Colorado Attorney General Phil Weiser recently filed a lawsuit against PetSmart that serves as a cautionary tale for employers: if you’re asking employees to repay training costs, you must do so in a way that’s transparent, fair, and legal.
In the lawsuit, Weiser accuses PetSmart of misleading employees into signing “training repayment agreement provisions” (TRAPs), and marketing the training as “free,” only to then threaten legal action and demand the repayment of up to $5,500 for training if employees left the company—voluntarily or involuntarily—before two years. According to the complaint, PetSmart presented these agreements after employees were already enrolled in the training program, sometimes during shifts, breaks or grooming sessions, and without adequate explanation.
This kind of practice may not only cost PetSmart tens of thousands of dollars in fines, penalties and legal fees, but it has also caused significant reputational damage to the company.
What Employers Should Know
While most employers aren’t intentionally trying to defraud or mislead their employees, they may not understand how easy it is to unknowingly violate employment and consumer protection laws. Here are five key lessons from the PetSmart case that employers should keep in mind:
1. Obtain Legal Counsel Before Drafting Employment Agreements
Colorado has very specific laws around employment agreements, including limitations on the use of TRAPs. Violating these rules can lead to lawsuits, state investigations, and civil penalties. Consult with an experienced employment attorney to ensure that agreements comply with current state regulations, and that the business is appropriately tailoring TRAPs to the level and type of role and training being offered.
2. Be Transparent
If your company is going to require repayment for training, provide employees with a legal agreement that communicates the stipulations clearly and in writing before the employee enrolls in the program. Surprising someone mid-program with a repayment clause, especially one with high financial consequences, is unethical and has the potential to backfire in a big way.
3. Market Honestly
If the training isn’t truly free, don’t call it free. Any marketing materials or internal messaging must accurately reflect the terms of the program. Misleading claims can open the door to consumer protection violations.
4. Prorate Repayment Terms
If you do pursue repayment, use a prorated approach and keep repayment amounts reasonable and proportional. It is punitive to expect full repayment from someone who leaves after 11 months of a two-year agreement, without adjusting for the time they’ve already worked.
5. Ensure Your Training Provides Real Value
If you ask employees to commit to a training program tied to repayment provisions, make sure the training actually delivers on its promises. In the PetSmart case, investigators found that many employees were dissatisfied with the quality of the Grooming Academy. The complaint described training sessions as inconsistent and overcrowded, with limited one-on-one instruction and not enough dogs to practice on. This added to PetSmart’s legal exposure as the value of the training did not justify the financial obligation imposed on employees
Please reach out to me or another member of our employment law team if your business is considering implementing or revising training repayment agreements, or if you have questions about how to structure employment agreements in the state of Colorado.
