A Consumer Financial Protection Bureau (CFPB) report highlighting worker employer-driven debt risks maintains there is a prevalence of challenges workers face when becoming indebted as a condition of employment.
“Employer-driven debt poses the risk of suppressing wages and forcing workers to stay in jobs they do not want,” CFPB Director Rohit Chopra said. “When it comes to consumer lending, federal law protects Americans even when they are on duty at work.”
The report explores the use of training repayment agreement provisions (TRAPs), which the CFPB indicated could impede worker mobility, specifically as it relates to obtaining higher wages.
In June 2022, the CFPB launched a formal inquiry seeking more information about employer-driven debt. Responses highlighted numerous ways workers experience unique harms related to employer-driven debts.
The CFPB indicated report findings showed workers are rushed through the loan sign-up process. Some employers may coerce employees to incur debts as a precondition of employment; employers use bait-and-switch fine print, requiring employees to sign paperwork appearing to allow the employer or issuer to unilaterally change the terms and conditions of the financial product without worker consent or awareness; and employer-driven debt puts up barriers to career advancement and higher wages.