Employer-driven debt can pose a risk to workers, according to a report by the Consumer Financial Protection Bureau. Such debt can encompass several products such as up-front purchase of equipment and supplies that an employer requires.

Employer-driven debt can also include “training repayment provisions,” or TRAPs, which the bureau says can impede worker mobility, particularly when it comes to higher wages. With TRAPs, workers agree to pay back the cost of training if they leave their jobs before the end of a contractual commitment period.

The report is the result of an inquiry begun by the bureau in June 2022.

“Employer-driven debt poses the risk of suppressing wages and forcing workers to stay in jobs they do not want,” CFPB Director Rohit Chopra said in a press release. “When it comes to consumer lending, federal law protects Americans even when they are on duty at work.”

A large part of the harm caused by the debt comes from the fact that employer-driven debts are linked to a worker’s employment, and that debt is controlled not by the employer but by a separate lending entity, according to the bureau.

Other concerns cited in the report:

• Workers can be rushed through the loan sign-up process.
• Employees can be made to sign paperwork allowing the employer or issuer to unilaterally change the terms and conditions of the financial product without worker consent or awareness.
• Employer-driven debt puts up barriers to career advancement and higher wages. Workers can be required to make large payments upon separation in some cases.