“Stay or pay” clauses spread as watchdogs consider a crackdown on worker contracts

You can always throw in the towel… but your job might sue you for the dry-cleaning. American employers are increasingly including “stay or pay” clauses in contracts. They require quitting workers to reimburse their soon-to-be ex-employers for hiring and training costs. Once primarily found in high-paying jobs (think: execs), the clauses have spread to thousands of typically mid- and low-wage gigs like teaching and pet grooming. In 2020, 10% of US workers were under a stay-or-pay clause. Now experts say the clauses can be found in industries covering a third of US workers.

• Orientation $$: A common stay-or-pay clause is called a “training repayment agreement provision” —or, ominously, TRAP. Labor advocates say that TRAPs are fines for quitting.

• Bark and bite: Last year a former employee sued PetSmart after the biz required groomers to pay $5K if they quit within two years. Earlier this year, a pilot sued Ameriflight after she said the cargo airline billed her $20K for quitting within 18 months.

Wait — don’t go… Stay-or-pay arrangements may be employers’ response to a regulator crackdown on noncompete clauses, which can restrict workers from switching to a competitor company. In recent years, noncompetes have spread from big banks to lower-wage industries like fast food — but not without pushback. President Biden spoke out against noncompete clauses in his State of the Union this year, and the FTC is set to vote next year on a rule to ban them. The regulator says doing away with noncompetes would affect 30M workers and boost wages by $300B/year.