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July 25, 2024
Effective August 7, 2024, a new Colorado law entitled Attorney General Restrictive Covenant Agreements (House Bill 24-1324) targets employer recovery of costs associated with education and training workers when such training is distinct from regular, on-the-job training.
Democratic Representative Chad Clifford, co-sponsor of the bill, gave an example of why he believed the bill was necessary: A worker in his district got a job at a pet store, which promised the worker free on-the-job training. When the worker left the store, they allegedly owed $5,000 to the pet store as reimbursement for its costs of training the worker. The worker had not even earned $5,000 at the store during the entirety of their employment there.
Clifford’s concern is that employers of workers in non-professional jobs[1] are using training cost repayment agreements to trap people in employment, making them pay the costs of training when the skills that they gained from the training are not transferable to another employer, or do not lead to employee certification.
Current Colorado law allows an employer to recover the expense of training and education. The new law regulates the expense that is recoverable. It requires that, to be recoverable, such training comply with the Attorney General’s rules regarding the training’s transferability or the credentialing available to the employee as a result of the training.
An employer who enters into, presents to a worker or prospective worker as a term of employment, or attempts to enforce any agreement that is void under the law is liable for actual damages, penalties (including penalties paid to the Attorney General in an amount up to five times the amount of any recovery), reasonable costs, and attorney’s fees. In addition, a violation of the law may constitute a deceptive trade practice.
Colorado employers: Take time now, before this law’s August 7, 2024 effective date, to review and revise, as necessary, your agreements regarding training cost repayment, particularly for workers in non-professional roles. If your training is not transferable to another employer or does not contribute to an employee certification opportunity, costs of the training likely is not recoverable.
The author of this article, Patricia Tsipras is a member of the Bar of Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in Pennsylvania, Colorado, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.
[1] Clifford believes that training cost agreements in law enforcement and for City employees are examples of good use cases.
