Drew Lakey, a former physician assistant at the Skin and Cancer Institute in Delano, Calif., resigned from her job in November. However, her departure led to a legal dispute when her former employer sued her for over $138,000. The company claimed that she owed them $38,000 for training costs and over $100,000 for the "loss of business" caused by her departure. When she was hired, Ms. Lakey had signed a training repayment agreement (T.R.A.) which obligated her to repay the training costs if she left before a certain period. These agreements, which require workers to pay back the cost of training if they leave their jobs prematurely, have become increasingly common in various industries.
Ms. Lakey's T.R.A. stated that she would receive $50,000 worth of on-the-job training, which she would have to pay back on a prorated basis if she quit before 2025. Although the reasons behind this high figure were not explained, the Skin and Cancer Institute referred to it as "high value" training in their complaint. Despite not fully understanding the financial implications at the time, Ms. Lakey took the risk, assuming that nothing would make her want to leave the contract early. After realizing that the company was not a good fit, she eventually decided to quit, even though she was concerned about the potential financial consequences.
Training repayment agreements are prevalent in industries such as nursing and trucking, with nearly 10 percent of workers reporting being covered by such agreements. This practice has gained popularity over the past five or six years as employers seek ways to navigate non-compete restrictions and improve employee retention. In some cases, employees have been surprised to receive letters from their former employers demanding reimbursement for training costs. The amounts requested can vary, but $20,000 is a common figure. The enforcement of these agreements can seem arbitrary, with some employers pursuing legal action or engaging debt collectors while others do not.
Employers view T.R.A.s as a means to shift some of their operational costs to employees, although this practice is not legal in California. However, there is another category of employers who use these agreements to help employees gain skills that will benefit their careers in the long run. Enforcing the repayment obligation depends on whether the training is voluntary for the employee's personal benefit or if it is required by the employer.
While T.R.A.s have been a part of the employment landscape for decades, there has been an increase in lawsuits in recent years. These lawsuits have raised the stakes as employers take former employees to court over repayment of training costs. In response to such practices, the Biden administration has taken steps to limit the use of noncompete clauses, which would also impact many T.R.A.s. Additionally, regulatory agencies like the Federal Trade Commission and the National Labor Relations Board have scrutinized T.R.A.s and raised concerns about their impact on workers' wages and job mobility. Some states, such as Connecticut and Colorado, have already implemented restrictions on T.R.A.s, and others are considering similar measures.