WASHINGTON, Oct 17 (Reuters) – 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 claimed the training was shop-specific and low quality.
Bal’s story echoes that of dozens of people and advocates in health care, trucking, retail and other industries who recently complained to U.S. regulators that some companies are charging departing employees large sums for training.
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Nearly 10% of American workers surveyed in 2020 were covered by a tuition reimbursement agreement, the Cornell Survey Research Institute said.
The practice, which critics call Training Repayment Agreement Provisions, or TRAPs, is drawing scrutiny from US regulators and lawmakers.
On Capitol Hill, Sen. Sherrod Brown is studying legislative options with an eye toward introducing a bill next year to rein in the practice, a Senate Democratic aide said.
At the state level, attorneys general such as Minnesota’s Keith Ellison assess how widespread the practice is and may update the guidance.
Ellison told Reuters he would be inclined to oppose reimbursement requirements for job-specific training, while it “might be different” if an employer wanted reimbursement for training for a certification such as a commercial driver’s license that is widely recognized as valuable.
The Consumer Financial Protection Bureau has begun reviewing the practice, while the Justice Department and the Federal Trade Commission have received complaints about it.
The use of training contracts is growing even though unemployment is low, which presumably gives workers more power, said Jonathan Harris, who teaches at Loyola Law School Los Angeles.
“Employers are looking for ways to keep their workers from quitting without raising wages or improving working conditions,” Harris said.
The CFPB, which announced in June that it was investigating the deals, has begun to focus on how to prevent even skilled employees with years of schooling, such as nurses, from finding new, better jobs, according to a CFPB official who was not authorized to speak at the post office.
“We have heard from workers and labor organizations that the products may limit workers’ mobility,” the official said.
FELLER has existed on a small scale since the late 1980s, primarily in high-paying positions where workers received valuable training. But in recent years, the deals have become more widespread, Loyola’s Harris said.
One critic of the CFPB effort was the National Federation of Independent Business, or NFIB, which said the issue was outside the agency’s authority because it was unrelated to consumer financial products and services.
“(Some state governments) have authority to regulate employer-sponsored debt. The CFPB should defer to those governments that are closer to the people of the states than the CFPB,” it added.
CARE AND LOAD ORDERING
Bal said she was happy when she was hired by the Oh Sweet salon near Seattle in August 2021.
But she soon found that before she could offer services to clients and earn more, she was required to attend training on such things as sugaring to remove unwanted hair and eyelash and brow maintenance.
But, she said, the salon owner was slow to schedule the workouts, which were sometimes postponed or canceled. Nor were they informative; Bal described them as “introduction level.” While waiting to complete his training, Bal worked at the front desk, which paid less.
When she quit in October 2021, Bal received a $1,900 bill for the instruction she received. “She charged me for training for services that I was already licensed in,” Bal said.
Karina Villalta, who runs Oh Sweet LLC, filed a lawsuit in small claims court to get the money back. Court records provided by Bal show that the case was dismissed in September by a judge who ruled that Bal did not complete the promised training and owed nothing. Villalta declined requests for comment.
In comments to the CFPB, National Nurses United said it did a survey that found the agreements are “increasingly ubiquitous in the health care industry,” with new nurses often affected.
The survey found that 589 of the 1,698 nurses surveyed were required to take training programs and 326 of them were required to pay employers if they quit before a certain time.
Many nurses said they were not told about the training repayment requirement before they started working, and that classroom teaching often repeated what they learned in school.
The International Brotherhood of Teamsters said in comments that training reimbursement claims were “particularly serious” in commercial trucking. They said firms such as CRST and CR England train people for a commercial driver’s license but charge more than $6,000 if they leave the company before a certain time. Neither company responded to a request for comment.
The American Trucking Associations argue that the license is portable from one employer to another and required by the authorities. It urged the CFPB not to characterize it as employer-driven debt.
Steve Viscelli, a University of Pennsylvania sociologist who spent six months training and then driving a truck, said the issue deserved scrutiny.
“Every time we have training contracts for low-skilled workers, we should ask why,” he said. “If you have a good job, you don’t need a training contract. People are going to want to stay.”
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Reporting by Diane Bartz; Editing by Chris Sanders and Lisa Shumaker
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