The Consumer Financial Protection Bureau has begun looking into cases of employers requiring employees to pay back the costs of training them. The CFPB claims that such agreements can leave employees burdened with thousands of dollars of debt to a company should they choose to leave. A March report by the Treasury Department found that such agreements can prevent employees from seeking higher-paid positions at competing companies, thus reducing workers' bargaining power. 

• “Employers are basically turning job trainings into debt traps,” a participant of the CFPB's survey on the matter stated, according to the Bureau's blog. The blog described the experience of a fully-registered nurse who was required to complete a company training course that would saddle participants with $10,000 debt if they then did not work full-time for the company.

• Some argue that training repayment agreements act as de facto non-compete agreements, but with loser terms. However, Sandeep Vaheesan, legal director at the Open Markets Institute, told Bloomberg Law, “in some ways [these agreements] are worse because they restrict workers’ ability to leave for any job.”

California's AB 2588

In 2020, California passed the first bill in the nation taking aim at these training repayment agreements. The state's Assembly Bill No. 2588 outlawed the practice specifically among employees providing direct patient care. It mandated that any employee training costs in this field are “a necessary expenditure or loss incurred by the employee in direct consequence of the discharge of the employee’s duties.” The bill is being considered a model for any federal regulation.

The Verdict

There’s really no excuse for forcing new hires to take mandatory training that may end up costing them thousands of dollars. This practice is absurd, and federal regulation on the matter is welcomed.