by Starting August 7, 2024, Colorado will implement a law safeguarding ex-employees from certain contracts that demand repayment for education and training expenses. These agreements, often referred to as ‘training repayment agreement provisions’ or ‘TRAPs,’ are designed to hold former employees responsible for the costs of specialized training they received while employed.
Colorado’s law, Bill 24-1324, seeks to curb abuses of post-employment training repayment agreements. Not all TRAPs are unlawful. The law’s focus is on unreasonable agreements that penalize the outgoing employee for choosing to leave employment. The law allows TRAPs when:
- The training is separate and apart from on-the-job training;
- The costs to be reimbursed are reasonable and not in excess of the actual costs of the specific training; and
- The agreed amount of recovery by the employer decreases over the employee’s term of employment as the employer gets value for the initial specialized training investment.
The law also pulls TRAPs under the state consumer credit law by defining them as ‘consumer credit sales.’ This means specific agreement requirements, notices, and enforcement processes apply. The state attorney general is also given authority to create rules to enforce the law.
The Colorado law is part of the continuing trend at the state and federal levels to limit post-employment obligations of employees which could limit their freedom to seek and obtain other employment.
