Training repayment agreement provisions, sometimes referred to as TRAPs, are coming under increased scrutiny. Some are not legally enforceable, depending on the amount of money owed by the employee and the state where the worker is located. The more onerous the agreements become, the more likely new laws will be passed to limit their use, if other laws passed are any barometer.
The agreements are signed by an employee upon starting work with an organization. The employee agrees to reimburse the employer for valuable training should they leave within a certain time period, often one or two years. This can help an employer displace training costs spent on a new employee.
How common is the practice? Numerous news articles have cited a 2020 study by Cornell University’s Survey Research Institute that found nearly 10% of workers are covered by the agreements, with more in the nursing and trucking industries.
Some states, including Colorado, make clear the limitations of these agreements. In its law concerning covenants not to compete, Colorado’s law requires the following:
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The training must be distinct from normal on-the-job training.
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The recovery is limited to the reasonable cost of training.
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The amount owed is reduced on a prorated share over the 24 months subsequent to the training.
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The amount due by the employee cannot allow their pay to fall below minimum wage in violation of the Fair Labor Standards Act (FLSA).
Colorado’s law points out the best practices, and even in states where there is no such law, a court could institute these requirements if determining whether and to what extent the agreement was valid. Learn more about Colorado’s law in this Employers Council whitepaper.
If you are a Consulting or Enterprise member and have questions about these types of agreements, contact Employers Council for assistance.
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