WASHINGTON, D.C. — An emerging scenario for workers is seeing them required to go into debt to their employers at their jobs, and the federal government is investigating this practice.
The Consumer Financial Protection Bureau (CFPB) has launched an inquiry into practices and financial products that may leave employees indebted to their employers. In today’s Request for Information, the CFPB seeks data about, and worker experiences with, these emerging practices and financial products referred to as employer-driven debt. The CFPB is interested in knowing whether consumers have a meaningful choice in accepting employer-driven debt products. The CFPB also wants to understand the terms and conditions for these products, including whether they might impede someone from seeking a better-paying job.
“The labor market operates at its best when workers are able to move freely within it,” said CFPB Director Rohit Chopra. “Our inquiry is about studying the effects of an emerging form of debt that may have the potential to trap employees in place.”
Though it may take other forms, employer-driven debt can cover an array of products and practices, including an employee’s up-front purchase of equipment and supplies that is essential for their work or that the employer requires. In other instances, workers may have to agree to debt products where the debt must be repaid if the employee leaves the employer before a certain date. For example, a company may provide training to a new hire, and require that the training’s cost be paid back if the employee leaves or is fired within a set period.
Employer-driven debt comprises an emerging set of products and services, which the CFPB will study to better understand the potential impact on individual borrowers, jobseekers, and the broader labor market.