Article 43
Wednesday, September 21, 2022
Training Repayment Agreements
Is your company charging you for training?
The buzzwords are EMPLOYER DRIVEN DEBT and TRAINING REPAYMENT AGREEMENTS.
If so, the government wants to hear your story.
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The Consumer Financial Protection Bureau (CFPB or Bureau) is charged with monitoring markets for consumer financial products and services to ensure that they are fair, transparent, and competitive. As part of this mandate, the CFPB is SEEKING INPUT FROM THE PUBLIC on debt obligations incurred by consumers in the context of an employment or independent contractor arrangement. Areas of inquiry include prevalence, pricing and other terms of the obligations, disclosures, dispute resolution, and the servicing and collection of these debts.
Employer-Driven Debt
The CFPB has identified a potentially growing market of debt obligations incurred by consumers through employment arrangements. These debts (referred to here as employer-driven debts) appear to involve deferred payment to the employer or an associated entity for employer-mandated training, equipment, and other expenses. In this marketplace, the users of these financial products and services are workers or job seekers and the firms offering or providing these financial products or services are employers or associated entities.
Though they may take other forms, employer-driven debt products appear to include:
· Training Repayment Agreements that require workers to pay their employers or third-party entities for previously undertaken training provided by an employer or an associated entity if they separate voluntarily or involuntarily within a set time period. These trainings may have been required in order to obtain a job or a promotion and may be of dubious value outside of the company-specific setting. These agreements generally require payment when workers leave their employment arrangements.
· Debt owed to an employer or third-party entity for the up-front purchase of equipment and supplies essential to their work or required by the employer, but not paid for by the employer. These products might be common in employment relationships in which workers are outsourced or classified as independent contractors. Workers may also owe deferred payments related to maintenance of equipment and supplies.
Risks to Consumers
Employer-driven debt, like other debt, could pose risks to consumers, including overextension of household finances, errors in servicing and collection, default, and inaccurate credit reporting. As with other debt, errors and misinformation can create heightened risks of consumer harm at each stage of the debt life cycle, from origination through servicing and default or payoff. The CFPB understands that, in addition to these general risks, employer-driven debt may also pose additional risks to consumers: consumers may not understand whether these arrangements involve an extension of credit, whether they have the ability to comparison shop for credit offered by others, or whether entering into the debt agreement is a condition of employment. Additional risks specific to the employment context may include whether default on the debt threatens continued or future employment, or whether the status of the debt is impacted by a decision to seek alternative employment. These risks might limit competition and transparency in this market for consumer financial products and services.
Risks to Consumers
Employer-driven debt, like other debt, could pose risks to consumers, including overextension of household finances, errors in servicing and collection, default, and inaccurate credit reporting. As with other debt, errors and misinformation can create heightened risks of consumer harm at each stage of the debt life cycle, from origination through servicing and default or payoff. The CFPB understands that, in addition to these general risks, employer-driven debt may also pose additional risks to consumers: consumers may not understand whether these arrangements involve an extension of credit, whether they have the ability to comparison shop for credit offered by others, or whether entering into the debt agreement is a condition of employment. Additional risks specific to the employment context may include whether default on the debt threatens continued or future employment, or whether the status of the debt is impacted by a decision to seek alternative employment. These risks might limit competition and transparency in this market for consumer financial products and services.
Request for Comment
This request seeks information from the public on how employer-driven debt has impacted consumers. The CFPB is particularly interested in hearing from consumers, worker organizations and labor unions, employers (including employers trying to compete with other employers using employer-driven debt), social services organizations, consumer rights and advocacy organizations, legal aid attorneys, academics and researchers, small businesses, financial institutions, and state and local government officials.
The CFPB welcomes the submission of descriptive information about experiences faced by people participating in the market, as well as quantitative data about employer-driven debt. The CFPB is interested in receiving comments relating to debt incurred to an employer or an associated entity, taken on in pursuit or in the course of employment. Commenters need not answer all or any of the specific questions posed. The CFPB anticipates analyzing this information in the service of better understanding the relationship between labor practices and the market for consumer financial products or services and identifying priority areas for future action.
You may submit responsive information and other comments, identified by Docket No. CFPB-2022-0038 by any of the following methods:
· Federal eRulemaking Portal: FEDERAL ERULEMAKING PORTAL. Follow the instructions for submitting comments.
· . Include Docket No. CFPB-2022-0038 in the subject line of the message.
SOURCE - FEDERAL REGISTER - PDF
Section Dying America • Section Workplace •
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