Companies spend a lot of money on employee training. American companies spend over $90 billion annually on employee training. The average cost for training and development per employee is around $1,250, but there are, of course, huge variations depending on role, company and industry.
When turnover is high, as is increasingly the case across many industries, employers can feel like their training dollars are simply flying out the window and, even worse, potentially benefiting a competitor a departing employee may take a job with.
Clawing Back Training Costs
To address these challenges, some companies embed provisions in their employment agreements requiring workers to reimburse the employer for the costs of training if they quit their job. Sometimes these training reimbursement agreement provisions (TRAPs) only apply if an employee leaves after a relatively short period of time.
TRAPs have come under increased scrutiny in recent years from both federal and state governments and from employee rights advocacy groups.
For example, the Student Borrow Protection Center argues that “Training Repayment Agreement Provisions, or ‘TRAPs,’ are the latest way employers are using anti-worker contract provisions to trap workers into low-paying jobs with poor working conditions. It’s student debt, but from employers in the workplace instead of in schools.”
The Employer Perspective
Employers often counter this criticism by noting that employees may gain valuable skills that help them secure higher pay throughout their careers and it’s only fair that employers who invest heavily in that training in order to develop qualified workers for that employer’s business should be entitled to recoup those costs if an employee takes that training and works elsewhere.
The legality of TRAPs vary by jurisdiction, so employers should be sure to seek legal advice if they intend to implement such programs for their own employees. To the extent an employer’s motivation to require TRAPs in employment agreements is based on a fear of turnover and losing employees to competitors after investing heavily in training, an alternative approach may be to consider updates to the company’s non-compete agreements, again in consultation with legal representation.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.