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The 'TRAP' Clause: Why You Owe Your Boss $20,000 for Quitting

• LeonIT Team • Calculating...
TRAP Agreement Training Repayment Provision Sign-On Bonus Clawback FTC Non-Compete Ban 2025 Employment Law Scams Resignation Penalties

Thinking of resigning? Check your contract for a 'TRAP' clause. Since the FTC abandoned its ban in late 2025, companies are billing employees $20k for 'onboarding training' when they quit.

You Thought You Were Free. You Were Just Leasing Your Job.

I received a DMs from a Junior Developer yesterday. He quit his job at a consultancy after 14 months to join a startup. He expected his final paycheck of $3,000. Instead, he got a certified letter demanding $18,500 within 30 days.

The letter cited Section 14.2 of his offer letter: "The Training Repayment Agreement Provision (TRAP)." It stated that the company spent $25,000 "training" him, and since he left before 24 months, he had to pay it back.

What was the training? Was it a Master's Degree? No. Was it a rigorous external certification? No. It was "Mandatory Onboarding"—watching PowerPoint slides about company culture and shadowing a senior dev for 3 weeks. In 2026, companies are effectively selling you your own orientation and billing you for it if you dare to leave.

Here is why the TRAP is the new Non-Compete, and how to spot it before you sign.

1. The Death of the FTC Ban (Sept 2025)

In 2024, the FTC promised to ban these predatory clauses. But in September 2025, after losing the Ryan LLC lawsuit, the FTC officially abandoned the appeal. The corporate world cheered. HR departments immediately rolled out updated contracts. Since they can no longer legally enforce a "Non-Compete" in many states (like California or Minnesota), they use the TRAP as a "soft" Non-Compete.

  • Logic: "You are free to work for a competitor! You just have to write us a check for $20,000 first." For most employees, that debt is a prison cell.

2. The "Fake Value" Scam

The core of the scam is how they calculate the debt. Real "Education Assistance" (like paying for your MBA) is a fair trade. But TRAPs monetize overhead.

  • The Scam: They claim the "Senior Mentor's" time is worth $500/hour. If you shadow him for 40 hours, that’s a $20,000 "Training Value."
  • The Reality: The Mentor was just doing his job. The company spent $0 extra. But they bill you the "Market Rate" of that time. It is an exit tax disguised as education.

3. The "Sign-On Bonus" Clawback Trap

This is the sibling of the TRAP. You get a $10,000 Sign-On Bonus. The contract says: "Repayable if you leave within 12 months." Fair enough. The 2026 Twist: The clawback is now "Pre-Tax."

  • You received $6,500 cash (after taxes).
  • You owe them $10,000 back.
  • The Loss: You are out of pocket $3,500. You essentially paid the IRS for the privilege of working there. (Note: You can claim this back from the IRS in 2027 under the "Claim of Right" doctrine, but it’s a paperwork nightmare that costs $1,000 in CPA fees).

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The Checklist: How to Defuse the TRAP

If you are staring at an offer letter today, or planning to quit:

  1. Ctrl+F "Repayment":
    • Look for "Training," "Education," "Relocation," or "Sign-On."
    • If you see a repayment timeline (12/24 months), ask for the "Amortization Schedule."
    • Good: It drops by 1/24th every month.
    • Bad: It is "100% repayable" until the very last day (Day 730). Negotiate this.
  2. Define "Training":
    • Add
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