Beware of the contract clause that burdens American workers with debt

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The bite of a TRAP can be especially painful when a worker has been led to believe that it will not be used. Scally couldn’t afford to pay her debt to PetSmart, but says her manager said that as long as she worked at the company long enough for her to recoup the $5,500, she probably wouldn’t apply the OK. She stayed until September 2021, when she calculated she had returned her money to PetSmart.

Four months later, Scally checked her credit report and saw that she owed “IC System” $5,500. She called to investigate and learned that the company was a collection agent hired by PetSmart. Scally had worked to get his credit rating high enough to receive a loan to start his own animal rescue business; now he has plunged. “It was like you took 10 steps forward, and now you’re pushed back eight,” she says.

Adrian Valdes, former dog bather at PetSmart, describes a similar ordeal. They enrolled in the Grooming Academy program in 2020 because it was their only way to get health insurance and guaranteed hours. But three months after completing the training, they found a job as a dog bather at another company with better pay and health insurance.

Valdes preferred bathing the canines rather than grooming them, but faced the perils of TRAP. Two former colleagues who left before the end of their contracts told Valdes that PetSmart did not enforce their refund agreements. Valdes calculated that their own earnings for the company exceeded the $5,500 fee and decided to quit. About a month later, a bill arrived from a collection agency for $5,500. “I was the unlucky one,” Valdes said.

Chris Hicks, senior policy adviser at SBPC and co-author of his report, says Scally and Valdes’ ordeals are not unusual: Most of the workers the authors spoke to were unsure if their TRAP was going to be enforced. “They said, ‘Some of my former colleagues have left and have not been prosecuted. So I think I can leave. But then they would see it applied. This pattern can hit workers with unexpected and unaffordable debt, Hicks says, or cause people to stay in bad jobs, fearing the consequences of leaving.

Luckily for Valdes, they had attended meetings organized by the labor advocacy organization United for Respect, which helped challenge the charge. It was eventually cancelled. If that hadn’t been the case, says Valdes, “I would have declared bankruptcy.”

Previous cases brought against employers have argued that the traps violate fair labor standards law, but courts have often upheld the agreements. Still, some states have recently begun restricting the use of TRAPs, and federal regulators have also shown interest.

In 2020, California lawmakers enacted legislation banning the use of TRAPs for healthcare workers in the state, and in May this year, Colorado lawmakers passed a bill banning their use for training. standard on the job. In June, the US Consumer Financial Protection Bureau opened an investigation into employer debt, including TRAPs.

After setting off her own TRAP, Scally found work as an animal care technician in South San Francisco. Debt and the PetSmart dispute have pushed back her schedule, but she still hopes to one day open her animal sanctuary, where she can rescue dogs and groom them on her own terms.

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