Labor News & Commentary November 20, 2023 "stay-or-pay" clauses in employment contracts

[Omaha Steve]

https://onlabor.org/november-20-2023/

By Morgan Sperry

Morgan Sperry is a student at Harvard Law School and also serves as OnLabor's Social Media Director.

In today’s news and commentary, The New York Times Magazine takes aim at “stay-or-pay” clauses in employment contracts, and law professors offer guidance to employees and students being retaliated against for political speech.

Today, The New York Times Magazine is drawing attention to “stay-or-pay” clauses, a new flavor of training repayment agreement provisions (“TRAPs”) that go beyond merely requiring specialized workers to repay training costs if they leave their jobs before a given period of time, and stray into actually requiring workers to pay tens of thousands of dollars in damages if they quit. Even worse, “stay-or-pay” clauses frequently include forced arbitration agreements, meaning that any disagreements regarding the legality and enforceability of the clauses will be adjudicated by a private arbitrator (who is generally paid for by the employer) rather than in a public courtroom. David Seligman—the Executive Director of Towards Justice, a Denver-based nonprofit that litigates on behalf of workers—notes that TRAPs structuring a “worker as debtor” employment relationship have proliferated since 2016, and these latest “stay-or-pay” clauses are particularly concerning. Earlier this year, the Consumer Financial Protection Bureau released a study on the consumer harms inherent in employer-driven debt, highlighting that TRAPs cause reverberating harm beyond just to the workers they directly constrain.

FULL story at link above.