The Virginia General Assembly is taking a new aim at “Stay or Pay” contracts, which have long plagued employees in positions that require significant job training or relocation.
Formally known as Training Repayment Agreement Provisions (TRAP), the agreements have come under intense scrutiny for their role in restricting worker mobility and creating a cycle of financial coercion. With the recent passage of House Bill 923, Virginia is positioned to join a growing movement of states seeking to restore the fundamental right of employees to change jobs without facing debilitating financial penalties.
“Stay or Pay” Agreements in Virginia
Employers intended for training repayment agreements to help recoup the high costs of specialized, external certifications that provided tangible value to an employee’s long-term career. In recent years, however, the use of these provisions has expanded into industries ranging from healthcare and trucking to retail and hospitality. The “Stay or Pay” model often functions by attaching a massive, often arbitrary, training fee to an employment contract. If an employee resigns before a predetermined period, sometimes as long as several years, the employer triggers a clause demanding immediate repayment of these costs.
The predatory nature of these agreements lies in the disparity between the alleged cost of the training and its actual market value. By threatening workers with a debt that often exceeds several months of their salary, these contracts effectively trap individuals in substandard working conditions, as the cost of quitting becomes a financial impossibility.
Relocation Expenses
While the primary focus of the bill is training costs, the draft legislation’s broad definition of a “stay or pay” contract also encompasses other common employment benefits, such as relocation expenses.
Virginia employers use relocation repayment agreements to protect their investment when moving a new hire or current employee to a different geographic location. Under the proposed language of HB 923, any agreement that imposes a “penalty, fee, or cost” upon the termination of employment could face legal scrutiny. The bill specifically includes “reimbursement of costs” within its list of potential prohibited penalties if they are used as a tool to deter an employee from resigning.
While there is a specific exception in the bill for “discretionary or unearned monetary payments” provided at the start of employment, such as sign-on bonuses, that are not tied to specific job performance, the status of direct relocation reimbursements remains a key area for legal review. If the relocation payment is structured as a debt that traps the worker in a role, it may fall under the new prohibition, forcing a shift toward “retention bonuses” rather than “repayment penalties.”
Legislative Progress & the Road Ahead
The momentum behind HB 923 has been swift during the current session. After receiving a favorable report from the House Committee on Labor and Commerce, the bill moved to the full chamber where it successfully passed on February 12. This milestone marks a significant victory for labor advocates and signals a clear appetite in the House of Delegates for more transparent and equitable workplace standards.
As the bill moves toward the Senate, employees and employers should review their existing employment agreements and offer letters. Provisions that mandate the repayment of internal training costs or general onboarding expenses are likely to become unenforceable or, worse, a source of legal liability. For employees, this legislative development offers a glimmer of hope that the era of being fined for seeking a better life is drawing to a close.
Should you have questions about an existing employment agreement, or if you are currently negotiating an employment agreement under Virginia law, contact the employment attorneys at Potomac Legal Group to seek counsel. Our attorneys are experienced in reviewing and negotiating these burdensome agreements.
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