Training repayment agreements trap employees in their jobs | Hacker News Reader

Training repayment agreements trap employees in their jobs

nytimes.com

65 pointsgnicholas86 comments

This has been a huge scam with contracting agencies, to the point I've had to reject some offers because the firm had a history of this.

The stinky part is that it's entirely out of your control. Say BigCorp hires WorkCo to staff up 30 positions with LevelIV skill. WorkCo grabs a bunch of people it thinks are LevelIII, sends them out an Official Uptrain Packet[1] to get them to LevelIV. Then BigCorp decides, eh, nah, we'll staff it internally - they pay the penalty to WorkCo and go on their way. Then WorkCo ditches the new hires, charges them for the LevelIV upskill package they sent out. You'll note that there is zero downside risk for WorkCo here.

How much do they charge? Haha, no one knows. None of these skill levels are documented consistently per-company - the GSO has rules, but they're circumvented constantly with all sorts of horseshit adjustments.

[1] Who certifies these is a VERY interesting thing indeed

Google isn't finding anything relevant for your [1]

Without risking poisoning the well against a powerful organization that more or less shapes my industry, it rhymes with "Thai Escrow'". The cert business has gotten extremely hinky last decade or so, with an explosion of "print your own spec" services, that give you a paper trail to rack up charges, like with these bogus *#$! training packages that get sent out.

Hold up a sec. How do these certs stay active? Weeeelllll . . that's linked to how Thai Escrow governance works. It's pretty bad. W3C seems like a hothouse of benevolence in comparison.

Why would you not name it? Especially if they're bad.

I'm going to guess it's ISO.

I'll cough once for yes.

You should just give the name. I’m not sure how insinuation and rhyme makes it less poisoning of the well.

Harder to use automated tools to correlate the account and the information I'd guess

What?

I promise I'm not trying to be daft, I honestly don't know what you're saying. Is there anyway you could be more concrete, or give me something to search more on? I searched for rhymes with "Thai Escrow" and I get nothing.

How can you be charged for training that your employer made you go through?

One example off top of my head is trucking. The company can say no experience required but you have to pay for training and training materials. It works out that one employee can barely support oneself in such a business arrangement and one is beholden to the company and there can be financial penalties for quitting early. It got such a bad rap there was a Planet money podcast about it https://www.npr.org/2020/08/10/901110994/big-rigged

Training Repayment Agreement Provisions (TRAPs). It's the hot new thing.

Tell someone they're hired, insert a harmless looking little clause[1], have 'em sign the paperwork, send 'em a training packet, then WHOOPSIE the client didn't need you after all and you owe us 30,000 smackaroonies.

Honestly, since the job seeker is explicitly prohibited from contacting the client independently, I'm amazed that this isn't a more common con. Like, why not just ditch the idea of having a client at all, and just prey on the job seekers? Probably because that's a little more on the "definitely illegal" side, because you have to lie about a client needing headcount[2]. What you can do, completely legally, is overhire on a client whim, since overhiring literally makes you money.

[1] "Oh this? It's industry standard for the client. Just a government thing. Look, here's our Official Certification. Everyone signs it."

[2] EDIT or, as a dedicated scammer, you could have a fake client too. Make it sound really official. "LEGACY AERO", "LONG RADIO CORPORATION", "OLD-TIMEY TOTALLY AMERICAN-SPEAKING TRUCKING COMPANY". Or make it sound religious! Be ready for lawyers with an actual business-looking fake client that's . . awww . . just on Hard Times. Also, be a worthless piece of human-shaped filth. That's the first prerequisite.

if a company terminates the employee then any repay clauses should become void. that's the case in germany for example. repay clauses only trigger if the employee quits without cause.

it is reasonable to charge for training, or require to work for some time if the training allows you to get a higher paying job. but the cost of the training, and the time that you need to stay in the job afterwards need to be reasonable too.

for example in germany, a 3-month training allows a 2 year binding to the job. repay clauses only trigger if the employee quits voluntarily and doesn't have a strong reason to quit. i couldn't find anything about the cost of the training, but i guess this should be industry average. pilot training is expensive everywhere, and medical training can be too i guess. but i would expect the training should allow you to demand a salary high enough to pay it off in a reasonable time.

the first example in the article is clearly demanding to much. as is mentioned further down, $20,000 is the average cost, which for a two year binding would mean the cost/repay-value is about $830 per month. still seems high, but if the training allows you to demand that much more for your salary then it would be ok.

