[co-author: Stephanie Kozol]*
Colorado Attorney General (AG) Phil Weiser has sued PetSmart LLC, alleging that its use of Training Repayment Agreement Provisions (TRAPs) violates state consumer protection and labor laws. The lawsuit reflects a broader effort by Weiser and other state AGs to combat purportedly exploitive employment agreements.
The complaint alleges that PetSmart’s TRAPs constitute deceptive trade practices. The state claims that PetSmart enrolled prospective dog groomers in a free training program that would teach them the skills necessary to become a dog groomer. However, despite advertising the training as “free,” PetSmart required participants to sign TRAPs that forced them to pay back the training costs if they later resigned from PetSmart. According to the state, if training participants left within 11 months of their start date, they owed PetSmart $5,500; if they left between their first and second year, they owed PetSmart $2,750.
Weiser is seeking substantial penalties, including up to $50,000 per violation, damages of $5,000 per affected or prospective worker, and an injunction to prevent PetSmart from enforcing the TRAPs. All these factors suggest a serious and aggressive approach from Weiser.
This lawsuit against PetSmart is not the only enforcement action by the Colorado AG targeting companies that utilize TRAPs. Just one week before the PetSmart filing, Weiser announced a similar settlement with HCA Healthcare, Inc. That settlement was part of a multistate effort — involving Colorado, Nevada, and California — about TRAPs imposed on nurses. The multistate settlement with HCA Healthcare, Inc. totaled $3.5 million, with Colorado’s share worth $1.4 million.
Why It Matters
State AGs are increasing their scrutiny of TRAPs and related employment practices. Businesses utilizing such practices face potentially significant financial risks, including hefty fines and other penalties. As a result, those businesses should, where applicable, proactively review and revise their labor policies to avoid legal challenges. The reviews should be completed with an eye toward compliance across multiple jurisdictions, as AGs increasingly coordinate their enforcement efforts.
*Senior Government Relations Manager
