Job searching can consume months or even years of your time, as you navigate through various challenges such as numerous interviews and onboarding processes. Just when you’re on the brink of starting training, you’re presented with a Training Repayment Agreement Provisions (TRAPs) document. Although the name sounds questionable, you feel compelled to sign it because you need a job. Before long, you realize you could be financially responsible for thousands of dollars in repayments for training your employer required, especially if you decide to pursue a different job.
Training repayment to ensure employee commitment
The predicament described above is becoming increasingly common among workers, notably in sectors characterized by lower wages and high employee turnover. A recent Skynova survey involving about 1,000 employees and managers indicated that “more than three-quarters of employees felt that requiring them to reimburse training costs if they resigned within a year would enhance retention rates.”
In July 2022, the Student Borrower Protection Center published a report titled Trapped at Work: How Big Business Uses Student Debt to Restrict Worker Mobility, which addressed this issue. According to the report, “These companies favor using ‘shadow’ student debt—nontraditional credit options aimed at funding higher education and job training—which leads to significant financial repercussions if employees decide to seek alternate job opportunities.”
Many experts view this trend as not only unethical but potentially exploitative towards employees. Marina Kats Fraigun, a lawyer based in Los Angeles and founder of Fraigun Law Group, notes that the California government, among other states, has started to scrutinize these kinds of agreements. “Such agreements restrict an employee’s freedom to leave, which undermines their personal liberties. I don’t see much benefit for the employee. While it may offer training, it’s something they could potentially pursue independently for less cost, without being tied to an employer,” she explains.
Employees should be aware of certain factors if their company requests payment for training, and companies ought to weigh their approach regarding retention strategies aimed at fostering long-term loyalty.
Investigations into the debt-creating practices
Employers may think they are safeguarding their investment in a well-trained employee while simultaneously preventing them from transitioning to rival companies with their newly acquired skills. However, this can potentially saddle new hires with significant debt. In 2022, the Consumer Financial Protection Bureau “initiated an investigation into practices and financial products that could leave employees financially obligated to their employers,” as stated in a press release. They specifically sought to understand whether employees had a “meaningful choice when accepting employer-driven debt options,” as well as evaluating the “terms and conditions of these products, including whether they inhibit someone from pursuing a better-paying position.” Employees facing difficulties were directed to their “submit a complaint” webpage.
Fraigun advises employees against signing any TRAPs agreements or similar contracts that might limit their freedom to leave their job. “It effectively traps them and is usually not worth the hassle,” she warns.
Training types and potential payment responsibilities
However, not all training opportunities are alike. Jennifer Messina, Ph.D., a certified psychologist based in New York City and founder and CEO of FORTE Collective, recommends evaluating the type of training involved:
- Voluntary professional development training: “Organizations should consider investing in their top talent by providing a budget for development opportunities. Typically, only motivated employees seek these pathways, and if the training aligns with their career trajectory, the company should bear all related costs.”
- Mandatory corporate or professional training: “It is logically sensible for the company to assume full financial responsibility for these costs.”
- Higher certification/degree programs: Messina indicates that, in such cases, it’s “fair” to expect some financial investment from the employee to share the tuition burden. “This is justified by the substantial investment required for formal degree or certification programs and the long-term benefits the employee gains from such education.”
Before committing to any agreement, clarify which category of training your employer is referencing, particularly if the document is unclear on this matter.
Compensation and commitment to the corporate mission
It would be beneficial if all employers grasped the principles of genuine motivation before managing a workforce—but many do not. It may seem logical that companies investing financially in employees would foster loyalty and commitment. However, experts suggest that this assumption might not hold true.
“Employees who lack motivation towards professional development may not truly benefit from it. From my experience, access to specialized training captivates those eager to progress in their roles. Therefore, imposing training costs could demoralize them or diminish their engagement with their current employer,” explains Messina. “Alternative approaches, such as requesting employees to provide feedback on their learnings and identifying applications of their training to enhance job performance, can yield better employee buy-in than mandating payment for professional development.”
Differing expectations across industries
Rather than generalizing expectations and realities across industries, focus on best practices tailored to your specific field to assess the prevalence and ethicality of this approach. Neil Thompson, a tech educator from San Diego, frequently collaborates with tech professionals eager to enhance their communication skills with non-technical peers. He provides training sessions for which employers usually reimburse employees, a common expectation within the tech landscape.
“In the tech sector, many companies maintain learning and development departments that offer training resources for employees. These departments also partner with external vendors for additional training opportunities. In these instances, there is typically no cost incurred by the employees. Given the increased workloads many face due to layoffs, organizations should invest in training to prevent employee burnout,” he states. He further notes that employees may struggle with motivation if asked to self-finance their training.
“When employees receive robust training, they’re more invested in the company’s mission. I previously worked at an organization that wouldn’t fund my desired training, only their mandated programs. Over time, my commitment to their mission waned because I felt the company didn’t value me, and while I improved my skills, it was primarily for my next potential employer.”
Strategies for employers to enhance loyalty and drive
Currently, the employment landscape is vastly different from what it once was. This implies that expecting a 30-year commitment from an employee may no longer be a practical expectation. “The dynamics of loyalty and commitment have shifted considerably—where a lengthy tenure might now range from one to three years, in contrast to the lifelong dedication of previous generations,” remarks Rosalind Franklin, a leadership and talent advisor based in California with Boyden.
According to the Top Employers Institute World of Work Trends Report 2023, there has been an 8% increase in companies offering workshops and training focused on employee development from 2021 to 2023. The report highlights that employers are increasingly acknowledging the significance of investing in their staff’s professional growth as a means to boost retention, engagement, and productivity, according to Trevor Bogan, a regional director for the Americas for Top Employers Institute, based in Charleston, South Carolina.
“Consequently, numerous companies are broadening their training initiatives and presenting more opportunities for employees to acquire new skills and advance their careers. This trend is gaining traction in the workplace for 2023 and beyond,” Bogan mentions, adding that empowering employees to take charge of their own development is far more impactful.
Firms aimed at cultivating a knowledgeable workforce should focus on investing in their employees, rather than attempting to secure buy-in through disingenuous methods. Franklin emphasizes, “Many organizations publicly declare that ‘their people are their most valuable asset’… Investing in your workforce can provide tangible proof of this commitment.”
