Some workers are going thousands of dollars into debt to pay for their own training. A federal watchdog is scrutinizing the practice of chasing employees for money after they leave.

• A new report from the Consumer Financial Protection Bureau looks at employer-driven debt.
• The report finds that employers are saddling workers with thousands in debt for training and supplies.

Some workers might decide they want to leave their jobs — only to get hit with a bill for thousands of dollars to compensate their former employer for training. A federal watchdog is looking into that practice.

On Thursday, the Consumer Financial Protection Bureau released a report detailing the impact of training repayment agreement provisions, or TRAPs. TRAPs are a form of employer-driven debt in which workers are indebted to their employer to cover the cost of training, equipment, or supplies, depending on the industry. For example, workers in the the rideshare or trucking industries sign TRAPs to get necessary transport supplies from their employer.

But, the CFPB argued those agreements can harm workers because "employer-driven debts are inextricably linked to a worker's employment, and the worker's ability to repay the debt is controlled by the issuer of the debt itself," the report said. In 2022, the watchdog launched an inquiry to seek data regarding workers' experiences with TRAPs, and it found a number of risks those agreements are posing to workers.

The report said that employees might be "rushed into signing agreements that hide the details of the debt workers are agreeing to," leaving them unaware of the implications of the debt they are taking on.

One worker told the CFPB in a comment that "[a]fter completing 4 years of schooling and passing technical interviews my first job seemed great. Once onboarding I discovered some 'training' was required, no problem at all. However the first day consisted of signing a long employment document in a room with all the other employees that required $10,000 to be paid by us if we leave the company within a year and $5,000 if within 2 years."

That means those workers might have to stay at the job even if they want to leave because they cannot afford to repay that debt. Another worker told the CFPB in a comment that "if I mention being unhappy, my boss replies that they'll take me to court for the over $5,000 they say I owe since it hasn't been two years."

And a different worker ended up returning to her job after leaving, saying in a comment: "Shortly after they left, Nurse E received a collection letter notifying them that they either pay the hospital $18,000, which was what [company] said was the prorated cost of their training, or complete the two-year/4,000-hour requirement. Nurse E tried to negotiate the payment of the amount they owed, but the hospital refused…Nurse E decided to return to working at [redacted] because of the financial liability."

Along with workers' claims of misleading terms on TRAPs, the CFPB also said workers experience lower earnings under these agreements "because deductions are taken to cover debt payments throughout the course of their work or to cover additional significant employment-related expenses." The watchdog said it will continue to evaluate how companies are using TRAPs to determine whether they are violating consumer financial laws.

That CFPB probe comes amidst a Biden-administration-wide crackdown on unnecessary fees and contracts that keep workers in low-paying jobs. In January, the Federal Trade Commission proposed a rule that would ban noncompetes — clauses in contracts that prohibit workers from taking jobs in similar industries or starting their own businesses in the same field. The FTC estimated that banning noncompetes could put nearly $300 billion more in workers' pockets every year.

"The abusive practices uncovered by the Bureau should be a wake up call to consumer protection officials and policymakers at all levels," advocacy group Student Borrower Protection Center Deputy Executive Director and Managing Counsel Persis Yu said in a statement. "TRAPs impose significant financial burdens on workers and foster monopsony in labor markets by reducing worker mobility and bargaining power. The largest corporations in America are now on notice: the use of TRAPs and other predatory contract terms must stop."