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

Microsoft logo illustration

Microsoft just Demonstrated Why the Hard Sell doesn’t Work — Again

Microsoft just undercut the launch of its own Edge browser by shoving it in front of users who never asked for it—and people are furious. It’s a mistake the tech giant has made before, and it’s a lesson small business owners can learn from without repeating it themselves. Here’s why the hard sell backfires, and three better ways to sell without being pushy.

Read More »
Moe Allen Auto Body Shop photo

How Moe Allen Auto Body Shop Turned a Recession Into a Rebrand

.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 );} Juan Carlos Vargas had already bought a body shop with 55 years of history behind it and started restoring its reputation alongside his son. But the recession hit hard, and for a while he couldn’t even afford to keep his own son on the payroll. “During the recession, I could not pay my son to help me in my business. When I met John, I needed to find a way to hire John,” Juan Carlos recalls. “My decision was correct as he helped implement a creative marketing campaign in 3 months that started to increase activity and turn my business around. Now I have been able to afford to rehire my son.” An Aging Business Needing New Life Moe Allen Auto Body Shop had been serving the Phoenix area in auto body repair and paint for decades, and the brand still carried real recognition and goodwill. But recognition alone wasn’t paying the bills. Sales had declined through the recession, and the business had no effective marketing engine to counteract it. The website didn’t do anything to leverage the company’s long history and reconnect with past customers, and shifting demographics in the surrounding area were slowing the flow of new opportunities. There were softer challenges too. Juan Carlos was candid that his accent felt like a barrier with some customers on the phone, and without clear systems and processes in place, the business was running on effort rather than efficiency. Family dynamics around leadership added another layer of complexity — there wasn’t a clear, shared vision for where the business needed to go. Polishing Up the Brand — and the Systems Behind It Waters Business Consulting Group approached the turnaround from multiple angles at once. On the marketing side, the team built creative campaigns that mined the shop’s existing customer database, and outsourced telemarketing to sidestep the accent concern entirely. The company’s decades of history became a marketing asset rather than an afterthought, with historic branding built to capitalize on that broad familiarity, a redesigned website to match, and even a T-shirt campaign with clever new messaging to build local buzz. Just as important, lead tracking was put in place so Juan Carlos could finally see where his leads were actually coming from and how well they were converting to quotes and sales — turning marketing from a guessing game into a measurable investment. The Results The turnaround happened fast. Within three months, sales and cash flow had already improved. The revamped brand and marketing built greater community awareness of the shop’s services, which opened the door to new opportunities, and the business added new fleet clients for more consistent, recurring revenue. Perhaps most meaningfully for Juan Carlos, the stress of the recession years gave way to a genuine sense of control — and the ability to bring his son back into the business he was working to rebuild. If your business has strong roots but is struggling to translate that history into consistent sales, a focused marketing and systems overhaul can turn things around faster than you’d expect — just as it did for Moe Allen Auto Body Shop. Waters Business Consulting Group works with Arizona business owners to build exactly that kind of turnaround. Schedule a free consultation to see what’s possible for your business. Contact Waters Business Consulting Group

Read More »
Waters Business Consulting Group

Reasons Why Your Business Stays Cash Poor

Positive cash flow isn’t just important—it’s the actual lifeblood of your company, no matter how many assets you hold on paper. Yet 82 percent of business failures trace back to poor cash management, even among businesses that are technically profitable. If your bank balance never seems to catch up, one of these five common culprits is probably to blame.

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.