Regulators are starting to crack down on contracts that require workers to pay their employers back for training costs if they leave their jobs before the contract is up — arrangements that have come increasingly common over the past few years, especially in nursing.
A Sept. 27 report from The New York Times cited data from a 2020 study led by researchers at Ithaca, N.Y.-based Cornell University that found 10 percent of participants were covered by such arrangements through their employer. A separate survey from National Nurses United found nearly 40 percent of nurses who joined the profession in the last 10 years were subject to the practice. In nursing, the agreements are often related to hospitals' training or residency programs, which hospitals have said can cost tens of thousands of dollars per nurse.
Ashley Tremain, an employment lawyer in Texas, told the Times she hears from workers about training cost agreements, or TRAs, a few times a month — a trend she noticed began to take off in recent years.
"They're just becoming ubiquitous as people are trying to find creative ways to move around noncompete restrictions," she said. Ms. Tremain added that she often hears from workers after they have left their jobs and then receive a letter from their employer notifying them that they owe the employer money, typically around $20,000.
Employers see the arrangements as a way to bolster retention and prevent situations where employees leave soon after their training.
Over the past year, regulators have taken action to challenge the legality of such agreements. The Federal Trade Commission proposed a rule that would ban most noncompete clauses, including TRAs. The Consumer Financial Protection Bureau began investigating employer-driven debt in September 2022 and in July 2023, the agency released findings saying it "poses the risk of suppressing wages and forcing workers to stay in jobs they do not want," and that "trainings may have greatly inflated valuations." Meanwhile, employers are increasingly taking former employers to court over the agreements.
When it comes to nursing, the practice of embedding training repayment into contracts is not new, but it has attracted more attention in recent years amid staffing shortages. A former nurse at an HCA Healthcare hospital spoke to NBC News earlier this year, saying she quit her job due to heavy workload and understaffing before her two-year contract was up, and then received several letters from her former employer asking for the $2,000 she owes for remaining training costs.
In May, Nashville,Tenn.-based HCA said it decided to end the practice. UCHealth in Aurora, Colo., also recently moved to stop requiring training repayment.