Tired of New Employees Abruptly Quitting? Here’s a Novel Solution for Recouping Your Training Costs

One of the most costly and infuriating aspects of running a business is training new employees only to have them up and abruptly quit. It takes a lot of time, effort, and extra expense to onboard new hires and get them familiar with practices and procedures. When they depart shortly after their training, it means having to fill that position all over again. Since this is such a huge hassle and a costly one at that, some companies are actually billing employees who quit. The strategy is to ensure new employees don’t receive critical industry training only to leave and use their new skills at a competitor paying higher wages and/or offering more enticing benefits packages.

Companies Recovering Employee Training Costs through TRAPs

Healthcare, retail, trucking, beauty, and more companies are adopting a new approach in order to reduce their workforce losses. Known as Training Repayment Agreement Provisions or TRAPs, these clauses are included in employee contracts. Nearly 10% of all American companies are now using these provisions, according to a recent report by Reuters News.
When a valued employee quits, the loss can have a detrimental effect on the person’s team and department and maybe even on the entire company. Not only can an unexpected departure lead to lost revenue, but it also could lower the morale and productivity of remaining employees. —Society for Human Resource Management
Other industries may follow this emerging trend if it proves successful and legal. There are already federal and state government agencies looking into the practice, and it appears to be legitimate. If it continues to grow in popularity, it should be not only a big benefit to businesses but to employees as well, as both parties will know precisely what’s expected of them and how to proceed accordingly.

How to Use Employee Training Repayment Agreement Provisions

Because this is somewhat new, it’s very important to take thoughtful, measured steps in order to implement such a practice. Here are some suggestions for how to use an employee training repayment agreement provision in your business:
  • Consult a labor law attorney. The very first thing you should do is to speak with a lawyer who specializes in labor law in your state. Even if a future employee willingly signs such an agreement, there may be something on the books that does not allow you to enforce such a provision. So, be crystal clear it is legal and actionable in your state.
  • Speak with your human resources department. Obviously if you are able to include an employee training repayment agreement provision in your hiring contracts, you’ll need to get the right people in your organization on board and in the know. You can help to develop a new section in your training process that discloses and advises potential hires and new team member about this provision.
  • Make sure new hires are made fully aware of the provision. When you’re recruiting someone new to your organization, be sure this is made abundantly clear before you proceed with follow-up interviews and probably before the very first, initial interview. Any job candidate should be made aware of this provision well before you get deep into the hiring process.
  • Include a mechanism to recoup new employee training costs. Of course, you’ll need a way to actually recoup those training costs. So, if you offer a sign-on bonus, that may be one way to recapture the expense. Here again, you’ll need to consult an experienced, licensed labor law attorney in your state to establish a recuperation mechanism for the provision.
What else would you suggest business owners do to deal with new hires who quit shortly after being brought on? Please share your thoughts and experiences so others can benefit from your input! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Like this article?

Share on Facebook
Share on Twitter
Share on Linkdin
Share on Pinterest

Related Posts

Office illustration

Borrow Now or Wait? Navigating Lower Interest Rates as a Small Business Owner

Borrow now or wait and see? It’s a question small business owners ask all the time. In many cases, it’s when interest rates are trending down. But the same can also hold true when interest rates are rising. Either way, the question is important because the answer has far-reaching consequences. Of course, it takes a bit of creative guessing since no one can accurately predict the future.

Read More »
Telephone stock photo

The Samsung Galaxy Fold Demonstrates this Powerful Business Lesson

Samsung shipped demo units of its $2,000 foldable phone to top reviewers, and within 48 hours, many of them were broken. It’s an embarrassing story about a tech giant, but the real lesson has nothing to do with hinges or screens. Rushing a product to market can cost you far more than a bad headline — here’s what every business owner should take from the Fold fiasco.

