Practices and financial products that may leave workers indebted to their employers is the focus of an inquiry launched Thursday by the Consumer Financial Protection Bureau (CFPB).
In a request for information (RFI), the bureau said it is inviting public input on data regarding, and workers experiences with, emerging practices and financial products referred to as employer-driven debt. The CFPB said it wants to know whether consumers have a meaningful choice in accepting employer-driven debt products, and it wants to understand their terms and conditions – including whether they might impede someone from seeking a better-paying job.
In the RFI, the bureau notes that employer-driven debt products appear to include:
- Training repayment agreements that require workers to pay their employers or third-party entities for previously undertaken training provided by an employer or an associated entity if they separate voluntarily or involuntarily within a set time period. These trainings may have been required in order to obtain a job or a promotion and may be of dubious value outside of the company-specific setting. These agreements generally require payment when workers leave their employment arrangements.
- Debt owed to an employer or third-party entity for the up-front purchase of equipment and supplies essential to their work or required by the employer, but not paid for by the employer. These products might be common in employment relationships in which workers are outsourced or classified as independent contractors. Workers may also owe deferred payments related to maintenance of equipment and supplies.
The bureau said it is seeking to gain a better understanding of the potential impact of employer-driven debt on individual borrowers, jobseekers, and the broader labor market. Areas of inquiry, according to the RFI, include prevalence, pricing and other terms of the obligations, disclosures, dispute resolution, and the servicing and collection of these debts.
Potential areas of focus include:
- Workers’ understanding of employer-driven debt arrangements: Workers may not understand that these arrangements involve an extension of credit, and they may not know whether they are able to comparison shop for credit offered by others or whether entering into the debt agreement is a condition of employment.
- How and whether default on employer-driven debt could threaten continued or future employment: This includes understanding whether the status of the debt may impact a decision to seek alternative employment. These potential risks might limit competition in the labor market and in the market for similar consumer financial products and services.
“The CFPB wants to hear from members of the public about their experiences with employer-driven debt, whether taken on in pursuit of employment or while being employed,” the bureau said in its announcement. “This includes prevalence, pricing, and other terms of the obligations, disclosures, dispute resolution, and the servicing and collection of these debts.”
The RFI is expected to be published soon in the Federal Register.