Employee Advocacy Groups Combat Employer-Driven Debt

employee taking notes as employer outlines terms of new contract

Shub Law recently reported on emerging contractual obligations set in place by employers known as Training Repayment Agreement Provisions. Yes – TRAPs! These TRAPs can limit an employee’s decision to seek more sustainable employment. As these provisions come to light, more and more employee advocacy groups emerge to fight against these unjust practices.

Click here to read more about TRAPs.

Current Investigations

The Consumer Financial Protection Bureau (CFPB) recently launched a campaign to gather testimony and background information that would uncover the steps companies take to justify these repayment provisions. A big question that the CFPB and many others have is whether employees have a choice in these employer-driven debt practices.

Man checks his wallet to find there is no money because, and is likely in debt.

Employers institute TRAPs in employment contracts to ensure they are repaid if a worker decides to end their employment before an expected date – in some cases, these provisions are in place even when the employee is fired. This employer-driven debt can cover the cost of training an employee, tools or equipment purchased on behalf of an employee, and even products essential or required for an employee to do their job.

Currently, the CFPB is curious to what extent employees knew about these provisions. Do employees understand that they are agreeing to employment on a contingency basis? Do employees have agency and freedom to compare one employer’s debt contract with another? These repayment plans threaten workers with enough debt that it discourages them from seeking jobs elsewhere.

Human Trafficking in New York

A recent settlement with the Albany Medical Center brought about by New York Attorney General Letitia James exemplifies just how evil some of these contracts can be. Albany Medical hired nurses from outside of the US under visa arrangements. The contracts they signed, however, contained an unlawful repayment provision that would have them pay up to $20,000 if they resigned or were fired within three years of starting employment. If the nurses did not pay this fee, the medical center threatened to contact immigration authorities to deport the nurses. Out of fear of deportation, these former nurses paid what they owed.

State investigators determined that provisions in the nurses’ contracts violated human trafficking laws. The medical center agreed to pay $114,000 in restitution fees to eight former immigrant nurses and was required to remove the repayment provision from all employment contracts – new and old. Moreover, Albany Medical notified current and former nurses that it removed the clause from operative contracts. Since the settlement, Albany Medical has been compliant.

Nurse gloomily sits criss cross style against a wall, decompressing.

Pushing Back on Debt Provisions

Instances of workplace exploitation and indebtedness such as that at the Albany Medical Center are exactly what the CFPB and other worker advocacy groups are trying to prevent. Whether it be nurses, sales associates, pet groomers, or anything in between, employer-driven debt is unjust. Employees are encouraged to speak on their experiences with TRAPs. These testimonies help advocacy groups understand just how deep this debt can go.

Shub Law stands with employees and consumers affected by this employer-driven debt. You shouldn’t be obligated to stay at a job from fear of retaliation. If you want to learn more about TRAPs and employer-driven debt, contact Shub Law today and tell us your story!

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