London-based Reuters is one of the world’s largest news organizations, with 3,100 journalists in 200 locations worldwide (profile here).
Their biggest headline on Monday, October 17, 2022, featured a woman from Shoreline, Washington, a Seattle suburb. The story (read it here) begins,
“When a Washington state beauty salon charged Simran Bal $1,900 for training after she quit, she was shocked. Not only was Bal a licensed esthetician with no need for instruction, she argued that the trainings were specific to the shop and low quality. Bal’s story mirrors that of dozens of people and advocates in healthcare, trucking, retail and other industries who complained recently to U.S. regulators that some companies charge employees who quit large sums of money for training.”
The story, of course, isn’t about Simran Bal; it’s about a scammy business practice that’s legal but shouldn’t be. Reuters says,
“Nearly 10% of American workers surveyed in 2020 were covered by a training repayment agreement, said the Cornell Survey Research Institute. The practice, which critics call Training Repayment Agreement Provisions, or TRAPs, is drawing scrutiny from U.S. regulators and lawmakers.”
People work to make money. To the extent employers give them in-house training, that’s a cost of business passed on to customers. But for these scammers, the worker is the customer, and they make their money by charging workers instead of paying them.
Even if that’s not the objective, in an economy characterized by labor shortages, when employers use these agreements as a way “to keep their workers from quitting without raising wages or improving working conditions,” that’s an anti-competitive practice.
Reuters says, “TRAPs have been around in a small way since the late 1980s primarily in high-wage positions where workers received valuable training. But in recent years the agreements have become more widespread” and, one could add, abused.
Bal said she was billed for training she was “already licensed in.” When she quit, the salon owner sued her in small claims court, but the judge threw out the claim; Bal didn’t have to pay. She was lucky.
TRAP contracts are common in nursing, and Reuters says, “Many nurses said they were not told about the training repayment requirement before beginning work, and that classroom instruction often repeated what they learned in school.” (Lesson: Read the entire contract before you sign it, and be prepared to walk away from the job offer if it contains unfavorable terms and conditions you weren’t told about.)
They’re also common in the trucking industry. Reuters says, “The International Brotherhood of Teamsters said … training repayment demands were ‘particularly egregious’ in commercial trucking” where firms “train people for a commercial drivers license but charge more than $6,000 if they leave the company before a certain time.”
This might be more justifiable, if the training is substantial, costs the company money, enables the trainee to get a CDL license he can take to another job, and what he’s charged is comparable to what he’d have to pay a truck driving school. But there’s still a need to regulate the practice.
Proponents of unregulated capitalism are simply wrong. Capitalism doesn’t work when it’s deregulated. In the Middle Ages, bandits charged travelers a toll to pass on the king’s road; in the modern world, many shady business practices fall in the same rough category. Streets and highways need traffic laws and cops to enforce them, and business also needs rules and enforcers. Otherwise, things don’t work.
Congress is studying regulating this particular employer practice. Business advocates argue it should be left to the states. I wouldn’t do that. America’s workers deserve the same protections from predatory employer practices regardless of where they work and live. And I sure wouldn’t trust Republican-run states to protect workers.