Lawsuit Investigation: Employee Training Repayment Agreements

Attorneys working with ClassAction.org are looking into whether class action lawsuits can be filed over certain training repayment agreements in employment contracts.

Specifically, they believe that in some cases, it could be illegal for a company to require workers to undergo training as a condition of employment and then be on the hook to pay back the costs of the training if they quit or are fired.

 Regulators have already begun looking into whether employee training reimbursement policies violate workers’ rights, and the attorneys believe the agreements could potentially run afoul of a federal law called the Trafficking Victims Protection Act, which prohibits forced labor.

Can My Employer Make Me Pay for Training If I Leave?

Some employers attempt to require repayment of training costs from workers through an employee training reimbursement policy included in their contracts. Often called training repayment agreements, these provisions require the worker to repay their employer for the cost of training if they leave their job within a set timeframe, usually a certain number of months or years. Often, training agreements are paid based on a sliding scale, with workers typically owing less the longer they stay with the company.

Employers began using training repayment agreements in the 1990s, primarily for high-skilled positions earning high wages, such as in the aviation, engineering and financial services industries. Since the 1990s, however, employee training reimbursement policies have become more common, with a study by the Survey Research Institute at Cornell University finding that nearly 10% of American workers surveyed in 2020 were subject to a training repayment agreement.

Are Employee Training Repayment Agreements Illegal?

With the use of training reimbursement agreements on the rise, several government agencies have begun looking into whether they violate consumers’ rights.

The Federal Trade Commission (FTC) has warned that training repayment agreements could function as non-compete clauses that unfairly restrict employees’ mobility. In a January 2023 proposed rule banning non-compete clauses, the agency noted that traditional and de facto non-compete clauses (including certain training agreements) are “exploitative and coercive” given workers generally have less bargaining power than employers. According to the FTC, the agreements could “force a worker to either stay in a job they want to leave or choose an alternative that likely impacts their livelihood.”

The FTC also pointed out that there are other ways for employers to protect their investments in training, such as by offering better wages, hours or working conditions.

The Consumer Financial Protection Bureau (CFPB) also looked into training repayment agreements as part of a formal inquiry into employer-driven debt. Though the agreements are not inherently illegal, the CFPB warned that an employee training reimbursement policy could present risks to workers in that the employer may not disclose all the details about the arrangement beforehand, employees may feel they have no choice but to accept the contract if they need a job, and workers could be misled about the value of the training.

The CFPB also noted that respondents to the inquiry reported feeling unfairly restricted from being able to leave their jobs due to the financial burden of having to cover reimbursement of training costs. This was true even if the repayment agreement was not enforceable, the CFPB found. The Bureau provided the following samples of reports from commenters:

This contract is something that is constantly dangled over our heads any time we are getting treated like dogs.”

If I mention being unhappy, my boss replies that they’ll take me to court for the over $5,000 they say I owe since it hasn’t been two years.”

The number was around $6500, and the thought of having to pay that back was terrifying…I wanted to quit after the first 2 months, but there was no way I could have ever paid it back.”

Pilot Training Contracts Under Fire

The same month the FTC proposed a rule banning non-compete clauses, advocates including the Student Borrower Protection Center and nonprofit law firm Towards Justice wrote a letter to U.S. Department of Transportation Secretary Pete Buttigieg requesting that the department look into the use of training repayment agreement provisions among pilots and other airline workers.

The letter mentioned a class action lawsuit filed by a pilot against her former employer over a training repayment agreement under which pilots could be required to pay up to $30,000 in training costs if they quit or were fired within 18 to 24 months of training. According to Towards Justice, which helped file the suit, professional training agreements are “especially common” in the airline industry, with many smaller cargo and regional airlines using them to “keep their pilots trapped in jobs where they earn barely above minimum wage.”

In November 2024, the judge overseeing the case certified a class and collective, putting the lawsuit one step closer to resolution.

Lawsuits: Workers Charged for Leaving Job

Several other class action lawsuits have been filed against employers that were allegedly attempting to backcharge an employee for training. One case filed in 2018 against a major financial services firm claimed financial advisor trainees were required to sign contracts holding them responsible for paying back up to $75,000 in training costs should they leave the firm within three years of their “can sell” date, i.e., the date they can begin taking on clients. The lawsuit alleged that employees were provided with “no meaningful training” and that the $75,000 in training costs was “grossly overstated.”

Another class action lawsuit filed in October 2022 claimed employees who enrolled in a pet store chain’s grooming training program were covered by a training repayment agreement provision that required them to pay $5,000 or more if they quit within two years. According to the lawsuit, this amount “far exceeds” the value of the training provided, especially since employees made barely above minimum wage. The case claimed the training agreement contract effectively stripped workers of bargaining power to seek other employment with better pay or work conditions.

How Could a Class Action Lawsuit Help?

If filed and successful, a class action lawsuit could help workers who signed employee training repayment agreements recover money for any harm, including lost wages and emotional distress.

A lawsuit could also force the company to change its employment contracts and remove any provisions found to be unlawful.

What You Can Do

After you get in touch, an attorney or legal representative may reach out to you directly to ask you some questions about your experience and explain how you may be able to help get a class action lawsuit started. It doesn’t cost anything to fill out the form or speak with someone, and you’re not obligated to take legal action if you don’t want to.

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