Employees Should be Careful to Avoid T.R.A.P.s

What is a T.R.A.P.?

A Training Repayment Agreement Provision (a.k.a. a “T.R.A.P.”) is a contract, or a contract provision, requiring an employee to repay their employer the cost of training provided to the employee by the employer for the employee’s professional development. A T.R.A.P. provision is usually included in either an employee’s employment contract or as a separate stand-alone contract made between the employee and employer after the employment relationship has begun.

Usually, the training provided by the employer is intended to train the employee with new skills and knowledge. The employer gets the benefit of an employee with expanded capabilities, and the employee benefits by receiving new skills and abilities. Technical training and professional development are expensive services and employers can sometimes seek to pass training costs onto the employee.

T.R.A.P.s are most often utilized when the employer is concerned that an employee might leave the employer’s employment before the employer gets the full benefit of the newly trained employee’s skillset. For example, industry certification boards often require costly and lengthy training in order to get board certification, such as for medical or mental health professionals. If an employee gets this kind of training and leaves immediately after becoming certified, the employer will have invested extensive time and resources and received no resulting benefit.

Read The Fine Print

Unfortunately, some employers will use T.R.A.P. provisions to exploit employees by including onerous terms or unreasonable restraints on the employee’s freedom. Because the employer wishes to ensure that employees remain employed long enough for the employer to profit from the training, T.R.A.P.s are included as a method of enforcement of non-compete and term of service provisions.

In essence, this means that if an employee leaves the employer in breach of her contract, either by taking employment in violation of her non-compete or leaving before her term of employment was supposed to end, the employer may use the T.R.A.P. provision to sue the employee. Thus, a former employee can find herself in the unfortunate position of owing money to her former employer.

Liquidated damages

There are two ways in which a T.R.A.P. might seek to recoup the costs associated with training an employee. The first method is to include liquidated damages as part of the T.R.A.P. Liquidated damages are a contract provision which pre-determine a set damages amount if the employer seeks repayment from an employee. For instance, an employer might include language in your contract which states that you must repay the employer $200.00 an hour for each hour of training provided. If you were to leave your employment in violation of your agreement after having received 100 hours of training, you would be liable to your employer for $20,000.00 ($200.00 x. 100 hours).

Dollar to Dollar Reimbursement – Compensatory damages

The other method for recovering training costs is a dollar to dollar reimbursement, also know as compensatory damages. Your former employer would sue for each dollar expended on your training, up to and including travel costs, per diems, and other such fringe benefits. Individuals are often surprised at the operational costs incurred by an enterprise in providing training, as such costs are also likely to be in the tens of thousands of dollars.

Regardless of the underlying terms of the T.R.A.P., employers can maximize the amount of damages it seeks from a former employee. Sometimes, employment transitions are accompanied by bad feelings on one or both sides, and employment disputes can become quite acrimonious. Employers, in addition, may also view an employment dispute as a threat to its authority and consequently wish to “make an example” of a former employee in order to maintain control over its workforce. As damages under T.R.A.P. can range into the hundreds of thousands of dollars, they make an effective tool with which to punish former employees.

T.R.A.P.s in Virginia

T.R.A.P.s have begun to become more common in employment contracts in the Commonwealth of Virginia. In principle, these provisions are considered enforceable. Thus, despite how unfair it might seem to an employee, Courts are willing to enforce the employer’s contractual rights against the employee.

Virginia courts are loathe to refuse to enforce employment contract terms. The Court will not, however, enforce contract terms that are unreasonable or punitive. T.R.A.P.s, while generally enforceable, have not had their reasonableness analyzed and defined by Virginia Courts. This is likely because the vast majority of employment suits are settled before trial. Thus, while the provisions themselves are generally enforceable, the precise terms under which Court may refuse to enforce T.R.A.P. have not been defined.

As a result, it is uncertain which T.R.A.P.s are enforceable and which are not. If you are a Virginia employee, or are employed under contract governed by Virginia employment law, therefore, and are being threatened by your employer using a T.R.A.P., you may be able to argue that the contract is unreasonable or punitive to avoid or mitigate enforcement of the T.R.A.P.

“I’m Caught in a T.R.A.P.! What do I do?”

The first thing to do is to not panic. While it can be very upsetting to be threatened by legal action, the important thing is to remember that it is a common occurrence and that there are trained and experienced professionals accustomed to untangling such problems.

The second thing to do is to find an attorney whom you trust with experience in employment matters. That professional will be able to review and evaluate your employment contract and inform you as to your rights and liabilities under your contract. In particular, your lawyer should be able to tell you what your potential liabilities are under your T.R.A.P. and what potential defenses you might have to said provision’s enforcement.

Lastly, you should communicate with your employer only by written means. You should gather all employment-related documents and your communications with your employer and organize them for your attorney. It is also wise to prepare a point by point narrative or timeline of the course of your employment and the circumstances leading to the dispute with your employer to further assist your lawyer in preparing your defense.

If you need any assistance from an employment lawyer with your employment contract or non-compete, and you were working from DC, Maryland, or Virginia, please do not hesitate to contact Lipp Law.