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Updated Apr 04, 2024

Don’t Scare Employees With This Employment TRAP

Are training repayment agreement provisions legal – and worth it? That depends.

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Skye Schooley, Senior Lead Analyst & Expert on Business Operations
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All business owners strive to retain their employees to maintain productive, well-staffed companies. But doesn’t it feel better knowing your employees are staying with your company because they want to, not because they have to? Of course it does. But in the wake of the Great Resignation, a tight labor market and recent “quick quitting” trends, some employers around the U.S. have found a way to TRAP employees into staying with their organizations – by using training repayment agreement provisions (TRAPs).

 Although these contracts are intended to help employers recoup costly training expenses if a new employee resigns soon after receiving company-sponsored training, a training repayment agreement can also have negative and scary consequences, like forcing low-wage workers to stay in a role out of financial necessity. Plus, there is an ongoing debate on whether these provisions should even be legal. Below, we break down everything to know about this TRAP.

What is a training repayment agreement provision (TRAP)?

A training repayment agreement provision, also referred to as a training agreement, a training reimbursement agreement or a training clawback, is a type of employment contract that asserts an employer will cover the cost for an employee to receive work-related training in exchange for the individual’s continued employment. If the employee leaves the company before a designated time, they are responsible for repaying the business for the cost of their training. TRAP fees and enforcement periods vary based on the employer, but they typically work on a sliding scale.

What’s an example of a TRAP?

To better understand what a TRAP is, consider this example: At (the fictional) Bob’s Cars, the company’s training agreement requires employees to repay $1,000 in training costs unless they remain employed with the organization for at least one year after the completion of training. 

If this training agreement uses a sliding scale, it might require an employee to repay 100 percent of the training costs ($1,000) if they quit within the first six months of training completion, 75 percent ($750) if they leave within six to 12 months, and ultimately zero if they stay with the company for more than a year after training completion. This way, the owner of Bob’s Cars is recouping their investment, literally or figuratively, whether the employee quits and pays back the money or puts their new skills to use for the business.

What industries use TRAPs?

TRAPs are becoming more common. About 10 percent of U.S. workers surveyed in 2020 were subject to training repayment agreements, the Cornell Survey Research Institute told Reuters.  When TRAPs first came about, they were often used to recoup specialized training costs for higher-skilled and higher-wage workers, such as technology employees and securities brokers. However, the use of TRAPs has since expanded to low- and moderate-wage industries, including underpaid jobs that are disproportionately held by women, immigrants and people of color.

Some industries increasingly reliant on training repayment agreements include health care, transportation, retail and hospitality. These fields are often rife with staffing shortages and high employee turnover, and some sectors (e.g., trucking) have notoriously harsh working conditions and low wages. So employers in these industries use TRAPs to entice staffers to stay with their companies: Keep working with us after your cost-free training or leave and pay us the debt you now owe.  

FYIDid you know
The Bob's Cars example above represents a minimal expense compared to some real-life TRAPs that have been enforced. In USS POSCO Industries v. Floyd Case, an entry-level laborer was responsible for paying back the majority of a $30,000 training reimbursement agreement upon quitting and breaching the contract.

What are the advantages of using TRAPs?

Although training repayment agreement provisions might sound like sketchy business behavior and their enforceability can vary, there are some solid benefits of incorporating them into your company’s HR policies.

  1. Candidate screening. Mentioning TRAPs in your job description can act as a screening measure to ensure only candidates who are seriously interested in your job opening apply and accept the position. Even if an organization never actually goes through with enforcing the repayment agreement, just the possibility of owing thousands of dollars down the line can help weed out candidates who aren’t necessarily serious about the position or your company long term.

If you look at TRAPs from a recruitment and retention perspective, it makes sense. Job-hopping has become extremely common as employees have the upper hand in a tight labor market, and the cost to hire and train an employee isn’t cheap. SHRM‘s 2022 benchmarking data revealed that the average cost per hire is nearly $4,700, although the cost of a bad hire can be three or four times the position’s salary. Using TRAPs may be a cost-effective way of securing quality workers.

Did You Know?Did you know
According to business.com's research on employee satisfaction, more than 60 percent of currently employed workers are seeking new jobs or will start job searching within the next six months.
  1. Recouping costs. Perhaps the most obvious reason why some employers are having workers sign training repayment agreements is to do just that – get repaid for expensive training costs. The average cost of training an employee in 2022 was $1,207, according to Training magazine. For organizations that want to provide highly specialized or extensive training, that figure can be much higher, and if you’re a company that sees high levels of employee turnover, these expenses can add up quickly. 

It’s in your financial interest to try to get your money back if the employee you’ve invested in doesn’t continue providing services for your business, and TRAPs make that possible. The situation can even be seen as a win-win overall – you’ll either get the benefit of employing a newly skilled worker or you’ll be reimbursed for the training you provided them.

  1. Retaining workers. It’s arguably fitting that the acronym for a training repayment agreement provision is TRAP because it can often trap employees in their jobs, especially low-level workers who can’t afford to repay training costs. While that is perhaps a sinister spin on these contracts, they can also serve as positive motivators for employees to stick with your company. Some staffers may be genuinely appreciative of the opportunity to receive free training with the comfort of knowing you’re both looking for a long-term employment relationship. [Read related article: Reasons Employees Quit and How to Prevent It]

If an organization is experiencing high turnover and doesn’t want to take measures such as increasing wages or improving working conditions to retain employees, having new workers sign TRAPs could be a tempting solution. However, you don’t want TRAPs to scare away prospective or existing team members, either. The key, then, is presenting the training agreement as a mutually beneficial opportunity and not as, well, a trap. If you do try to use TRAPs to punitively force people into staying with your company, word of your penalty may spread – and tank your business’s reputation among the workforce in the process.

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Skye Schooley, Senior Lead Analyst & Expert on Business Operations
Skye Schooley is a dedicated business professional who is especially passionate about human resources and digital marketing. For more than a decade, she has helped clients navigate the employee recruitment and customer acquisition processes, ensuring small business owners have the knowledge they need to succeed and grow their companies. In recent years, Schooley has enjoyed evaluating and comparing HR software and other human resources solutions to help businesses find the tools and services that best suit their needs. With a degree in business communications, she excels at simplifying complicated subjects and interviewing business vendors and entrepreneurs to gain new insights. Her guidance spans various formats, including newsletters, long-form videos and YouTube Shorts, reflecting her commitment to providing valuable expertise in accessible ways.
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