Regulators Looking at Training Repayment Agreements
Some workers who choose to leave their jobs face legal action for violating their training repayment agreements (TRAs) with their employers -- and regulators are moving to do something about that, The New York Times reported.
TRAs -- also derisively known as TRAPs, for training repayment agreement provisions -- provide skills or credentials specific to an employer’s needs, unlike a degree obtained from an outside institution. They also differ from arrangements in which employers pay part of an employee’s tuition from an outside institution.
Nearly 10 percent of workers who participated in a 2020 study by the Survey Research Institute at Cornell University reported being covered by a TRA, The Times reported. They are more common in the nursing field and the trucking industry; one survey by National Nurses United found that nearly 40 percent of nurses who had joined the profession in the last decade were covered by them.
Ashley Tremain, an employment lawyer in Texas, told The Times that she noticed the practice take off about five or six years ago, and now hears from workers about TRAs a few times a month. “They’re just becoming ubiquitous as people are trying to find creative ways to move around noncompete restrictions,” she said, referring to agreements that prevent workers from leaving to work for a competitor or starting a competing business for a period of time after employment. The Federal Trade Commission has proposed a rule that would ban the practice.
Employers see TRAs as a way to improve retention and prevent paying for training employees who then leave soon after.
“When the training is required by the employer, that is the employer’s cost of doing business, and they can’t force the employee to bear that cost or to reimburse that cost,” Dan Pyne of Silicon Valley law firm Hopkins & Carley, who has written TRAs and represented employers enforcing TRA contracts, told The Times. “But when the employee is going through the training voluntarily, primarily for their own benefit, in those situations, as a rule, the repayment obligation would be enforceable, and would be legal.”
In addition to the FTC, other regulators are taking action. In July, the Consumer Financial Protection Bureau (CFPB) released the findings of a yearlong study on employer-driven debt, saying it “poses the risk of suppressing wages and forcing workers to stay in jobs they do not want” and that “trainings may have greatly inflated valuations.”
Earlier this month, the National Labor Relations Board (NLRB) announced that it had filed a consolidated complaint against Juvly Aesthetics, a chain of med spas, for labor violations in Ohio and Wisconsin. Among other violations, the complaint said, the company tried to illegally recoup $50,000 and $60,000 in training fees from former employees.