Bill would outlaw making some lower-wage workers pay cost of training

ALBANY — Some employers are requiring new hires making low wages to commit to paying thousands of dollars for their training, which researchers and advocates say can trap workers in jobs in a new twist on indentured servitude.

The practice that employers call training reimbursement agreements has long been used in law, finance and science, and for airline pilots, engineers and other high-paying fields. But it has become more common in retail, food service, trucking and some other fields within the last five years, according to state and national researchers.

These agreements — which opponents refer to as TRAPs, or training repayment agreement provisions — can saddle an employee with debt even if the worker quits or is fired before a set period of months or years.

For employers, the agreements are a way to pay for training and to keep trained employees from quitting and using the skills for a competitor. The agreements also can reduce turnover in an economy with low unemployment rates. The practice gained traction after the wave of resignations during and after the COVID-19 pandemic, which prompted many workers to seek better jobs or drop out of the workforce.

A bill in New York with powerful sponsors — State Sen. Rachel May (D-Syracuse) and Assemb. Phil Steck (D-Schenectady) — would outlaw that practice. The proposed trapped-at-work act prohibits “reimbursement clauses or promissory notes as a condition of employment.” The bill is active for the current legislation session scheduled to end Thursday.

The bill doesn’t affect fields with “true training that must be paid for” or under other more traditional and fair uses of the practice such as those negotiated in labor contracts.

Training reimbursement agreements are becoming more common, said Jonathan F. Harris, a professor at the Loyola Law School of Los Angeles who has studied the practice. “Especially over the last five years, these have really trickled down to all levels of the economy.”

Harris said researchers estimate that major companies that employ more than a third of all private-sector workers rely on such agreements.

“These are workers who literally cannot afford to leave their job. It brings up constitutional issues,” Harris said. “Advocates have called it debt bondage and indentured servitude, which brings up constitutional concerns.”

“I’m excited about the New York legislation,” Harris said. “I think it could make a big difference.”

Steck said he pursued the bill because of the experience of Trish D’Allaird of Niskayuna.

D’Allaird told Newsday she took a 20-hour-per-week job that paid slightly over minimum wage plus commissions “just for the fun of it.” She took a class on eyelash extensions from the company and, with some concern, signed the agreement to work there.

“What’s a year?” she said she figured. “It’s just for the fun of it.”

But she quit in 2022 after four months over what she called poor working conditions. Now she is being sued by the company for $5,000 in training costs. She said her lawyer advised her not to identify the company.

“I can understand, as an employer, putting something like this in place to protect them and get employees to stay longer. But if they need to put these things in place to force them to work, that’s not healthy,” she said. “It is not OK for someone to force you into a job.”

Steck said he sees a pattern.

“I think what we’ve seen all over is a return of very abusive employment practices as labor law has gotten whittled away by more conservative judges,” Steck said. “We are starting to see employers taking more advantage of employees.”

“There may be a case for someone making a huge amount of money, but for an average person, these are really abusive,” he said. If the bill isn’t passed this week, he added, it will be a priority for him in the 2024 session beginning in January.

May didn’t respond to a request for comment.

Business groups in Albany, Manhattan and on Long Island said they were unfamiliar with the practice and the bill. They had no comment.

The federal Consumer Financial Protection Bureau is in the midst of an inquiry.

“The labor market operates at its best when workers are able to move freely within it,” said Rohit Chopra, director of the federal agency. “Our inquiry is about studying the effects of an emerging form of debt that may have the potential to trap employees in place.”

Meanwhile, Harris said laws haven’t caught up to the practice.

“It has a chilling effect,” Harris said. “For every one case you see, you can bet there are thousands of other workers who are working under the presumption that the TRAP is going to be enforceable, and so they can’t quit … If it’s about retaining workers, there are other ways to do that, like making the workplace more hospitable or paying them more.”

Correction: Researchers estimate that major companies that employ more than a third of all private-sector workers rely on agreements requiring workers to pay for training if they leave the job within a certain period, according to Jonathan F. Harris, a professor at the Loyola Law School of Los Angeles. A previous version of this story misstated the number of employees covered by such agreements.’

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.