When Michelle Gaffney was hired as a registered nurse at Shasta Regional Medical Center in Redding, California, nearly eight years ago, she had to sign a contract agreeing to repay $30,000 in training costs if she left the hospital before three years.
She had already worked at the facility for 13 years as a patient care technician in the intensive care unit but went back to school to earn an associate degree in nursing. The hospital, she said, was unique at the time for hiring those with an associate degree instead of a bachelor degree.
“The contract was a slap in the face,” said Gaffney, who now is a member of the California Nurses Association, a nurses’ union. “It’s not an incentive to want to work for a place that’s threatening you.”
For three years, she was worried about getting fired and being on the hook for the training, Gaffney said.
“Our job is to speak up and advocate for our patients. It’s almost like you’re being blackmailed. You have to go on, and keep your head down,” she said. “There’s no way I could have just plunked down $30,000 if I had to leave.”
Prime Healthcare, which owns Shasta Regional, did not immediately respond to a request for comment.
Lawmakers and regulators have in recent years pushed back against employers that aim to recoup training costs from workers. California in 2020 expanded its labor laws to require acute care hospitals to cover training costs for employees and job applicants. The Consumer Financial Protection Bureau in June requested public comment on the practice, and Sen. Sherrod Brown’s, D-Ohio, office told HR Dive that he is considering legislation on these training repayment agreement provisions — or TRAPs — and is working with the CFPB “to ensure that consumers are protected from predatory consumer products like TRAPs.”
“Our view is that these are an employer-driven form of debt,” Rachel Gittleman, financial services outreach manager for the Consumer Federation of America, a consumer advocacy organization, told HR Dive. “It can have lengthy and massive impacts on your ability to secure credit in the future.”
Gittleman in September testified to the U.S. Senate Committee on Banking, Housing and Urban Affairs, characterizing training repayment programs as “credit products that should be covered by basic consumer protections.”
Kate Rigby, an attorney at law firm Epstein Becker Green, said the agreements are a form of backup for employers in a tight labor market. The companies that try to recoup training costs generally are ones with programs that require a lot of investment, she said.
“Employers are typically using these, especially now, because there is so much movement. Training new employees creates a lot of extra cost for employers,” Rigby said.
It’s a best practice to let employees know about training – and associated costs and time commitments – at the time of hire or before training begins, Rigby said. And costs that employees are responsible for should be tied directly to the cost of the training, she said.
Because laws vary by jurisdiction, it’s important to know what they are where a company operates, Rigby said. Many jurisdictions will allow an employer to recoup training costs if the training is portable and something a worker can use elsewhere in their career, she said.