March 2023 | Volume 14, Issue 8


Read the full article from The Huffington Post.

According to the article, Kate Fredericks quit her job flying for the cargo airline Ameriflight in late November 2021, six and a half months into her stint as a pilot based out of Puerto Rico. It was the most expensive resignation she could imagine.

Ameriflight told Fredericks she owed the company $20,000 for the cost of her training since she was leaving before working for 18 months. Fredericks had signed an agreement to those terms when she was hired, so she was not surprised the company expected her to pay up.

She had heard stories of other erstwhile Ameriflight pilots getting calls from debt collectors. Fearing the bill could wreck her good credit, she negotiated a payment plan directly with the company: $250 a month for nearly seven years.

She started mailing the company a handwritten check each month because she was told they could not accept electronic payments.

“I was terrified. I didn’t want someone banging on my door,” said Fredericks, who is 37 and lives in Mattapoisett, Massachusetts. “Some tried to ignore it and had collections scare the living daylights out of them.”

Fredericks is now challenging the legality of that contract. She recently filed a proposed class-action lawsuit in federal court in Puerto Rico, arguing that the agreement she had to sign with Ameriflight amounts to an unlawful constraint of trade, trapping workers in their jobs to stifle competition and keep wages down.

Her Ameriflight debt is a high-priced example of what critics call “training repayment agreement provisions,” or TRAPs. These agreements require workers to compensate their former employers for the purported costs of training if they leave before working a certain amount of time. In a recent case that gained national attention, a PetSmart dog groomer was hit with a $5,000 bill for the retailer’s “grooming academy” when she quit her job after seven months.

The clauses have drawn the attention of the Federal Trade Commission because of the way they tie workers to their jobs and put a lid on pay. The agency recently issued a sweeping proposal to ban noncompete agreements, explicitly including training-repayment provisions in the plan. Employer groups are likely to sue the FTC in an effort to stop it.

But the FTC does not have jurisdiction over air carriers when it comes to addressing alleged “unfair or deceptive practices” — that responsibility falls to the U.S. Transportation Department. Recently, several advocacy groups sent a letter to Transportation Secretary Pete Buttigieg asking that he follow the FTC’s lead and stop the use of training-repayment provisions in the airline industry. The groups alleged that at least six other aviation firms have used the clauses.

According to Fredericks’ lawsuit, an Ameriflight pilot could owe up to $30,000 depending on the training they received. In Fredericks’ case, her $20,000 tab would have been knocked down to $10,000 if she worked a full year after her training period. After 18 months, she would not have owed anything.

Her complaint alleges Ameriflight withdrew the debt repayment agreement from new contracts last spring but continues to enforce it on pilots who signed it previously.

An Ameriflight spokesperson declined to answer questions about Fredericks’ lawsuit or the training repayment agreements, saying the company does not comment on litigation. Ameriflight, which is based in Dallas, serves as a “feeder” airline contracted by overnight carriers like UPS and DHL.

Fredericks filed her lawsuit with the help of Towards Justice, a legal aid group assisting workers, and the Student Borrower Protection Center, a nonprofit watchdog of the student loan industry. Attorney Mike Pierce, the center’s director, said Ameriflight’s repayment agreement is another illustration of employers trying to foist the cost of workforce training onto workers.

He compared it to the exploitative practices used by many for-profit colleges.

“What we saw in this case was the same fact pattern as when someone walks in the door of a fly-by-night helicopter or flight training academy,” Pierce said. “Instead of recruiting vulnerable people off the street and selling a bill of goods, they’re hiring people to become the next generation of pilots and using that position to take advantage of them.”

But Fredericks’ battle with Ameriflight is also a story about the tumultuous pandemic labor market ― how it threw millions of desperate workers out of their jobs, then later handed them newfound leverage once the economy rebounded.

The daughter of a pilot, Fredericks started flying planes in early 2018. She said it took her a year and a half and around $80,000 to obtain her private pilot license, instrument ratings and other credentials she would need to find work. She financed the training with equity from a home sale and by working at a restaurant while she learned to fly.

Her first job was flying scenic tours in Bar Harbor, Maine; her next was flying aerial surveys in parallel lines. But a promising new job she took with Republic Airlines fell through once the pandemic hit in the spring of 2020, as pilots and flight crews across the industry were laid off, furloughed or nudged into retirement.

A friend from her old surveying job told Fredericks there was still a lot of work in Puerto Rico. So she went to the island and literally walked around the airport handing out copies of her resume, she recalled. She worked for a small commercial carrier before Ameriflight called with an offer in the spring of 2021. She understood she might be locking herself into Ameriflight for around two years.

But the industry still had not recovered, and stable work remained hard to find.

“There’s this pressure put on pilots. ... You’ve just dedicated two years of your life to nothing but flying,” said Fredericks. “I had done all of these things and completely restructured my life.”

Fredericks said her training period, during which she was paid $12.50 per hour, lasted around two months, and took place in Puerto Rico and Dallas. That stint included the “Part 135” training that the Federal Aviation Administration requires for Ameriflight to operate its small cargo planes. Portions of the training were specific to the Beechcraft 99 planes that Fredericks would be flying. She said much of her in-the-air training with Ameriflight pilots was on flights in which the company was carrying cargo and making money.

