Training Repayment Agreements for Dental Staff

A training repayment agreement is a commitment to pay back the cost of training if the employee leaves before an agreed date.

The practice pays for the course up front — an EFDA program for an assistant moving into expanded functions (the role itself is covered in our guide to hiring an EFDA), a radiography or coronal polishing course, dental assisting school, or continuing education — and the employee signs an agreement to repay some or all of it on an early departure.

Federal agencies group these clauses under a broader label.

In a July 20, 2023 report, the Consumer Financial Protection Bureau described training repayment agreement provisions — TRAPs — as a form of employer-driven debt.

The same report cites a Cornell survey finding that nearly 10% of U.S. workers surveyed in 2020 were covered by a training repayment agreement, a figure across all industries, not dental specifically.

A repayment clause is not a non-compete: the employee stays free to take any job and owes money if they leave early, rather than being restricted from where they may work.

State law is merging the two, though — Colorado, Wyoming and Washington put their repayment rules inside the same statutes that govern non-competes generally — so what you can recover, and how, moves with non-compete law.

The states below have written rules that reach training repayment in a dental practice.

Dates matter: several of these laws phase in across 2026 and 2027, so the rule that applies to a contract depends on when it is signed.

California.

AB 692 (Business and Professions Code 16608) bans most stay-or-pay terms: for contracts entered into on or after January 1, 2027, an employer may not require a worker to repay a debt or impose a penalty, fee or cost if employment ends.

Get the date right — AB 1697 delayed the law, and its stay-or-pay provisions as they existed on January 1, 2026 are inoperative from January 1, 2026 through December 31, 2026, so an agreement signed in 2026 is not governed by them.

What counts as a prohibited "penalty, fee, or cost" is broad: the statute names retraining fees, replacement hire fees, quit fees, liquidated damages and lost profit.

The exception is narrow.

California still allows tuition repayment — but only for a "transferable credential," defined as a degree from a third-party institution that is accredited and authorized to operate in the state, is not required for the worker's current employment and is useful beyond the current employer — and only in a separate contract that states the amount up front, prorates it, never accelerates it, and waives it if the worker is terminated for any reason other than misconduct.

A radiography or EFDA course the job requires is not a degree, so it likely does not fit the exception on the statute's own definition — that application is this page's flag, not the statute's wording, so confirm with counsel how the law treats a course your practice requires.

Two more California provisions point the same direction: a worker subjected to a prohibited stay-or-pay term can sue for actual damages or $5,000 per worker, whichever is greater, plus injunctive relief and attorney fees (Labor Code 926) — and Labor Code 2802 requires employers to indemnify employees for all necessary expenditures or losses incurred in direct consequence of their duties — a provision to raise with counsel before you require staff to cover training the job requires.

New York.

The Trapped at Work Act (Chapter 643 of 2025, signed December 19, 2025) adds Labor Law Article 37, which bars employers from requiring workers to sign an "employment promissory note" as a condition of employment — and the definition expressly includes notes framed as reimbursement for training.

As originally enacted, the Labor Commissioner may fine an employer $1,000 to $5,000 per violation, and an employee who successfully defends an employer's suit on a void note can recover attorney fees.

A February 13, 2026 amendment narrowed the law's scope — commentary says it now allows repayment for a defined "transferable credential," sign-on bonuses and relocation assistance — and delayed its effective date, with law firms reading the date as December 19, 2026 or February 13, 2027.

Do not build on either date: check the current status before a New York hire signs anything with a repayment term.

Washington.

From June 30, 2027, a provision requiring a worker to repay or forfeit compensation for taking other lawful work counts as a noncompetition covenant.

The carve-out is narrow: a written agreement to repay out-of-pocket education expenses that expires within 18 months of the employee's start date, limits repayment to the pro rata portion of the remaining time, and is waived if the employee quits for statutory good cause.

Wyoming and New Mexico.

Wyoming's 2025 law (section 1-23-108 of the Wyoming Statutes, effective July 1, 2025) voids covenants not to compete that restrict the right to be paid for skilled or unskilled labor, but names training and relocation cost recovery among its exceptions — and then prescribes how much can be recovered, on a sliding scale covered in the next section.

New Mexico's practitioner law, which covers dentists, does not limit provisions requiring a practitioner who has worked under three years to repay loans, relocation expenses, signing bonuses or recruiting, education and training expenses.

That coverage is dentists — for hygienists and assistants, ask counsel what governs.

A look-alike to rule out.

Virginia's restrictive-covenant law defines covered "health care professionals" by licensing board — medicine, nursing, counseling, optometry, psychology and social work — and the Board of Dentistry is not on the list.

The repayment carve-out in that law belongs to those covered professions, so a Virginia dental practice should not treat it as available to its staff; ask employment counsel what Virginia does allow for dental roles.

Where repayment survives, the states that allow it share a shape: the recovery is tied to what the training cost, and the balance falls as service accrues.

