U.S. Companies Now Charge Ex-Employees for Their Training

Yves here. Thomas Neuburger describes a training clawback scam that amounts to wage theft. If the US had decent wage and hours laws and/or a functioning class action bar, this abuse would be extremely limited. Did the employee actually get anything of value? Was the training solely for the employer’s benefit? Did the employee work long enough for any training cost to be recouped? Was the employee furloughed for the employer’s benefit, as in in an arguable bad faith move?

By Thomas Neuburger. Originally published at God’s Spies

“I can always choose, but I ought to know that if I do not choose, I am still choosing. … Man is condemned to be free.”
― Jean-Paul Sartre, Existentialism and Human Emotions

“The beatings will stop when billionaires are rich enough.”
—Yours truly

The Corporate War on Wages

As we emerge from the Covid crisis, the whole U.S. economy, it seems, is determined to destroy wage growth (or more properly, “wage recovery”). Covid crisis stressed many industries — for example, the airlines, causing the government to find ways to give them money.

Yet as soon as companies received this largess, they found other uses for it, uses that don’t involve paying employees:

CEOs did find ways to enrich themselves, however. From the Guardian:

United Airlines received billions in Covid aid. Now thousands of workers could lose their jobs

Few industries were hit as hard as airlines when the coronavirus pandemic hit the US last year. To stop what looked like the imminent collapse of a major employer, the government stepped in with $15bn in support.

“We thank Congress and the administration for quickly passing legislation to protect the paychecks of tens of thousands of United Airlinesemployees,” said Frank Benenati, the United Airlines spokesperson.

A year on, the $5bn United Airlines received from the $2.2tn Coronavirus Aid, Relief, and Economic Security Act (Cares Act) has helped the airline hand back billions to shareholders and millions to executives. But for 2,500 United catering workers who struggled through the pandemic, it’s a different story. The company is now weighing plans to outsource their jobs to a contractor. [emphasis added]

The Guardian article makes it clear that the outsourcing is a result of pro-union efforts by catering workers.

When it came time to hire workers back, most companies balked, attributing their under-staffing to “no workers available,” when in fact the real cause was, “We refuse to increase wages, customers be damned.”

Eventually even the Fed joined the “War on Wages” bandwagon:

The chairman of the U.S. Federal Reserve, Jerome Powell, said his goal is “to get wages down.” …

According to a transcript of the presser published by the Wall Street Journal, Powell blamed this inflation crisis, which is global, not on the proxy war in Ukraine and Western sanctions on Russia, but rather on U.S. workers supposedly making too much money.

“Employers are having difficulties filling job openings, and wages are rising at the fastest pace in many years,” Powell complained.

The Fed’s proposed solution: bring down wages.

The Fed could have added supply chain issues to the reasons for inflation. But they didn’t. You don’t need to think very hard to understand why.

Clawing Back Wages

The War on Wages has expressed itself in a wonderful variety of ways, including retroactively reducing an employee’s total compensation after she quits. The tool to do that — charge her, as she walks out the door, for the training she received they day they welcomed her in:

More U.S. companies charging employees for job training if they quit

WASHINGTON, Oct 17 (Reuters) – When a Washington state beauty salon charged Simran Bal $1,900 for training after she quit, she was shocked.

Not only was Bal a licensed esthetician with no need for instruction, she argued that the trainings were specific to the shop and low quality.

Bal’s story mirrors that of dozens of people and advocates in healthcare, trucking, retail and other industries who complained recently to U.S. regulators that some companies charge employees who quit large sums of money for training.

Nearly 10% of American workers surveyed in 2020 were covered by a training repayment agreement, said the Cornell Survey Research Institute.

Training Repayment Agreement Provisions are appropriately called TRAPs, because they are.

Living with Predators

All of which leads to a larger observation. We live among predators, lions and tigers and bears, each determined to eat what they can of us before another predator takes a bite first.

Our monetary flesh is rendered off our bones, inch by inch, by those who surround us. Unlike our ancient ancestors, however, whose predators were beasts, our present predators are fellow human beings, creatures identical to ourselves in all but intent.

