From the Web: CFPB Inquiry on Employer-Driven Debt Could Hinder Hiring and Training Efforts

Report says the CFPB’s study of employer-driven debt could create difficulties for businesses when hiring and training employees.

8/25/2022 11:00 A.M.

2 minute read

The Consumer Financial Protection Bureau’s Request for Information (RFI) seeking data about, and worker experiences with, emerging practices and financial products referred to as “employer-driven debt” is problematic for businesses, according to a report from the U.S. Chamber of Commerce.

Bill Hulse, vice president for Capital Markets Competitiveness, and Glenn Spencer, senior vice president, employment policy division, for the U.S. Chamber of Commerce, say this study and RFI will create difficulties for businesses’ need to hire and train employees.

“While it sounds innocuous, the RFI is targeted at common business practices that expand hiring opportunities and provide employees with in-demand skills,” Hulse and Spencer wrote in the Chamber of Commerce report. “Frequently, when companies hire new employees, they provide them with the opportunity to undertake training or certification courses. In return, employees will often agree to stay with the company for a limited amount of time or otherwise assume the burden for their repayment.”

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, according to a news release from the bureau.

“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,” according to a news release from the CFPB. “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.”

Employer-driven debt comprises an emerging set of products and services that the CFPB is studying to better understand the potential impact on individual borrowers, jobseekers, and the broader labor market.

Hulse and Spencer also say that by the CFPB targeting these business practices, “it could make it more difficult for companies to attract, train, and retain employees. Companies should not have to jump through new regulatory hoops to have reasonable safeguards that protect the investments they are making in human capital, including the risks they are taking when hiring new employees and providing training.”

Read the complete article here. The bureau’s RFI is available on the Federal Register. Comments are due Sept. 7.

If you have executive leadership updates or other member news to share with ACA, contact our communications department at [email protected]. View our publications page for more information and our news submission guidelines here.

This site uses cookies. By continuing to use our site, you are agreeing to our use of cookies. Review our Privacy Policy for more information. You may change your preferences on how cookies are stored by reviewing the settings on your browser.

The content on this site is presented for educational, general reference, and informational purposes only; is not intended to serve as legal or other advice; is not intended to be a full and exhaustive explanation of the law in any area; and should not replace the advice of your own legal counsel. By continuing to use our site, you are agreeing to the legal disclaimers in our Terms of Use. Review our Terms of Use for more information.

Friendly Reminder

Get continued access to ACA International’s wide array of resources, which can help you become more profitable, compliant and successful.

Renew your membership today to take advantage of tools you won’t find anywhere else:

  • Discounts on seminars, products, services and events
  • Resources to strengthen your compliance department
  • Industry-specific risk management products and services
  • Participation in ACA’s online community, The Hub
    Members-only website content
  • Professional development and training opportunities, and so much more!