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CORPORATIONS WANT TO PREVENT WORKERS FROM LEAVING THEIR JOBS  
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Luke Goldstein
August 12, 2025
Jacobin
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_ As regulators crack down on noncompete agreements that bar workers
from finding better jobs, employees across the country are
increasingly bound by a new form of “stay-or-pay” contract that
indebts them to their bosses. _

TRAPs are common in retail jobs like fast-food restaurants where
extensive job training isn’t typically considered necessary.,
Christopher Dilts / Bloomberg via Getty Images

 

A Texas nurse switched to a better-paying job at a nearby hospital
only to wind up with debt collectors at her door demanding
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she pay her former employer back for a loan she didn’t know she
owed.

A cargo pilot faced a $20,000 lawsuit
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over job-training expenses at a commercial airline that had just fired
him for refusing to fly a plane under unsafe conditions.

After being promised college tuition relief paid for by Chipotle,
fast-food workers can get stuck
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with the tuition bill.

These are all examples of how millions of workers across the country
are increasingly finding themselves bound by Training Repayment
Agreement Provisions
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a new form of “stay-or-pay” contract that indebts employees to
their bosses. Often inserted into contracts without workers’
knowledge, these restrictive labor covenants turn employer-sponsored
job training and education programs into conditional loans that must
be paid back — sometimes at a premium — if employees leave before
a set date.

As regulators scrutinize
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restrictive noncompete agreements for barring workers from obtaining
better employment, a _Lever _review of class-action and state-level
lawsuits reveals that employers in health care
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and transportation
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turning to TRAPs to keep employees locked in their jobs and
potentially evade law enforcement.

“It’s student debt, but coming from employers in the workplace
instead of in schools,” said Mike Pierce, the executive director and
cofounder of the Student Borrower Protection Center, which has tracked
the spread of TRAP contracts nationwide. Other labor leaders on the
front lines of industries adopting these clauses have compared TRAPs
to “indentured servitude.
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Employers argue that these clauses are a way to recoup their
investment in employees who decide to leave the company prematurely.
But these contracts have come under fire from labor groups and
regulators. Oftentimes, the amount of debt demanded under TRAP
contracts — which can be upward of $50,000
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is far higher than the employer’s training costs.

Last month, the California Attorney General’s Office announced
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$1.5 billion multistate settlement with HCA Healthcare, one of the
largest for-profit hospital networks in the country, for its illegal
use of TRAPs to demand low-paid nurses pay for their $4,000 training
expenses. As part of that initial lawsuit, the California Nurses
Association conducted a survey
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new nurses nationwide have been forced to sign a TRAP.

“TRAPs allowed employers to use the threat of financial ruin to
prevent nurses from acting collectively to improve hospital working
conditions for ourselves and our patients,” said
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cardiovascular intensive care nurse and representative for the
California Nurses Association, at a press conference. “In short,
these stay-or-pay contracts handcuff us to employers that exploit our
calling as nurses to care for others.”

TRAPs are just the latest example
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stay-or-pay contracts that restrict worker mobility through financial
and legal threats, which federal regulators have deemed exploitative
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Other examples include noncompete clauses
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which prohibit workers from seeking jobs across the entire sector they
work in, and “no-poach agreements
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between a group of employers that effectively blacklist workers and
have been found to violate antitrust laws
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There are also “liquidated damages provisions
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impose cancellation fees on workers for leaving their jobs.

 

By blocking workers from seeking better jobs elsewhere, these
agreements are weaponized to drive down
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power, and lock workers
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unsafe working conditions or abusive workplace environments.
Constraining worker mobility can even restrict economic growth and
hamper new businesses looking to attract a workforce with potentially
better pay, according to research from the Federal Trade Commission
(FTC).

The New Trap, Same as the Old Trap

While noncompete clauses are known to impact at least one in every
five workers
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there is no precise data yet on the exact number of employees bound by
TRAPs.

But a new study
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a rough estimate of these contracts’ prevalence. Three Cornell
University Law School researchers analyzed a 2020 online survey of
several hundred workers and found that about 10 percent reported that
they were in debt-fueled training agreements. The figure suggests that
TRAPs could be hanging over the heads of an estimated seventeen
million workers nationwide.

The finding was a huge increase from a 2014 study
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found just 4 percent of workers were in TRAP contracts. And due to
confusing contract language, many more employees are likely bound by
such clauses without realizing it.

TRAPs have emerged because of the professionalization of the labor
market. Sixty years ago, just one in twenty workers
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some professional credential, compared to one in four today.
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since far more jobs today require skills education or occupational
licensing, employers now have to invest in these resources on-site to
prepare workers for the industry.

This shift has also opened the door to a new industrial complex
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for-profit training sites and academies, which many workers are
steered into when they’re hired for a job. Critics say employers now
use these job training programs to force workers into debt and
suppress wages, courtesy of TRAP contracts.

TRAPs started appearing
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in the 1990s and were almost exclusively used by employers in
high-skilled, higher-wage professions like high finance and
technology.

