Drew Lakey quit her job as a physician assistant at the Skin and Cancer Institute in Delano, California, in November. She gave four months’ notice.
In late August, her former employer sued her, claiming she owed the company more than $138,000. The Skin and Cancer Institute was trying to make her repay $38,000 in training costs and more than $100,000 for “loss of business” caused by the company’s inability to transfer Lakey’s responsibilities to someone new.
Lakey had signed a training repayment agreement, or TRA, when she was hired. The contracts require workers to pay back training costs if they leave their jobs before the end of a certain period. The agreements are frequently presented late in the hiring process as a take-it-or-leave-it provision: No TRA, no job.
Lakey’s contract stated she would receive $50,000 worth of on-the-job training, a sum she’d be required to pay back on a prorated basis if she quit before 2025. The company didn’t explain the figure, which is more than the average cost of tuition for a year of physician assistant school. But in a complaint, the Skin and Cancer Institute said Lakey had agreed to the TRA because it was providing her with a “high value” training.
The numbers didn’t make sense to her, but Lakey said she hadn’t seen the training repayment provision as a big risk at the time. “I thought there was nothing that could happen that would make me want to leave the contract early,” she said.
At the start of her job, Lakey, then 26, went through a three-month training period that involved shadowing another physician assistant while earning a reduced salary. Not long after she started, Lakey realized she wanted to leave but was afraid if she quit that she would be on the hook for tens of thousands of dollars. She quit anyway after deciding the company wasn’t a good fit.
The Skin and Cancer Institute did not respond to multiple requests for comment.
Nearly 10% of workers who participated in a 2020 study by the Survey Research Institute at Cornell University reported being covered by a TRA. The arrangements are especially common in the nursing field and the trucking industry; one survey by National Nurses United found that nearly 40% of nurses who had joined the profession in the last decade had been subject to the practice.
Ashley Tremain, an employment lawyer in Texas, said she noticed the practice take off about five or six years ago, and she now hears from workers about TRAs a few times a month.
“They’re just becoming ubiquitous,” she said, “as people are trying to find creative ways to move around noncompete restrictions,” which are gaining traction at the state and federal levels.
Tremain tends to hear from people after they’ve quit their jobs and received a letter from their former employer stating that they owe money for training. The most common dollar value she sees listed is $20,000. Enforcement can seem random at times, and Tremain said some employers seemed to send a relatively small proportion of cases to court or to debt collectors.
Who Uses Training Repayment Agreements
Employers see TRAs as a way to improve retention and prevent paying for training employees who then leave soon after.
Dan Pyne, a lawyer with Hopkins & Carley, a law firm in Silicon Valley, who has written TRAs and represented employers enforcing TRA contracts, said companies who came to him tended to fall into two categories: One group is made up of employers looking to shift some of the costs of their operations to employees, which is not legal in California. The other group is employers looking to help employees gain new skills that will serve them later on in their careers. This second type of TRA is more legally enforceable.
“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,” Pyne said. “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.”
The owner of Oh Sweet Skincare in Bellevue, Washington, sued a former employee for $2,244 — a sum that included $1,900 in training reimbursement and expenses related to a work conference. The employer, who asked not to be named for fear of harassment, said that she enforced the TRA because employees who bounced from job to job were detrimental to small businesses like hers and that she lost money on spending time to train new employees. She does not ask experienced employees to sign the agreements, she said, if they can prove they know the skills required to perform the services.
But regulators have begun to take action on the legality of TRAs. In the last year, the Biden administration has moved to limit the agreements. The Federal Trade Commission has proposed a rule that would ban most noncompete clauses, including many TRAs. In July, the Consumer Financial Protection Bureau 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.”
On Sept. 7, the National Labor Relations Board 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.
Chris Hicks, a senior policy adviser for the Student Borrower Protection Center, a nonprofit, called the move “the clearest example yet of the Biden administration seeking to declare TRAPs unlawful.” (TRAs are frequently referred to by advocates as training repayment agreement provisions, or TRAPS — an acronym that has been adopted by regulatory agencies like the FTC and NLRB.)
At the state level, Connecticut has banned most TRAs since 1985, and Colorado recently passed a law that limits the practice. Additional bills have been introduced in California, Pennsylvania and New York.
Lawsuits Pile Up
Training repayment agreements have been around for decades, but the last few years have seen a flurry of lawsuits in which employers raise the stakes by taking former employees to court.
In the aviation industry, Florida-based Southern Airways Express has sued 60 former pilots since May, arguing that they owed up to $20,000 for training in jobs that paid $12 to $21 per hour. Last year, Bloomberg Businessweek identified hundreds of lawsuits filed by staffing agencies against health care workers who quit or threatened to quit.
Critics say companies that impose TRAs don’t necessarily plan on recouping training costs and use them as a way to discourage employees from leaving within the first few years of employment. Trisha D’Allaird, a 43-year-old cosmetologist in New York, said an ex-employer posted a copy of a lawsuit filed against former employees for TRA violations in the employee break room.
In 2020, Madison Birch got a job offer in Augusta, Georgia, in intraoperative neuromonitoring, a career that involves monitoring patients’ nervous systems in real time during surgery. The offer was exciting: She had been applying to work at SpecialtyCare, a contractor that works with hospitals to provide operating room support personnel, for over two years. The company sent her to a two-week training session and promised to offer supervision and mentoring in the field as she worked toward passing a board certification exam. Her salary started at $35,000 and would increase substantially when she passed the exam.
The job wasn’t what she expected; the surgeries were long, and she couldn’t step away, even for bathroom breaks and personal emergencies.
Birch, 26, quit her job in November without passing her board certification exams. She had been afraid to leave, having heard horror stories of former co-workers hounded by debt collectors or sued by SpecialtyCare. But she had reached her breaking point.
“I told myself mentally that I could never work for anybody that made me hate what I did,” she said.
In February, SpecialtyCare sued Birch for $30,000 to recoup training costs. According to a complaint filed against SpecialtyCare by former employees, the company’s TRA included a stipulation saying the amount of money owed increased after the training was complete, up to a certain point. If Birch had left SpecialtyCare after six months, she would have owed $15,000. If she had left after a year, when she finished her training, she’d owe $20,000. The number kept growing — to $25,000, then $30,000 — as she stayed at the company longer. Birch’s TRA ended after three years, and she quit between the two- and three-year mark.
The lawsuit is ongoing. SpecialtyCare did not respond to requests for comment.
In some cases, on-the-job training covered by a training repayment agreement does result in a certification or provide employees with skills that are transferable to another job. Under the Fair Labor Standards Act, employers can’t require employees to bear expenses that are primarily for the benefit of the employers. It is legal, for example, for a management consulting firm to pay for an employee to complete an MBA degree and require the worker to return to the company upon graduation; the employee can take the degree along when leaving, and it can help find more work.
Rachel Dempsey, a lawyer for Towards Justice, a nonprofit law firm, said that was different from a practice at PetSmart, which she said had tried to recoup training costs from employees at its in-house grooming academy. No state requires pet spa technicians to obtain licenses. Dempsey’s firm sued PetSmart last year.
“I feel like we have caught the problem, and we’re in a moment where we can fix it, and I hope we can take those next steps,” said Hicks, the policy adviser. “But it will take multiple arms of the federal government and state governments cracking down on these problems, and it’s going to take coordination between all of the above.”
