Don’t Scare Employees With This Employment TRAP

What is a training repayment agreement provision (TRAP)?

A training repayment agreement provision, often called a training agreement, training reimbursement agreement or training clawback, is an employment contract that says an employer will pay for an employee’s work-related training in exchange for the employee staying with the company for a set amount of time. If an employee leaves early, they may have to repay some or all of those training costs. The amount and the enforcement period depend on the employer, and many agreements use a sliding scale that decreases the repayment as the employee stays longer.

“When used appropriately, TRAPs can be a method for employers to provide employees with valuable training and other opportunities while protecting the employer from a situation where the benefit of the training leaves with the employee before the employer receives any benefit,” explained Tom Spiggle, employment law attorney at The Spiggle Law Firm and author of Fired? Afraid You Might Be?

What’s an example of a TRAP?

To see how a TRAP works in practice, imagine a scenario at the fictional company Bob’s Cars. The business has a training agreement that requires employees to repay $1,000 in training costs unless they remain with the company for at least one year after completing the program.

If the agreement uses a sliding scale, the repayment might look like this:

• Leave within the first six months: owe 100 percent of the cost ($1,000)
• Leave between six and 12 months: owe 75 percent ($750)
• Stay more than one year: owe nothing

In this setup, Bob’s Cars either recoups its investment in employee training through repayment or benefits from the employee using their new skills on the job. That’s the core idea behind most TRAPs, but whether they’re practical or ethical is another conversation.

What industries use TRAPs?

TRAPs show up across a wide range of industries, but they’re most common in fields where training is expensive, specialized or in short supply. 

• Highly skilled industries: TRAPs first appeared in high-skilled, high-wage sectors such as technology, finance and securities, where employers wanted to protect their investment in specialized training. “The industry that has most commonly used and benefited from TRAPs is high-skilled and high-waged tech employees that require specialized and expensive training,” noted Pete Potente, international business attorney and CEO of POTENTE. “The tech industry… want[s] to ensure a return on their investment.”
• Healthcare: Healthcare is another field where TRAPs have long been used. “This training sometimes leads to portable certifications that an employee can use to find other employment,” Spiggle explained. “TRAPs are a way for employers to avoid taking a loss when an employee leaves before a certain time period.”
• Other industries: But over the past decade, TRAPs have expanded into low- and moderate-wage industries, including roles disproportionately held by women, immigrants and people of color. “Unfortunately, TRAPs are becoming increasingly common in the beauty, trucking and nursing industries,” Potente noted. “The trainings in these industries are typically company-specific and non-transferable, making the TRAP predatory.”

Several of these sectors are also facing severe staffing shortages, which can drive TRAP usage even higher. According to the 2024 IRU Global Truck Driver Shortage Report, the worldwide trucking industry is short more than 3 million drivers. Healthcare systems, meanwhile, report nursing vacancy rates of about 10 percent nationwide, averaging 47 RN openings per hospital. 

With this kind of pressure, some employers use TRAPs as a retention strategy, offering “free” training with strings attached if the worker leaves too soon. 

Are TRAPs legal?

Training repayment agreement provisions can be legal, but whether they’re enforceable depends heavily on the details. Courts and regulators look at things like the type of training, the employee’s role, the real cost of the program and whether the repayment amount is reasonable.

What makes a TRAP more likely to hold up?

For a training reimbursement agreement to be enforceable, it generally needs to meet a few key standards:

• The training must provide real value to the employee beyond the skills they need simply to perform their job.
• Participation must be voluntary. If the training is required for the role, a TRAP becomes much harder to justify.
• The agreement must be in writing and signed before the employee begins training.
• The repayment amount must reflect actual training costs, not padded fees or punitive charges.

Employers also have to consider how minimum wage and overtime laws might apply. For example, requiring a lower-wage employee to repay a large amount could effectively bring their pay below minimum wage, which makes the agreement unenforceable. Before drafting any employment contract, it’s always best to consult a business lawyer.

Federal scrutiny is growing.