20 K$ of training with a two-year binding to pay it back is structurally a 20 K$ loan with a two year term and a clause demanding instant repayment of the entire principal in full if you quit.

If the company is actually giving you 20 K$ worth of training and they just want you to pay off the debt then that can just be a regular two year loan. If you quit you still need to pay, but on the normal payment cycle.

These repayment clauses are loans with extra employee unfriendly steps. Even bankers do not write loans like this for regular people. And when you need to learn a thing or two from bankers about financial ethics, you have made a grave mistake.

right, the instant repayment is wrong. i couldn't find much about that for germany in comparison. only one source mentioned a case where a court granted the employee the right to repay in installments.

The only good thing I can say about this disgusting cash grab by business is they are asking such a ludicrous amount that people have no choice but to lawyer up.

$30k in "training costs" for a 2 week program leading into a $35k/year job?

$38k in "training costs" + $100k in "loss of business because we have to find a replacement" for a job that pays $200k average, and far less for starters, is insane.

If they just tried to hit people up for $10k or something, some might actually suck it up and move on.

Are the employees to blame that the company overpaid? That's what I would ask.

No.

Insurance companies already use this line when they refuse to pay off a note with value vs financing owed payments. They flat out say "we are not responsible for bad financial decisions of the insured".

No the employees are not, and the practice should generally be illegal or at worst, extremely rare.

Must be one helluva boot camp for that kind of price. You could almost get tuition for a single semester class at a college for those prices.

I can't read this particular article, but in general, it is striking on how companies often view training their employees, either via external or internal means, as some great burden that is thrust unfairly upon them. Given such a situation, it isn't surprising that employment has become a lot more transactional and short-term. At least, this seems like a major component. There seems to be a general unwillingness, from both parties of employer and employee, to invest in the other beyond superficial means. It would be my guess though that this particular dynamic was initiated by corporations though, by reducing interest in training, placing pressure on universities to train entry-level employees for them, and reducing other long-term investments such as pensions.

There are very few rules and regulations that enforce or promote an employers ability to invest in their worker.

The rules and regulations that do exist are pathetic, starting with the laughable minimum wage.

Not to mention other rules are completely abused to make workers work more hours and to not be adequately paid, such as exempt employees whose salary hovers around that minimum level.

Companies also outsource and offshore in seconds. They do not even invest in the country anymore.

Even though legally these items are not unjust enrichment I fail to see why morally it cannot be construed as so.

Let’s get real about which side is exploiting the other.

If a company is giving you “50 K$” of training and you are “paying it back” through your work over 5 years then you are actually getting paid 10 K$ more and the company is withholding the amount from your paycheck like how you might elect to directly pay into a 401(k). So, logically, at the end of the 5 year period you should be getting a 10 K$ raise since you no longer need to withhold for training costs, right?

The problem with these job training payment schemes is not that they are immoral on their face, it is that they are accounting and financial nonsense.

If you want to be a welder, that requires training. If you do not have enough money, you can get a loan. If you want to reduce the risk, you can work at a company that will guarantee you a job for a period of time if you complete the training. If you want to spend the money on things other than paying down the loan, then you can do that. Money is fungible and personal, training should also be fungible and personal.

That is at least sane model. You may also disagree with that as well, and you are welcome to do so, but the real abomination here is shackles made of fake loans paid with fake money.

> So, logically, at the end of the 5 year period you should be getting a 10 K$ raise since you no longer need to withhold for training costs, right?

Sure.

I suspect that happens.

You wouldn't get the raise because your pay isn't dictated by how much money you make for a company, but by supply and demand.

You have incurred a 50 K$ debt to the company. Where are you getting the income to pay it?

