Digital Originals

published : 2023-10-01

Workers Who Received On-the-Job Training Face Lawsuits as Former Employers Seek Repayment

Legal Agreements Could Force Former Employees to Pay Thousands in Training Costs

A former employee, Drew Lakey, shares his experience with training reimbursement agreements. [Image: Person holding a clipboard, contemplating their decision. Taken with Nikon D850]

Companies are utilizing a legal stipulation to compel their former employees to repay training expenses, resulting in potential lawsuits and financial burden.

These training reimbursement agreements require employees to reimburse their employers for training costs if they leave within a specified period after being hired.

In a recent case, The Skin Cancer Institute in Delano, California filed a lawsuit against a former employee, claiming $38,000 in training costs and an additional $100,000 for loss of business.

Notably, a survey conducted by the Cornell Survey Research Institute revealed that nearly 10% of workers reported being covered by training reimbursement agreements in 2020.

Furthermore, more than a third of the 1,700 nurses surveyed were subjected to such agreements.

An employment lawyer, Ashley Tremain, discusses the rise in training reimbursement agreements. [Image: Lawyer in a conference room, reviewing legal documents. Taken with Canon EOS 5D Mark IV]

Ashley Tremain, an employment lawyer in Texas, pointed out that these agreements have become increasingly common over the past five to six years, with workers reaching out to her several times a month, often owing around $20,000.

This shift in popularity can be attributed to individuals seeking ways to maneuver around noncompete restrictions.

While employers argue that these costs are justified, individuals like Drew Lakey, an employee mentioned in The New York Times, express surprise at the desire to leave the contract early.

According to Dan Pyne, a lawyer specializing in agreements enforcement, the enforceability of repayment obligations depends on whether the training is voluntary or required by the employer.

"When the employee is going through the training voluntarily, primarily for their own benefit, in those situations, as a rule, the repayment obligation would be enforceable, and would be legal," Pyne explained.

A survey reveals the prevalence of training reimbursement agreements among nurses. [Image: Group of nurses in a hospital, discussing patient care. Taken with Sony Alpha A7 III]

On the other hand, employees who frequently switch jobs can adversely affect businesses, as demonstrated by a skincare clinic owner in Washington state who filed a $2,244 lawsuit against a former employee due to losses incurred during training.

Recognizing the potential negative impact of such agreements, the Biden administration has taken steps towards limiting stipulations like training reimbursement agreements, with the Federal Trade Commission proposing a rule to ban many noncompete and reimbursement agreements.

While efforts to mitigate the issue are underway, individuals like Madison Burch, who quit her health care job without passing a board certification exam, still face legal consequences.

Burch was sued for $30,000 by her former employer, highlighting the significant financial burden these agreements can impose on individuals.

Despite the ongoing lawsuits and debates surrounding training reimbursement agreements, the full implications of these agreements remain to be seen.