From the Frying Pan of Non-Competes into the Fire of TRAs/TRAPs

We wrote about non-competes as recently as Monday.  Previously, we featured a guest post by Jonathan Harris (left) about news ways employers are finding to bind workers to their positions without non-competes.*   Now, Karla L. Miller of The Washington Post has also got wind of Jonathan's work, and she's written about it here (if you don't subscribe, you can do the next best thing and follow her Twitter feed here).

The story focuses on a dog-trainer.  She learns how to train work detection dogs that can sniff out drugs, bombs, or bedbugs.  Bedbugs?!?  In order to get what seemed like a fun job, the trainer had to sign on for three years.  If she quits before her three-year term is up, she has to pay the company $35,000 to reimburse it for the training she has received.  The is a Training Repayment Agreement (TRA), also known as a Training Repayment Agreement Provision (TRAP).  The "training" consists of her employers treating her shabbily and yelling at her for every mistake.  She is miserable and wants to leave but cannot afford to do so.  According to Jonathan Harris, TRAPs are on the rise in many categories of high-turnover, low-pay jobs, including transportation, health-care, retail, construction, and service industries.

The article also quotes from Rachel Dempsey (right), an attorney with Towards Justice, which together with the Student Borrower Protection Center, is representing workers subject to TRAPs.  The employers who are the targets of these lawsuits are charging workers for training that the companies themselves provide.  It is not as if the workers are getting degrees or certificates that would be valuable to them in seeking future employment.  The dollar value of on-the-job training is likely minimal and certainly well shy of the $5000-$35,000 that employers seek to claw back from departing employees. 

Moreover, the commitment is one-sided.  Employees have to pay if they leave -- and in some cases, even if they are fired -- but employers are under no obligation to retain employees until the end of their term of indentured servitude.  Unconscionability perhaps?  The circumstances under which employees agree to TRAPs have some indicia of procedural unconscionability.   The one-sidedness of the provisions suggests substantive unconscionability.  Rachel Dempsey points out that TRAPs may also violate state or federal statutes.

California and Connecticut already impose limits on the enforceability of TRAPs.  The new FTC rules on non-competes might also cover schemes like TRAPs that have the same effect, and the CFPB is also considering regulation in this area.  

* Via SSRN, I just learned of this nifty short piece that Jonathan published in the Northwestern University Law Review's blog, Of Note.