Are you claiming a company can just expunge employee debt willy-nilly? Then instead of a paycheck I can just take a loan from my employer that they expunge avoiding all income taxes. No, that is not how it works. A entity can not magic a loan into existence and then back out.

You are being paid 10 K$ more. Your salary or hourly wage should reflect that. Maybe they might choose to dock your pay or fire you after you “pay off” the debt since the “training” is actually just a shackle of no independent merit (e.g. they give you a 50 K$ salary, but claim a 10 M$ training loan over 5 years so you are on the hook for 2 M$ per year you quit early).

That should probably be dealt with via false advertising laws around training programs and laws around loans. They would also be required to disclose that you are explicitly taking on a 10 M$ personal loan for that job which would almost certainly scare people away. Also probably super duper illegal. I do not think the courts would take too kindly to gigantic loans for fake training.

> “They’re just becoming ubiquitous,” she said, “as people are trying to find creative ways to move around noncompete restrictions,” which are gaining traction at the state and federal levels.

Interesting to see how companies adapted to the changes in noncompete laws. What will be the next fallback position?

> The Federal Trade Commission has proposed a rule that would ban most noncompete clauses, including many T.R.A.s. In July, the Consumer Financial Protection Bureau released the findings of a yearlong study on employer-driven debt, 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.”

Inflated values should not be used, but does that taint all TRAs? If they are outlawed, how will that change the hiring practices of companies that train new hires in-house?

> Interesting to see how companies adapted to the changes in noncompete laws. What will be the next fallback position?

a friend of mine just left a quantitative hedge fund recently that, in anxious anticipation of noncompetes possibly being banned in new york, asked all of its employees to sign new "nonassociation agreements" as a fallback... these basically say you're not allowed to work with your current colleagues at future employers... which is arguably more draconian than a noncompete... it would be ironic if this became the replacement.

[edited for punctuation]

You can just say Square Point...

And here I was thinking that I wasn't the only one having trouble with iOS17's new autocorrect capitalization algorithm...

Please tell me they didn't actually sign that.

If a non-compete isn't enforceable, how is it enforceable to control what two people, both of whom no longer have an employment contract with the old employer, do?

This is not possible in France, by law.

While I love our labor law (with all is atrocities as well), this is one of these points I would challenge. When you invest Xk€ in specialized trying just to have someone quit right after that it is quite annoying.

This is money which build have gone into training for other members of the team that stay.

Having this money paid back by the company that hires them could be a solution (with plenty of issues of is own)

If training is voluntary and pay back in case of termination by employee is agreed in the contract, sure. Otherwise there's no reason why a company is ok to accept the risk of money loss due to the employee being hit by a bus, but not ok to accept the risk of failure to retain that person.

> If training is voluntary and pay back in case of termination by employee is agreed in the contract, sure.

It's insane how willing american culture is to waive what should be rights if they're signed away. Really, the primary right available to you is the right to be railroaded by contract.

You’re not living up to your moniker’s namesake with this comment. As a general matter, people in fact should have enough agency to be able to evaluate a situation and decide to sign away certain protections. There are many exceptions to this, but signing away one’s ability to freely leave a job without consequence in exchange for upskilling at their employer’s expense falls squarely into the principle above.

The funny thing is, we know the outcome of your line of thinking. Eventually it becomes normalized and part of every contract. That's why we had to stamp out non-competes because otherwise companies would gladly collude to make it so there is no choice.

Have you read contracts, terms of services? You don't acually need to. I'll summarize 100% of those documents for you right now in an easy to understand post with no legalese.

> you own nothing

> the company owns everything

> you have no rights

> you promise not to try and exercise any right you think you have

> you agree to binding arbitration with the firm we pay, just in case you ever get it in your silly little head that you do have rights

> you cannot do anything the company doesn't like

> the company can do anything it wants whether you like it or not

> the company is not responsible for anything ever

> the company makes absolutely no guarantees about anything

> however you are liable for everything that you do that we do not approve of

That's what happens when you can alienate people from their rights via contract: alienation turns into legal boilerplate present in every single one of those documents. The only possible reason for a company not to do this is ignorance or legal liability.