Federal oversight of TRAPs has increased sharply. Here’s what’s driving the attention:

• FTC: In its 2024 final rule banning most noncompetes, the Federal Trade Commission noted that some TRAPs can be treated the same way when they function like a noncompete. A repayment clause may violate the rule if the cost is so high that it effectively penalizes a worker for leaving. The rule is currently on hold due to litigation, but the FTC’s position signals closer scrutiny of aggressive stay-or-pay agreements.
• CFPB: The Consumer Financial Protection Bureau issued updated guidance warning that TRAPs that create “employer-driven debt” may violate consumer protection laws, especially when the repayment obligation is unaffordable or traps workers in place.
• NLRB: The National Labor Relations Board has also stepped up enforcement. In its own published guidance, the NLRB explicitly lists training repayment provisions as agreements that may unlawfully restrict employee rights when they interfere with workers’ ability to change jobs.

What about state laws?

No state has issued a retroactive blanket ban on all TRAPs, but several have enacted (or are close to enacting) major restrictions.

• New York: The Trapped at Work Act, passed in June 2025, would ban employers from requiring TRAPs, but it isn’t law yet; it’s still awaiting the governor’s signature.
• California: AB 692, signed in 2025 and in effect as of January 1, 2026, prohibits employers from including stay-or-pay provisions like TRAPs in new employment contracts.
• Colorado: In Colorado, TRAPs are allowed only under the state’s restrictive covenant rules and must be reasonable, tied to actual training costs, and fully disclosed to employees upfront before they accept the job.
• Connecticut: In Connecticut, TRAPs can be enforced only for specialized, portable, industry-recognized training; employers can’t recover costs for routine employee onboarding or job-specific instruction.
• Other states: At least 10 additional states have introduced or advanced bills to curb or ban TRAPs outright. Many others are exploring similar proposals, creating fast-moving momentum at the state level even as federal rules continue to evolve.

What are the advantages of using TRAPs?

TRAPs can sound controversial, and their enforceability varies by state. Still, when they’re structured fairly and used transparently, they can offer real business benefits, especially for employers investing heavily in employee development. Here are the top advantages: 

1. They improve talent acquisition and reduce early turnover.

Being clear about training opportunities and any related repayment terms helps attract candidates who see the job as a long-term commitment. That kind of self-selection brings in applicants who want to grow with your company instead of treating the role as a short stepping stone.

That matters for a simple reason: Losing people early gets expensive fast. The Work Institute’s 2025 Retention Report estimates that replacing an employee costs about 33 percent of their salary, and SHRM reports a median cost-per-hire of $1,200 for nonexecutive roles and $10,625 for executive roles, depending on the position and industry. Once you factor in employee recruitment time, onboarding and lost productivity, a single departure can set a business back significantly.

TRAPs won’t fix retention issues on their own, but they can help protect the investments you make in the hiring process, especially in roles with long ramp-up periods.

2. They help protect your training investment.

Training costs continue to rise across industries. According to the 2025 Training Industry Report, companies spend an average of $874 per learner. Retailers and wholesalers spent the most per learner at $1,046, followed by service organizations at $944. Small companies spent about $1,091 per learner, midsize companies averaged $782, and large corporations came in at $468. Specialized or advanced skills can drive these costs even higher. 

For organizations that offer various business certifications or specialized skills training, TRAPs can provide a reasonable safeguard against employees quitting too soon. Either the employee stays long enough for you to benefit from their new skills, or they repay some of what you invested in their development. When structured fairly, this setup can be a genuine win-win: You gain a newly trained worker or receive reimbursement for part of the training cost if they leave early.

3. They set clearer expectations on both sides.

When TRAPs are built with reasonable terms and clear expectations, they can actually improve employer-team relationships and benefit both sides. Employees learn valuable business skills and earn credentials that can help their careers, and employers benefit directly from their team members’ knowledge and work. 

Of course, TRAPs shouldn’t be a company’s only retention strategy. Businesses must still work on improving the workplace culture, providing fair employee compensation packages, and offering professional growth opportunities, or they’ll risk turnover spikes after the TRAP agreements end. Perhaps even more damaging, if employees feel you “trapped” them in an unfair arrangement, word can spread quickly and damage the organization’s reputation among job seekers.