A new lawsuit against Smoothstack, a technology-focused staffing agency, is the latest to highlight the trade-offs of training repayment agreements.
The pitch from Smoothstack, a technology-focused staffing agency, is simple: Earn money while you train, get deployed to an IT job at a top tech company, start working and launch your career.
But the reality is more complicated, a lawsuit alleges. Throughout this process, Smoothstack underpays workers while they train and even once they start working at one of the company's clients, which include Fortune 500 companies, the lawsuit, filed last week in federal court in Alexandria, Va., claims. If a worker tries to leave Smoothstack before billing 4,000 hours -- roughly equivalent to two years of work -- to one of Smoothstack's clients, they owe the company roughly $24,000, according to the suit.
The lawsuit, filed on behalf of a former Smoothstack employee that seeks class-action status, is the latest to highlight the practice of employers binding workers to companies through training repayment agreements. These provisions in employment contracts require workers to pay their employers if they leave their job before working for a minimum amount of time set by the company.
Over the past several months, regulators have upped their scrutiny on these deals, which cover employees in industries representing about one-third of all workers in the U.S. By threatening to saddle employees with debt if they quit, these agreements have stoked...
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