BarbriSFCourseDetails
  • videocam Live Online with Live Q&A
  • calendar_month January 28, 2026 @ 1:00 PM E.T.
  • signal_cellular_alt Intermediate
  • card_travel Employment and Workers Comp
  • schedule 90 minutes

Employee Training Repayment Agreement Provisions: Increased Scrutiny, Litigation Update, Pitfalls to Avoid

Drafting to Mitigate Risk of Enforcement Action; Lessons Learned From Costly Stay or Pay Settlements

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Description

TRAPs, also known as "stay or pay" provisions, require employees to repay specified amounts for employer-provided training if the employee leaves their job before a specified time. While TRAPs were historically used for high-paying and/or specialized positions, they are now increasingly used for broader groups of employees, in part to protect the loss of company investment in the employee in response to regulatory efforts to limit the use of noncompetes. Even though federal scrutiny of TRAPs seems to have subsided to some degree under the current administration, state attorneys general have increased enforcement action against employers for TRAP use and states have passed or advanced legislation targeting these provisions.

Recent high-visibility litigation and costly settlements demonstrate this increased scrutiny and under what laws the states are pursuing such actions. For example, the attorneys general of California, Colorado, and Nevada recently announced a settlement with Hospital Corporation of America (HCA) where the company agreed to pay approximately $3.5 million to settle claims that it unlawfully "trapped" new nurses in overly restrictive training repayment agreements where the entry level registered nurses were required to sign the agreements as a condition of participating in mandatory specialty training programs. If the nurse left their hospital employment within two years of the training, they were required to pay back a prorated amount of the value of the training. The states said the company's agreement violated consumer protection laws.

Another Colorado action alleges that PetSmart's use of TRAPs violates state consumer protection and labor laws and constitutes deceptive trade practices where the company allegedly enrolled prospective dog groomers in a "free" training class, but required them to sign a TRAP agreement whereby they would pay PetSmart $5,500 if they left within 11 months of their start date or $2,750 if they left between their first and second year of employment.

Listen as our expert panel examines the risks of using TRAPs in employment agreements. The panel will examine the status of federal enforcement action and the increased scrutiny by states including notable legislation and litigation. The panel will also offer best practices for determining whether to use TRAPs and how to draft these provisions to minimize the risk of enforcement action.

Presented By

Stephen E. Baumann II
Partner
Holland & Knight LLP

Mr. Baumann focuses on providing efficient, practical and strategic solutions that employers need to navigate ever-evolving labor and employment challenges, from day-to-day advice and counsel to complex, high-stakes litigation across the country. He is experienced in working with employers of all sizes, from small startups to Fortune 500 companies, to address and resolve employment and traditional labor issues throughout the employment life cycle, from hiring through performance management, corrective action and separation of employment. Mr. Baumann advises employers about employment agreements, employment policies, protection of trade secrets, restrictive covenant agreements and other issues confronting employers in a constantly evolving legal landscape. He also frequently advises technology and telecommunications industry clients on the full range of labor and employment support for private tech companies that have achieved "unicorn" status, a valuation of more than $1 billion. This work often includes serving as external in-house employment counsel to support these high-growth, fast-moving companies in California, Colorado and nationwide for whom the establishment of complete HR standards, policies and procedures presents a new type of growth opportunity. In addition, Mr. Baumann has a significant background in litigation practice in federal and state courts nationwide. He has an in-depth knowledge of complex litigation involving trade secrets, non-compete agreements, non-solicitation agreements, discrimination, retaliation, harassment, failure-to-accommodate and wrongful termination.



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Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.


  • Live Online


    On Demand

Date + Time

  • event

    Wednesday, January 28, 2026

  • schedule

    1:00 PM E.T.

I. Introduction: what are TRAPs?

II. Status of federal scrutiny of TRAPs

A. Agencies' focus

B. Litigation

1. SpecialtyCare class action

2. Other

III. Increased state scrutiny of TRAPs

A. State legislative update

B. High-profile litigation and settlements

1. HCA

2. PetSmart

3. Other

C. Lessons learned

IV. Best practices

A. When to use employee training repayment agreements

B. Drafting considerations to mitigate risk of enforcement action

V. Practitioner takeaways

The panel will review these and other important issues:

  • Why have companies begun using TRAPs more frequently in recent years?
  • What is the status of federal scrutiny of TRAP use? Notable federal litigation?
  • Under what laws are state AGs pursuing enforcement action? Notable state litigation?
  • What lessons can be learned from recent high-dollar TRAP settlements?
  • What are best practices for drafting employee training repayment agreements to mitigate the risk of enforcement action?