• Colorado limits recovery to the reasonable costs of training that is distinct from normal on-the-job training, decreasing proportionately over the two years after the training — and recovery is permitted only if it would not violate the FLSA or Colorado wage law.
• Wyoming sets a sliding scale for relocation, education and training expenses: up to 100% for an employee with under 2 years of service, up to 66% for 2 to under 3 years, and up to 33% for 3 to under 4 years.
• Washington (from June 30, 2027) requires the agreement to expire within 18 months of the employee's start date and limits repayment to the pro rata portion of the remaining time.
• California (from January 1, 2027, inside its transferable-credential exception) requires the amount stated up front, prorated, never accelerated, and waived when the worker is terminated for any reason other than misconduct.

Where your state's rule still allows repayment, you can borrow the pattern.

Itemize what the training actually cost — course fee, exam and credential fees, materials — rather than a round number, and put that figure in the agreement before the course starts.

Prorate by the month so the balance falls as service accrues.

Waive the balance when you terminate the employee for reasons unrelated to misconduct.

And keep the recovery tied to cost: the farther a clause moves past what the training cost you — toward a penalty for leaving — the more it invites the scrutiny described below.

Tying it to cost does not save a clause the state bars outright: for contracts entered into on or after January 1, 2027, California bans requiring a worker to repay a debt if employment ends, outside the transferable-credential exception, and New York's Trapped at Work Act bars requiring workers to sign notes framed as reimbursement for training, subject to the amended scope and unsettled effective date described above.

A clause that survives state law still has to be collected lawfully, and collection is regulated separately from repayment itself.

The federal floor is the FLSA: under 29 CFR 531.35, FLSA wages must be paid "free and clear," and the wage requirements are not met where an employee "kicks back" part of the wage to the employer, directly or indirectly, in cash or otherwise.

The regulation speaks to kickbacks generally — applying it to a training repayment that cuts into a non-exempt employee's minimum wage or overtime is this page's reading of the rule, not a quoted Department of Labor ruling on training debt, so treat it as a reason for caution rather than a settled line.

States are stricter:

• California — it is unlawful for an employer to collect or receive back any part of wages it has already paid to an employee (Labor Code 221).
• New York — Labor Law 193 bars wage deductions except those made under law or regulation or expressly authorized in writing by the employee for the employee's benefit. Whether a repayment of your training costs fits either branch is the question to put to counsel.
• Texas — Labor Code 61.018 bars withholding any part of an employee's wages unless a court ordered it, state or federal law authorizes it, or the employee authorized it in writing for a lawful purpose. The written-authorization route is broader than New York's, but whether it covers a training repayment is a counsel question, not a forms question.

The practical structure is to keep repayment out of payroll entirely: pay final wages as your state requires, then handle any repayment as a separate invoice and payment schedule.

Where state timing rules compress that window, the state-by-state deadlines are in our final paycheck rules guide — and employment counsel should confirm the collection path before your first agreement is signed.

The federal document to read on training repayment is the CFPB's July 20, 2023 Issue Spotlight.

It described training repayment agreement provisions as a form of employer-driven debt and said the bureau intended to evaluate them for potential violations of consumer financial laws.

Read it for what it is: a research report, not a rule.

It bans nothing, it creates no dental-specific standard, and it does not tell you what the bureau's posture is today — if enforcement priorities matter to your decision, ask counsel what the current state of play is.

The Federal Trade Commission actions we can point to in this space are about non-competes, not training repayment.

On September 10, 2025, its chairman sent warning letters to several large healthcare employers and staffing firms urging them to review employment agreements, including non-competes, for their healthcare workers — and the letters named nurses, physicians and other medical professionals, not dental practices.

The agency has also said it can still challenge individual non-competes case by case when they are unjustified, overbroad or anticompetitive.

The takeaway for a practice owner is not a dental rule; it is that restrictive employment terms in healthcare are drawing agency attention, which is a reason to keep any repayment term narrow, documented and cost-based.

Every repayment agreement has the same flaw: it collects money from someone on the way out the door, which is exactly when the relationship is at its worst.

Two pay structures aim the same money at staying instead.

Retention bonuses.

Pay a bonus for staying through the period the training was meant to cover, and the money moves forward instead of backward.

Staging the payments — part at signing, part at the end of the period — does the retention work without a repayment clause at all: leave early and the unearned portion is simply never paid.

How to stage them, and where bonus clawbacks now hit state limits, is in our guide to sign-on and retention bonuses.

Pay steps.

Tie a wage increase to the credential instead: the assistant completes the EFDA course or the radiography certification, and their rate steps up.

The investment shows up in pay rather than as a receivable, the employee sees the return immediately, and there is nothing to collect.

Start from posted pay in your market rather than a rule of thumb — the dental assistant hub and our raises and pay scales guide show how to build the step.

A continuing-education allowance works the same way: pay for the course, skip the strings.

None of these structures needs a repayment clause to protect the investment, and none of them creates a repayment receivable for someone heading for the door — though staged bonuses have their own state rules, which the bonuses guide linked above covers.

The rest of the pay-design toolkit — benefits, bonus plans, scheduling — lives in our dental hiring hub.