This folder contains additional examples of letters and testimony from both advocates and opponents to legislation banning TRAPs and stay-or-pay contracts.
In most states, legislation that would ban the use of TRAPs and stay-or-pay contracts is supported by labor unions, employment lawyers, antimonopoly organizations, and worker centers. Similarly, we have found consistent opposition from hospital and trucking associations. These industries often rely on TRAPs and stay-or-pay contracts to retain their workforce, rather than compete for them with higher wages and benefits, and propose amendments to state legislation that would carve out their industries from these new protections. Local Chambers of Commerce have represented these interests with state lawmakers and typically sought to slow bills rather than outright oppose them.