But similar to the evolution of noncompetes
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companies across lower-paid sectors soon began adopting
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practice. Today TRAPs have even become commonplace in retail jobs
like fast-food restaurants
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training isn’t typically considered necessary.

Such debt agreements give employers an upper hand to drive down wages
for already poorly paid service workers, according to
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Vaheesan, a legal director at the Open Markets Institute. But
constraints on worker mobility also have economywide consequences,
such as prolonging labor shortages
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response to health crises. During the height of the COVID-19 pandemic,
for example, nurses employed by one hospital were legally barred
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working at a nearby understaffed hospital amid surging COVID
infections.

“Restricting workers from leaving their jobs might be especially
harmful to working people during periods of full employment,” wrote
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in_ _the_ Washington Post._ “By all accounts, there are jobs to be
filled. But workers can’t necessarily move to fill them.”

TRAPs, unlike other stay-or-pay contracts, operate as an unregulated
financial product. The contracts typically extend a conditional loan
to workers for job training, a form of credit lending that has mostly
flown under regulators’ radar.

“Even if it’s not credit, it’s debt collection, so you get a
financial service or consumer product in some sense,” explained
Pierce with the Student Borrower Protection Center. “You are signing
a note that commits you to repay that debt, separate from the
employment agreement, and then enforcing that note through third-party
debt collectors.”

 

This means that TRAPs can also include predatory lending practices
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such as exorbitantly high interest rates, collection fees, and
attorney legal billing. Altogether, these financial obligations can
lead to enormous amounts of debt. Sometimes, to pay off the liability,
workers’ retirement benefits and final paychecks are denied
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One employer used a TRAP to impose
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$20,000 debt obligation on a hair stylist who typically made less than
$30,000 a year for quitting her job before she’d worked there for at
least five years. Meanwhile, workers at an Indiana-based metal factory
were forced to pay $20,000 for seeking employment elsewhere, and
drivers
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a transportation company had to shell out $8,000
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leaving their posts.

According to legal experts who have litigated these cases, the amount
of debt levied on workers is often conjured up by employers once an
employee leaves, rather than being stipulated in the contract.

“It is often difficult to draw a direct connection between the costs
that workers face under TRAPs and the cost of the training to the
employee… if it is of any likely value at all,” reads a
2022 report
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the Student Borrower Protection Center, “Trapped at Work.”

Opening the TRAP Door

During the Biden administration, federal regulators put restrictive
labor agreements in their crosshairs after years of public outcry.

In 2023, the FTC, under Democratic former chair Lina Khan, took
action
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landmark rule banning noncompete agreements. The rule not only
prohibited noncompetes across the board, but it also included language
that would have allowed the agency to crack down on TRAPs by pursuing
litigation on a case-by-case basis.

At the same time, the National Labor Relations Board and the
Department of Labor pursued a handful
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TRAPS as an unfair labor practice, including at a health care staffing
company and a computer programming boot camp. In both instances, the
companies agreed to stop using TRAPs in the near term as part of
settlement agreements.

But by failing to comprehensively prohibit TRAPs, regulators opened
themselves up to criticism from antitrust and labor advocates
who worried
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Biden administration was shunting the problem to the courts, dragging
out the legal process. Watchdogs also warned
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some employers were pivoting from noncompetes to TRAPs to escape the
regulatory hammer.

But any federal momentum to regulate TRAPs has been shut down under
the more business-friendly Trump administration. The rule prohibiting
noncompetes has been blocked
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a Texas federal judge and is currently awaiting an appeal. The
Republican chair of the FTC, Andrew Ferguson, voted against the
regulation as a commissioner during the Biden administration and has
so far deferred a decision
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whether to continue defending the rule on appeals.

Instead, the matter has moved to the states, which are now pushing to
ban stay-or-pay contracts. The California and Pennsylvania
legislatures have passed bills this year prohibiting
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which are now awaiting signatures by the states’ Democratic
governors.

 
The California attorney general’s $1.5 billion TRAP settlement with
HCA Healthcare last month, which required the hospital network to stop
enforcing all such agreements, points to another path forward for
state-level action that, for now, circumvents Donald Trump’s
agencies.

According to Pierce, the lawsuit took a novel approach by claiming
that TRAPs, as financial products, violate the federal Consumer
Protection Act as an unfair and deceptive practice. Colorado adopted a
similar tactic when it recently filed a complaint
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the pet store chain PetSmart for forcing dog grooming employees into
debt contracts for their training.

“We’re seeing a flurry of state lawmakers and attorneys general
step in and be very aggressive in recent months as the Trump
administration has pulled back,” said Pierce.

This article was first published by the Lever
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investigative newsroom.

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Luke Goldstein is a reporter with the Lever. He is an investigative
journalist based in Washington, DC, who was most recently a writing
fellow at the American Prospect and was with the Open Markets
Institute before that.

* Training Repayment Agreement Provisions; Jobs; Precarity;
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