Contracts are good, they are a proof of mutual engagement.

Contracts that enforce only one position are not good - this is why we have string labour laws. A contract in France cannot have anything that is outside the labour law. They are completely generic.

I'm not arguing against the existence of contracts. I'm arguing against the position that people should have the "ability" to waive away their own rights. Such an "ability" inevitably leads to the boilerplate situation I described above.

My country's laws work the same way as what you described. I've had lawyers straight up laugh when I presented them some of these abusive contracts. This "waive your rights" business seems to be an american thing.

This is why I am not suggesting that people waive their rights - this should be completely forbidden because it will be used against them (and in France it is not possible for you to waive your rights, that part of the contract just does not exist in the eye of the law)

What I suggested is to have another company take the burden of the training that happened right before someone left.

How American culture is related to my comment?

If an employee has training, they're more attractive to other employers. Not the case with buses.

well then stop being a shitty employer if you have a problem with people moving on after you train them up. i thought we were into the free market here.

It’s a free-rider problem. How can you compete with me when only you bear training costs while only I benefit from the worker’s skill?

A key question is whether the training is actually worth what’s being charged for it.

is it though? you’re training people so they can be competent at the job they’ve been hired for and then they what take their skills and go do the same thing at a different company? Why would they do that when they already have a job at your company? There must be a reason for them to be leaving in sufficient numbers to cause you problems…

maybe if i don't suffer the cost of training juniors then i can offer a higher salary?

Or maybe I have all the customers because I can afford to sell at lower margins.

sure, but if i don't pay a higher salary then i won't be able to poach the employees you just trained.

So you pay them a little more but less than the cost of training. Win-win (previous employer loses).

The same issue comes up any time a company makes an "investment" in their staff. The bigger the investment, the bigger the incentive to jump ship.

then maybe you should stop training people; or think for a second that if you are the one training everybody you can take a little less profit in exchange for starving your competitors of trained employees. Besides it works itself out anyway if they stay on longer even though it takes you longer to recoup your training costs. tldr this training argument is full of contradictions

Enjoy living in a country with poorly-trained workers then, I guess.

that's the challenge, especially for foreign companies trying to hire locals. in china big companies pay good salaries but they also often don't have a good work culture. i got better results hiring juniors who have not yet experienced that work culture. at least in china students do learn programming so they are not poorly trained. a friend of mine tried that in another country and could not make it work.

it works itself out anyway if they stay on longer

but they don't stay longer. and unfortunately a pleasant work environment doesn't help because juniors don't know yet that other companies are different. it takes working for a few companies before someone learns to value work culture over a higher salary.

finding the right balance is not easy.

If they don't want to lose people after a training, then hire people with that skill directly, for a higher salary, no?

if everyone does that, then were will the training come from?

a friend of mine had the same problem with hiring junior developers. by the time they had enough experience so that he could make a profit from their work, they left for higher paying jobs. he barely broke even most of the time so he ended up closing his business because it wasn't viable.

Obvious answer to this problem is to offer more money after training. Keeping someone on junior salary after this person reached next level is not smart.

but that pushes the break-even point out even further.

If that affects your break-even point you may have problems with your business model. Hiring juniors, training them and keeping on junior salary is a gross misunderstanding of how things should work.

that may well be. my friend was in asia doing classic outsourcing for european and american companies, which means he was competing against other companies in that space. i don't know the details. maybe he was offering more but not enough, maybe he didn't get good enough contracts, or maybe outsourcing with juniors simply doesn't work.

it's also an issue of perception. my company once tried to attract juniors with a high salary (at least 50% higher than local average) but that meant that we couldn't give them a raise early enough. after a year they got a better offer and left.

I usually offer 0,6-0,8 of the salary they will get at middle level (i.e. reaching full autonomy and being able to complete 90% of tasks). This offer is limited in time: they have 6-12 months to grow or they are out. Recognition of their personal growth and higher salary is a good motivation to stay if there’s no red flags in the company (poor processes, toxic environment, frequent overtime etc).

in which country are you working?