Which means our use of the term “predator” is off by a lot. An animal that preys on humans is a predator. But a human who preys on humans is more than that. He’s also a psychopath. And we have permitted our society to structure itself so that our most successful psychopaths, our apex predators … are also our rulers.

No wonder ours is a pre-revolutionary nation. And given that, it’s bad for us all that Democratic Party, for the most venal of reasons, vehemently opposes revolutionary leaders who hail from the left of the Right:

The Democratic Party’s Real War in 2020 Was Against Bernie Sanders

[I]n 2020 [the Democratic Party] saw its biggest priority not as beating the man they cynically pretended they thought was a fascist, but as stopping Bernie Sanders. Democratic elites were not just ideologically hostile to the Sanders project, but materially threatened by it. After all, they could live and even thrive under another four years of Trump; the previous four years was proof of that. But if Sanders actually managed to take over the party, it was an open question how long it would be before the corporate largesse ran dry. [emphasis added]

As it stands, we have no good choices. Just degrees of bad ones.

All of the revolutionary energy in the country — which could be called “anti-predator defense” by an impartial observer — is being channeled by both political parties toward right-wing demagogues, who will certainly do us harm, will destroy rather than heal.

A Future No One Wants

It’s a sorry situation. And it’s not a stable one, as Chris Hedges observes:

The reconfiguration of society under neoliberalism to exclusively benefit the billionaire class, the slashing and privatization of public services, including schools, hospitals and utilities, along with deindustrialization, the profligate pouring of state funds and resources into the war industry, at the expense of the nation’s infrastructure and social services, and the building of the world’s largest prison system and militarization of police, have predictable results.

We’re watching those “predictable results” right now, and nothing on offer will mitigate them.

The beatings will stop when billionaires are rich enough, and not before. In other words, never, unless the our billionaire-serving rulers are replaced.

Seems impossible? Not so. Not for an existentialist. Even in the face of a gun aimed at our head, there’s always a choice.

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  1. LawnDart

    More examples of the sociopathy has spread throughout all facets of USA life, and yeah, it’s rapidly becoming more coarse and obvious: our society is horribly sick. Me, for one, I am done– I won’t participate in cannibalism and this death cult does not have my allegiance…

    It’s still a big world with lots of beauty to be found in it. Personally, I hope to get out and live there again before this tomb is sealed.

  2. DJG, Reality Czar

    I am with Simran Bal: I can imagine how terrible the “training” is at that shop.

    I have worked for years in publishing, and publishing years back was aligned with the crafts that supported it like (hot) typesetters and unionized printing companies. So editors more or less served an apprenticeship. In my case, that included a visit to one of the last hot-type houses in Chicago, where some flinty typesetters used Merganthaler machines that melted pigs (if I recall) and locked the lines of type in cases to create pages. Those were the days when there were still such a thing as galley proofs.

    Training in large publishing houses now consists mainly of indoctrination. My last brush was listening to a colleague of mine as she trained a new editorial assistant in some “mentoring” program so that the young woman would seem to understand hierarchy. [Not long after, the young editor changed careers–to another field far away from publishing.]

    I recall that the “mentor” went on about how women have to be so much more qualified than men….

    Training? Really? And women have plenty of influence in publishing, including the many unqualified women.

    In fact, my former colleague couldn’t grab her ass with both hands, as we say.

    So I can image what “training” consists of these days: Some multimedia production on sexual harassment with radio buttons to acknowledge one’s presence. (Something I was forced to take a few weeks back to retain my status of free lance.)

    Training as in learning of skills? It’s gone.

    1. nippersdad

      I, too, worked in printing. I remember those hard bitten hot type printers, and, besides being dangerous it was an art. It took years to become a journeyman in that field, and one could easily see why.

      They would have been furious had the paper tried to make bank off of the training process, something that was done entirely under the aegis of the CWA at that time. That would have been something to walk out over.

      The worst corporate scam we really ever had to think about was dead peasants insurance, and that was just kind of funny.

