Stay or Pay Contracts. What they Are & Why they're Risky

“Stay-or-pay” or TRAP agreements (Training Repayment Agreement Provisions) require workers to repay large “training” costs or fees if they leave before a set period. These clauses can chill job mobility, invite aggressive debt collection, and—depending on the terms and your state—may be unlawful or unenforceable. Federal and state regulators are scrutinizing these agreements, particularly in healthcare, transportation, and sales industries.

If you’ve been threatened with a TRAP demand: Save all documents and contact us for a Free Case Review.

What Is a Stay-or-Pay (TRAP) Agreement?

A TRAP is a clause in an offer letter, onboarding packet, or separate agreement that says something along the lines of:

if you quit (or are terminated) before X months, you must repay $Y for

“training,” “onboarding,” “certification,” or similar.

Common industries that use TRAP agreements include healthcare (e.g., nursing), trucking, aviation, technology sales, and hospitality.

Are TRAPs Legal?

It depends on the terms and your jurisdiction. The CFPB has identified “employer-driven debt,” including TRAPs, as a consumer risk area and continues to monitor and coordinate with other regulators.

Bottom line: Enforceability hinges on the contract language, the true nature/value of the “training,” prorating, whether repayment is triggered by any separation (including layoffs), and prevailing state/federal law trends.d

What To Do If You’re Hit with a TRAP Demand

1. Save everything: Offer letter, handbook, TRAP clause, invoices, training outlines, emails, texts, pay stubs.

2. Do not pay under pressure: Quick payments may waive defenses.

3. Document the training: What you actually received, how long, who taught it, whether it’s standard onboarding or a specialized certification.

4. Track collection conduct: Voicemails, letters, credit-report entries—these details matter.

5. Get legal advice early. Contact us today.

FAQs (Quick Answers)

Are stay-or-pay agreements always enforceable?No. Courts and regulators scrutinize whether the fee reflects real, job-specific training vs. routine onboarding, whether it’s prorated, and whether it functions like a noncompete by deterring mobility. Outcomes are highly state-specific.

What if I was fired or laid off?

Clauses that demand repayment even after involuntary separation are especially suspect. Keep all paperwork; you may have strong defenses.

Can they send me to collections or ding my credit?

Some try. “Employer-driven debt” collection raises consumer law issues; we evaluate your claims under federal collection and credit reporting laws, as well as unfair practice claims.

Didn’t the FTC ban these?

No blanket ban is currently in effect. The FTC’s 2024 noncompete rule is blocked; agencies may still challenge certain de facto noncompetes (including some TRAPs) on a case-by-case basis.

What’s happening in my state? State rules are changing quickly. For example, California’s legislature passed a 2025 bill targeting many stay-or-pay terms (status: confirm current stage), and state AGs have pursued settlements in healthcare.

Think your employer’s TRAP is abusive? Contact Wells Law – Chicago today for a Free Case Review.