I hire remotely within +-2 hours from CET (Europe, Middle East, Africa), but I‘m not working for agencies.

People's right to move to better jobs (by their own judgement) is more important than a business's right to never lose money. In fact, businesses don't have a right to never lose money at all. A business can fail, that's okay, it's an important part of our economy that businesses fail. Let them take their loss, and let them fail if they can't find a way to succeed that doesn't involve financial slavery.

You seem to think this only benefits the employer.

Financially viable on-the-job training benefits employee opportunities as well.

E.g. if $CORP pays for my MBA, I think it's reasonable to commit to labor or payment.

Sounds absurd and abusive to me. Companies should feel pressure to have good perks such as useful education that could be used elsewhere and if they can't retain people they certainly don't deserve a kick back for sucking.

I don't want to play in a job market with parasitic companies full of indentured servants who are afraid to demand the wage correspond to their role.

Sounds like a system that will make upward mobility difficult.

Not a fan of moving back toward indenture systems, personally.

Any explanation why or just preference?

Master-servant relationships and onerous debt imposed on the weak by the strong are things to be avoided as much as possible. They’re repugnant. We’ve got enough of that as it is, without adding more and stronger forms for it to take.

People quit due to toxic management culture, not to triple their salaries with a shitty training program.

What you propose will end up with employees refusing to be trained because they have a low salary (I know that, I’m French).

A previous job wanted me to pay for my own training when I got a promotion. They told me they would reimburse me later, which was an insult on top of the miserable salary I had. I quit later because why would I work with someone who can’t even take care of their employees?

> People quit due to toxic management culture, not to triple their salaries with a shitty training program. > What you propose will end up with employees refusing to be trained because they have a low salary (I know that, I’m French

It certainly depends where you work. A GIAC training in information security is a few thousand euros. Cybersec people are well paid and do not have problems to find a good job. They quit for various reasons (not only salaries, also remote work, freelancing and other similar stuff)

Your situation does not reflect everyone's.

> A previous job wanted me to pay for my own training when I got a promotion. They told me they would reimburse me later, which was an insult on top of the miserable salary I had. I quit later because why would I work with someone who can’t even take care of their employees?

That's a good reason to quit, yes. I do not see what your point is, though.

Finally, as I said in my last sentence - a probably fair deal would be for the receiving company to pay some kind of pro-rata.

I mean, the company can use the fact that they paid for your training to void the money on your CPF for the year. And if the training is really expensive, they can propose you to pay the formation with your CPF, for a discounted price (I got a cybersec formation for half the price, paid in full by my CPF last year. This year they pay for my AWS architect certificate)

> the company can use the fact that they paid for your training to void the money on your CPF for the year

can they? I did not know that. Are you sure of this? The law seems to clearly say no: https://www.editions-tissot.fr/droit-travail/content.aspx?id...

https://archive.is/ljAKC

This link is currently broken for whatever reason

If you’re on cloudflare dns try with another dns provider.

Is there an alternative? I'm getting captcha loops on archive.is, and the DNS issue is frankly embarrassing. Is anyone else providing the same service?

> Is there an alternative?

Plenty; here's one: https://ghostarchive.org/archive/kSTlN

Whatever happened to at-will employment? That can't be only valid when they want to fire/lay-off.

> “They’re just becoming ubiquitous,” she said, “as people are trying to find creative ways to move around noncompete restrictions,” which are gaining traction at the state and federal levels.

It's crazy how much power asymmetry exists between corporations and individuals nowadays. From forced arbitration (even for basic things like rent contracts) to non-competes, to now TRAs...

> But regulators have begun to take action on the legality of T.R.A.s. In the last year, the Biden administration has moved to limit the agreements.

Good to know. But solving problems at the executive level, without codifying the solution into law, makes it temporary and up for grabs by the next election, you know, for those jonesing for "less regulation".

Perot Systems (later became EDS) was famous for this in the 80s with their college hires.

Ah indentured servitude. We're running backwards into the 19th century.

Unions aren't perfect but they care more about you than some capitalists.

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