    2. Anthony G Stegman

      With respect to the training clawback scam ‘training” can be seen as a profit center for many businesses. The salon where Simran Bal worked got an easy $1900 of pure profit. There needs to be laws enacted to prohibit this type of abuse. What do Nancy and Chuck have to say about this?

  3. JohnA

    In Britain, whenever a union goes on strike for better pay and conditions, or these days, more likely to prevent worsening pay and conditions, the media scream that the unions are ‘holding the country to ransom’ and union leaders are invariably described as ‘barons’ who are ‘trying to rule the country’.
    Yet over the past couple of weeks, the casino bankers in the City of London, forced the new prime minister, Truss, to reverse her policies and ultimately resign. Clearly Truss was utterly wrongheaded, incompetent and promoted way above her station, but if you were to ask the question ‘who rules Britain/who is holding the country to ransom?’, the answer would surely be the City, not the unions. Yes such logic never appears in the media.

    1. Stephen

      I agree.

      Most of the media is owned by corporations or oligarchs. No incentive for on the ground journalists to bite the hands that feed them.

      Nor would an editor allow them to.

  4. griffen

    At two previous roles, between 2016 to 2021, I was employed by consumer finance companies and the monthly compliance training was mostly well done and AFSA production videos and tutorials. Nothing awful about them, other than recalling all the particular regulations for the pop quiz. I never paid a dime for that ( and over 50% of the training was helpful), so the suggestion of this being widespread across many industries is kinda hard to ascertain.

    I am not cynical, but this time the above just seems a bit light on actual detailed reporting. Okay, the article linked to Reuters expands the universe to include nurses and the trucking industry. Yeah we are ruled by predators so best be aware.

    1. FreeMarketApologist

      I think it may be in the difference in the category / type of employer. I work for a big global bank, and we have both in-house produced training, as well as decent training budgets for staff, many of whom hold specific licenses and certifications which are required for their position (i.e., by regulation, or the requirement is defined in the job description). To the best of my knowledge, no training money is charged/clawed back if a staffer leaves. (Legal fees for processing work visas is another story). This has been true in my previous positions as well.

    2. Travis Bickle

      This scam is more reflective of opportunism, characteristically with the intent of feeding on those on whom the more powerful might most efficiently prey: employees who must accept their rules as a condition of employment and the unemployed who will do anything to subject themselves to their munificence.

      It is the nature of man to capitalize on whatever opportunities present themselves. And one does not attempt to prey on those those who can defend themselves.

      I’m reminded here of a string of car dealerships on the same stretch of highway south of downtown Austin, TX, some years ago. The various owners were persuaded (and it clearly wasn’t hard) by a local entrepreneur for him to run a series of sales training workshops for aspiring salespeople. The wannabes had to agree to pay for their training, with the cost being forgiven at some rate over the course of successful employment in the event they were actually hired. The smucks not hired were bestowed with a skill they had to pay for and were faced with signing papers to that effect. Most of those who showed up on that first day decided to risk it, mistakenly thinking that the dealerships couldn’t squeeze blood out of an onion. During the training, really an extended pep-rally, aspirants were gauged for their social networks and charm, the creme of them being notionally hired (since it was straight commission).

      Those not hired were mistaken, and had their paper sold to debt collectors. Most of those hired ultimately also failed to make it, after their core base of friends and relatives had been squeezed dry. (Depending on the circumstances their debt might have been forgiven, in which case I suppose it became a write off for the dealership.)

      There is a pattern to all such things: recognize opportunities amongst those most vulnerable; if illegal, hire lawyers & lobbyists to patiently carve out ways to screw them legally; rinse and repeat.

  5. Lex

    Unfortunately, the billionaires (oligarchs) will never be rich enough so the beatings shall be infinite.

    1. ArvidMartensen

      True, the greed of oligarchs in the US and elsewhere seems limitless.
      How many houses do they need to own to finally say “I have enough”? How many yachts? How many jets? How many women?

      I used to ask myself that question but now I realise that is entirely the wrong question. To oligarchs this question is nonsense.