An important question in Fredericks’ case is what her training was worth and how well it would transfer to other carriers. Her lawsuit calls $20,000 a “gross overvaluation.” Fredericks said she gained little marketability for her Beechcraft 99 training (the model’s production ended in the mid-1980s). She said she came to Ameriflight with 1,700 hours of flying time, well above the 1,200 hours Ameriflight required for incoming captains.

“The training I received is a requirement by the FAA in order for them to operate as an airline in the U.S.,” Fredericks said. “You can’t just not do this training. If they didn’t give me this training, I couldn’t fly, and they couldn’t operate.”

Fredericks said her base salary at Ameriflight was around $55,000 per year. As the travel industry rebounded in 2021, her pay and schedule started to look less attractive compared to other opportunities. The same companies that had executed mass layoffs at the start of the pandemic were now competing with one another for a limited pool of workers.

“Now the airlines were like, ’Oh no, we need pilots, pronto,’” Fredericks recalled. “It was basic capitalism, supply and demand. It was an immediate flip. I watched it happening and said, ‘I’m going to miss the boat if I don’t do something about this.’ Compared to where the market was, I was underpaid, overqualified, and had a grueling schedule that didn’t give me any time to see my family.”

She left Ameriflight for another job at the end of November 2021. She and company officials were soon discussing her debt over email. Fredericks said she asked the company’s chief pilot for an itemized accounting of training costs but did not receive one.

It is not clear exactly when Ameriflight instituted the training repayment provision. Fredericks said she believes the company stopped using it last year because the tight job market would no longer allow it. (In August the company announced significant pay hikes for its pilots, setting a new base salary of $76,500 for captains.)

“When someone is offered a no-strings-attached job to fly jets in the normal hours of the day, or offered to be paid less and sign a TRAP and fly in the middle of the night ― which one would you choose?” she said.

Ameriflight’s repayment agreement was the subject of heated online debate in at least one forum for pilots early in the pandemic. At the time, a poster who said they worked for Ameriflight defended the use of the clause. The job market had been flooded with lots of capable pilots and the company needed to hire the ones who would stick around, they wrote.

“Our training department spends a significant amount of time and Ameriflight spends a significant amount of money on each new hire,” the poster wrote. “With the substantial uptick in qualified applicants, narrowing the pool down to candidates who agree to commit to Ameriflight for at least 18 months is the responsible thing to do.”

If Fredericks’ lawsuit succeeds, it is possible her debt and that of other former Ameriflight pilots would be wiped out. They could also be entitled to damages. As part of the lawsuit, she is seeking an injunction that would forbid Ameriflight or its debt collectors from trying to enforce the clause.

Fredericks still has several years left under her debt repayment plan. She said she hesitated to file a lawsuit out of fear she could damage her job prospects and even be blackballed from airlines as a “problem child.” But she wants to put an end to the practice.

“People need to be free to make their own choices and not feel like they have a debt they’re carrying around like Atlas with the world on their shoulders,” Fredericks said. “No one should feel like they don’t have any options.”

Discussion Questions

  1. Explain what a training repayment agreement provision is.
    As indicated in the article, “training repayment agreement provisions,” or TRAPs, are agreements that require workers to compensate their former employers for the purported costs of training if they leave before working a certain amount of time. The article references a recent case that gained national attention in which a PetSmart dog groomer was hit with a $5,000 bill for the retailer’s “grooming academy” when she quit her job after seven months.

    The article also references the fact that these clauses have drawn the attention of the Federal Trade Commission because of the way they tie workers to their jobs and put a lid on pay. The agency recently issued a sweeping proposal to ban noncompete agreements, explicitly including training repayment agreement provisions in the plan.
  2. What is the best argument for the employer in this case? What is the best argument for the employee?
    In your author’s opinion, the best argument for the employer is the principle of freedom of contract. According to this argument, so long as the employer and the employee have met the basic requirements of contract formation (offer, acceptance, and consideration), they have a binding contract, and the contract provisions are enforceable against the other party. The best argument for the employee is rooted in the principles of equity and unconscionability. According to this argument, it would be extremely unfair to hold the employee to the training repayment agreement provision, since the employer has the “upper hand” in drafting the employment agreement and its provisions, and in negotiating the agreement.
  3. In your reasoned opinion, should training repayment agreement provisions be enforceable? Why or why not?
    In your author’s opinion, this is a difficult question to answer. Fundamental to the notion of a contract is that once an agreement is formed, the agreement and all its provisions are enforceable. Without the enforcement of contracts, contract law means substantially less. Employers do, however, have substantial power to draft and negotiate agreements to include terms they prefer. It will be interesting to see the ultimate outcome of the FTC’s proposed rule to ban noncompete clauses in employment agreements. If the FTC does ultimately ban non-compete clauses (and TRAPs), employment law will consider this an exception to the general rule of freedom of contract and the binding and enforceable nature of contracts.