A new bill granting the Colorado Attorney General rule-making authority over certain employment agreements took another step closer to becoming law on April 23 when it passed its Senate Committee on Business, Labor & Technology hearing.
House Bill 24-1324, titled Attorney General Restrictive Employment Agreements, is a bi-partisan effort sponsored by Democratic Rep. Chad Clifford and Republican Sen. Larry Liston. The bill specifically targets employer recovery of costs associated with education and training workers, when they’re training is distinct from normal, on-the-job training, according to the bill’s summary.
Clifford, in his introductory statement in the bill’s initial House Committee hearing, gave an example of the type of work training the bill intends to address.
“We have someone in my district who got a job at a pet store, was promised free on-the-job training, and when they left that store, they ended up owing the store $5,000 for their training,” said Clifford. “The store filed credit bureau information on them showing that they owed that, and they were like, ‘We didn’t even earn $5,000 in this job.’”
Clifford said when he talked to Colorado Attorney General Phil Weiser about this story, he said his office was aware of the issue and would support a bill to address training repayment agreements.
Clifford said the problem wasn’t with all agreements of this nature, and he cited the use of these agreements in law enforcement and for city employees as examples of good use cases.
“It’s widely used, we don’t have a problem with that,” said Clifford. “What we do have a problem with is that we have a ton of different non-professional jobs that have started using these types of agreements to trap people in employment.”
As it stands in the current statute, an employer can recover the expense for that training or education. The bill would regulate the recoverable expense as other consumer debt and student debt and add a requirement the training comply with rules set by the attorney general regarding the transferability of the training or the credentialing available to the employee as a result of the training for the employer to recover the expense.
Martha Fulford, assistant deputy AG and the administrator of the consumer credit union for the Colorado Department of Law, appeared before the committee on behalf of the AG to support the bill.
“Our office has grown concerned about training repayment agreements, or TRAPs,” said Fulford. “In particular that some employers are using TRAPs where the skills that the employees gain from training are not transferable to another employer and or do not lead to certification for the employee.”
Fulford said the bill would allow the AG’s Office to conduct a full Administrative Procedure Act rulemaking process on training repayment agreements.
“The bill would also clarify that TRAPs are under the Restrictive Employment Agreements Act [and] are covered by ethical consumer protection statutes, including the [Colorado Uniform Consumer Credit Code], the Student Loan Equity Act and the Fair Debt Collection Practices Act,” said Fulford. “We think this clarification of existing law will provide compliance guidance to employers using TRAPs.”
One issue raised by Makyla Moody of Greenberg, Sada & Moody in the initial committee hearing was the $1,500 registration fee, paid to the Attorney General, for smaller employers who would offer a training repayment program.
“Our concern is the fact that in order just to offer it, we’d have to register with the Attorney General’s Office,” said Moody. “That’s a huge expense considering our employee’s only asking us to front this particular money.”
An amendment to the bill, passed in its second reading to the House of Representatives, directly addressed this concern. The amendment added a small business and government fee exemption for businesses using five or fewer of these types of agreements a year.
The bill was amended another time in its hearing in the Senate Business, Labor and Technology Committee hearing. The Senate amendment limits the scope of the AG’s authority.
Following the amendment, the bill passed unanimously in the Senate committee, and awaits its second reading in the Senate.