      The real questions that oligarchs, both US and foreign, ask themselves are:
      What do I have to own to be the richest man in the world? Which %$!#! btard is richer than me?
      How can I stiff the other %$!#!s to get their stuff and destroy them?
      How many acres of prime agricultural land do I need to buy to control all food? How many vaccine makers and drug companies to control all human health? How many companies to control all commerce? How many political parties and how many Presidents to control all laws?

      We could call these the gatesway questions leading to wealth and power.

      And that is why oligarchs will never have enough.
      Until perhaps there is one oligarch left who owns everything because he is the last human being. And finally content.

  6. Arizona Slim

    Very few of my jobs offered anything that rose to the level of training. Instead, I was supposed to have the skills required for the job, and then show up and follow instructions.

  7. LAS

    While the arguement may be correct, the graph is exaggerating to make the point b/c its vertical axis is excessively curtailed or manipulated.

    Certainly, I have noticed that corporations have to be saving on wages since their service levels are fallen dramatically. They have all these automatic answering systems and virtually no way of ever reaching a human being … cable services, insurance services, and so on. Store assortments seem more narrow as well.

    I’ve known corporations AND small business take other deductions when an employee resigns, including charges if they do not turn in laptops or took early vacation days on a promise to make up for it later.

  8. Mikel

    Think about the American Airlines example.
    Who believes those self-centered SOBs in the exec suite care about passenger safety over profits? They are cutting corners everywhere to stuff their own pockets.

  9. Ken Murphy

    I saw the roots of this back in the 1990s when I worked at BNP in NYC. Training was still fairly common back then. I’d done online Merchant banking training at Marine Midland/HSBC, NatWest paid for my AIB Banking for Professionals Certificate as well as Credit training. When I got to BNP they were still paying for MBAs for staff, and I got sent to Louveciennes for global bank training.

    But what was happening was that the Baby Boomers would get the MBA and immediately demand a big raise to reflect the added value they now brought to the company as a result of their MBA. When they didn’t get it, they would jump ship to a new firm for a big raise. Companies were like “WTF? Why are we paying for this?” So they stopped. Haven’t seen decent training since. At Beal Bank it was basically the annual sexual harassment training, and that was about it.

    Nowadays it seems that companies expect new employees to be fully skilled up for their position at the time of hire. In other words, the “training risk” has been shifted from companies to employees, trusting that the employees will make the right choices for training relevant to a company’s needs for skills for a particular position. Or they’re making the employees pay for crappy internal training, which just sounds oh so American.

    Yeah, let me know how that’s working out for you…

    1. Anthony G Stegman

      Back in the day Silicon Valley companies would boast about paying for their employees ongoing education – bachelor degrees, MBAs, and the like. What often happened, the additionally trained and educated employees were not given promotions, nor were they given pay raises. The educational “benefit” was mostly for recruiting purposes. When a position opened up that required an MBA (for example) it was more likely that the company would hire from outside, rather than promote internally someone who earned their MBA while working at the company. The bright shiny new thing is always more attractive than the familiar reliable workhorse. Such is life.

  10. Duke of Prunes

    This is something Ross Perot’s EDS did. They made you sign a promissory note before attending “phase 2” which was basically Cobol/Jcl (i.e. mainframe) school. You then worked it off the next 3 years, or some hotshots had their new company buy them out. They claimed they did this because too many left after the training

  11. Anthony G Stegman

    As far as I am aware Silicon Valley tech firms generally are not playing this game. The main reason for this is likely because they provide little to no training, so what is there to claw back.

  12. Socrates Pythagoras

    I am currently job hunting in the IT sector, and I’m constantly coming across “jobs” from placement services that offer training , after which they will place the employee for contract work. Employees must agree to relocate wherever the company wants to send them. My guess is the pay is below market rate. If one leaves before 12 months one must pay back training costs, which generally run around $12000.

    They are attempting to draw in new grads and career switchers who don’t have the bona fides to break into an industry that generally only considers employing people who are fully formed and possess the ridiculously inflated qualifications for an entry level role.

  13. Glen

    This is one of the reasons why thinking America can “win”, much less even “fight” a New Cold War is DOA.

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