WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) published a report highlighting the risks employer-driven debt poses to workers. After a review of responses to the CFPB’s public inquiry, the analysis describes the growing prevalence of employer-driven debt and challenges workers and consumers face when they become indebted to an employer or an employer’s affiliate as a condition of employment. The issue spotlight delves into the use of training repayment agreement provisions (TRAPs), which can impede worker mobility, particularly when it comes to obtaining higher wages.
“Employer-driven debt poses the risk of suppressing wages and forcing workers to stay in jobs they do not want,” said CFPB Director Rohit Chopra. “When it comes to consumer lending, federal law protects Americans even when they are on duty at work.”
Employer-driven debt can cover an array of products and practices, including a worker’s up-front purchase of equipment and supplies that the employer requires. TRAPs are a common form of employer-driven debt. Companies use TRAP provisions to require workers to agree to pay back the purported costs of training if they leave their jobs before the end of a contractual commitment period. In some instances, workers may have to agree to debt products where the debt must be repaid if the worker leaves the employer before a certain date.
In June 2022, the CFPB launched a formal inquiry to seek more information about employer-driven debt. The...
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