Read More »
Boogie Bulb case study photo

How Boogie Bulb Nearly Tripled Revenue by Finally Understanding Its Own Margins

.elementor-widget-text-editor{font-family:var( –e-global-typography-text-font-family ), Sans-serif;font-weight:var( –e-global-typography-text-font-weight );color:var( –e-global-color-text );}.elementor-widget-text-editor.elementor-drop-cap-view-stacked .elementor-drop-cap{background-color:var( –e-global-color-primary );}.elementor-widget-text-editor.elementor-drop-cap-view-framed .elementor-drop-cap, .elementor-widget-text-editor.elementor-drop-cap-view-default .elementor-drop-cap{color:var( –e-global-color-primary );border-color:var( –e-global-color-primary );} When Linda Foss brought her newborn daughter home from the hospital, a simple nasal aspirator bulb was the thing that kept her congested airway clear. When it wore out and Linda went looking for a replacement at the pharmacy, she couldn’t find one with the same suction power or quality. That gap became the idea behind BoogieBulb — a medical-grade infant nasal aspirator Linda founded in 2008 and built into the first company to sell one directly to consumers. “My experience with Waters Business Consulting has been great,” said Linda Foss, Founder & Owner of Boogie Bulb. “John really helped me understand my financials which helped me set up my books correctly so I was better able to understand my profit margins. The financial operations component of my business was a learning curve for me, and John’s help and insight set me up for success. I highly recommend this consulting group.” Fast Growth, Fuzzy Numbers Boogie Bulb gained traction quickly, landing in major retailers and on Amazon — but Linda’s grip on the financial side of the business hadn’t kept pace with its growth. She lacked a clear pricing strategy and a solid understanding of her true acquisition costs, which made it hard to see her real COGS, gross margin, and net profit margin, especially once e-commerce fulfillment costs and service fees were factored in. Marketing was another blind spot: Linda needed help driving traffic to both the Boogie Bulb website and its Amazon listing, and needed a plan to scale the product responsibly. Complicating matters further, an individual she’d outsourced marketing to had wrongly assumed the role of a business partner, leaving Linda to navigate how to dissolve that implied relationship. Turning Financial Fog Into Financial Clarity Waters Business Consulting Group started by digging into Boogie Bulb’s revenue trends and manufacturing costs to determine the sale price that would optimize gross profit margins and actually produce net profit. The team calculated Linda’s true customer acquisition cost by analyzing advertising spend, customer counts, website analytics, units sold, and revenue — then established a clear break-even point for the business. With the financial picture in focus, the team helped Linda determine the best price points and tiered pricing structure for wholesale distribution, and served as a sounding board she could turn to for everyday business decisions. Waters Business Consulting Group also helped Linda work through and resolve the implied partnership relationship that had complicated her marketing arrangement, and connected her with trusted resources for trademarks and website development. Tripled Revenue and a Stronger Brand The clarity paid off directly in growth. Company revenue nearly tripled from 2014 to 2017, driven by a much clearer understanding of COGS per unit and the pricing needed to achieve the highest possible margins. Boogie Bulb gained real exposure in the marketplace, built a stronger brand identity, and capitalized more effectively on seasonal sales trends. The team also worked with Linda to evaluate the viability of distributing and selling the product commercially through brokers. With the outsourced marketing relationship dissolved and cash flow improved, Linda was able to reinvest in further improving the product itself. Waters Business Consulting Group also helped identify potential merger and acquisition opportunities for Boogie Bulb and provided guidance on how to approach negotiating them. Need Clarity on Your Own Numbers? If pricing, margins, or acquisition costs feel more like guesswork than a strategy, you’re not alone — and it’s fixable. Schedule a free consultation to get a clearer financial picture of your business. Contact Waters Business Consulting Group to schedule your free consultation.

Read More »

Imagine Selling Your Business…

How Would Your Life Change?

You didn’t start your business just to stay busy—you built it to create freedom, security, and options for yourself and your family. Selling your business can be life-changing, but the real question is whether you’re intentionally building toward that outcome or simply leaving it to chance.

Sign up below for a free consultative session to learn what your business could be worth today and in the future! 

Thank you for your interest in learning what your business is worth. We will be in touch shortly.