Big corporations use TRAPs to tie workers to low-wage jobs long-term, saddling them with pseudo student debt
By Brian Kabateck
Student debt has received heightened focus recently amid the controversy over student loan relief. But there’s a lesser-known form of fabricated student debt that hurts workers in various jobs across diverse industries.
Numerous corporations, often the big players in their respective sectors, are using anti-worker contract clauses known as Training Repayment Agreement Provisions, or TRAPs, to keep employees in low-wage jobs, often with poor working conditions, for years—or face stiff financial penalties.
The Student Borrower Protection Center (SBPC) recently issued a new report that documents the “widespread and accelerating use of Training Repayment Agreement Provisions (TRAPs) by big businesses.” Says SBPC, “A growing body of evidence indicates that employers nationwide are utilizing shadow student debt to trap workers into unfair contracts and substandard working conditions.” That same day, a high-profile class-action lawsuit was filed in California’s Superior Court against PetSmart, the popular pet supply and grooming services retailer, bringing attention to TRAPs.
In the suit, former PetSmart employee BreAnn Scally alleges that PetSmart claims its “grooming academy” offers free, paid training with substantial instruction and hands-on experience with meaningful supervision. In reality, however, students are very shortly grooming pets for paying customers, with little oversight or guidance. Trainees receive no formal credentials. (California law does not require certification for groomers.) Doing high-volume work with animals for pay that hovers around minimum wage, the job of a PetSmart groomer is arduous and sometimes even dangerous. And, in the proverbial fine print, the contract locks the trainees into their position with PetSmart for at least two years.
The suit contends that when examined under either consumer or employment law, PetSmart’s TRAPs are illegal, and the debts incurred are unenforceable. It argues that if the training chiefly benefits the employer, then employment law prohibits the business from charging the employee. If, on the other hand, the training gives the worker transferable professional skills, then charging for that education means PetSmart is running an unapproved for-profit college, illegal in California.
Companies claim they use TRAPs to recover the expense of training their employees. But those costs are difficult to pin down. Training may range from earning recognized credentials to completing the company’s basic orientation programs. The employers set the agenda and prices, which can artificially inflate their worth and tack on high-interest rates, attorney fees, withheld paychecks, and pursuit by collection agencies. The collections process can damage credit scores and hinder the worker from pursuing other types of education and career growth.
At PetSmart, an employee’s accumulated debt from this on-the-job education can total over $5000 if they don’t stay with the company for two or more years. And the company allows only 30 days for repayment when someone leaves.
A form of predatory debt, TRAPs deprive workers of the freedom to change jobs and seek better employment conditions; they stifle the labor market, minimize competition, and undermine worker mobility and bargaining power. As SBPC points out, “even if this TRAP is not enforced, its presence has the power to accomplish the intended consequence of pressuring workers into staying.”
TRAPs are not new; companies have used them for years. But according to the SBPC, they are now becoming more widespread among employers, from trucking companies, hospital operators, and retailers to financial services firms.
If you’ve been trapped by a TRAP or are experiencing an unfair labor practice, it’s essential to seek advice from one of our employment law professionals—we’re here to help. The experienced attorneys at Kabateck LLP understand your rights as a worker. You have the right to be treated fairly by your employer.