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CFPB launches inquiry into employer-driven debt practices

On June 9, the CFPB issued a request for information (RFI) seeking public input on practices and financial products that may cause an employee to owe a debt to their employer. The Bureau’s focus is on debt obligations incurred by consumers in the context of an employment or independent contractor arrangement, including training repayment agreements where employees are required to repay the costs of job training should they voluntarily or involuntarily leave a job within a set time period. Other employer-driven debt products include up-front purchases of equipment or other supplies that are not paid for by the employer—a common occurrence when workers are outsourced or classified as independent contractors. Among other things, the RFI seeks information on “prevalence, pricing and other terms of the obligations, disclosures, dispute resolution, and the servicing and collection of these debts.” The Bureau is particularly interested in whether consumers “have a meaningful choice” in agreeing to these products, what these agreements’ terms and conditions are, and whether they might prevent individuals from seeking alternative employment. “The labor market operates at its best when workers are able to move freely within it,” CFPB Director Rohit Chopra said in the announcement, noting that the inquiry will study “the effects of an emerging form of debt that may have the potential to trap employees in place.”

Federal Issues CFPB Consumer Finance Employer-Driven Debt Products