Jan 31 (Reuters) – Intel Corp (INTC.O) said on Tuesday that it had made broad cuts to employee and executive pay, a week after the company issued a lower-than-expected sales forecast driven by a loss of market share to rivals and a PC market downturn.
The reductions will range from 5% of base pay for mid-level employees to as much as 25% for Chief Executive Pat Gelsinger, while the company’s hourly workforce’s pay will not be cut, said a person familiar with the matter who was not authorized to speak publicly.
Intel spokesperson Addy Burr said in a statement that the “changes are designed to impact our executive population more significantly and will help support the investments and overall workforce.”
Intel last week said its profit margins were plunging as the PC market cools after several years of growth during the pandemic.
Gelsinger also conceded that Intel has “stumbled” and lost market share to rivals such as Advanced Micro Devices Inc (AMD.O), which on Tuesday reported quarterly sales that were above Wall Street’s expectations.
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The person familiar with Intel’s pay cuts said that in addition to 5% decreases for mid-level employees, vice president level employees will see 10% reductions and the company’s top executives other than the CEO will get 15% cuts.
The company has also lowered its 401(k) matching program from 5% to 2.5% and suspended merit raises and quarterly performance bonuses, the person said.
Annual performance bonuses based Intel’s overall financial performance will remain but those bonuses have been smaller in recent years as the company has lost ground to rivals, the person added.
Reporting by Stephen Nellis in San Francisco; Editing by Christopher Cushing and Jamie Freed
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Schools, transport networks, refinery deliveries hit
Macron: Reform vital to ensure viability of pension system
SAINT-NAZAIRE, France, Jan 31 (Reuters) – Striking workers disrupted French refinery deliveries, public transport and schools on Tuesday in a second day of nationwide protests over President Emmanuel Macron’s plan to make people work longer before retirement.
Crowds marched through cities across France to denounce a reform that raises the retirement age by two years to 64 and which is a test of Macron’s ability to push through change now that he has lost his working majority in parliament.
On the rail networks, only one in every three high-speed TGV trains were operating and even fewer local and regional trains. Services on the Paris metro were thrown into disarray.
Buoyed by their success earlier in the month when more than a million people took to the streets, trade unions which have been battling to maintain their power and influence urged the public to turnout en masse.
“We won’t drive until we’re 64!” bus driver Isabelle Texier said at a protest in Saint-Nazaire on the Atlantic coast, adding that many careers involved tough working conditions.
Others felt resigned ahead of likely bargaining between Macron’s ruling alliance and conservative opponents who are more open to pension reform than the left.
“There’s no point in going on strike. This bill will be adopted in any case,” said 34-year-old Matthieu Jacquot, who works in the luxury sector.
Unions said half of primary school teachers had walked off the job. TotalEnergies (TTEF.PA) said 55% of its workers on morning shifts at its refineries had downed tools, a lower number than on Jan. 19. The hard-left CGT union said the figure was inaccurate.
For unions, the challenge will be maintaining a strike movement at a time when high inflation is eroding salaries.
At a local level, some announced “Robin Hood” operations unauthorised by the government. In the southwestern Lot-et-Garonne area, the local CGT trade union branch cut power to several speed cameras and disabled smart power meters.
“When there is such a massive opposition, it would be dangerous for the government not to listen,” said Mylene Jacquot, secretary general of the CFDT union’s civil servants branch.
[1/16] Protesters attend a demonstration against French government’s pension reform plan in Paris as part of a day of national strike and protests in France, January 31, 2023. REUTERS/Gonzalo Fuentes
Opinion polls show a substantial majority of the French oppose the reform, but Macron intends to stand his ground. The reform was “vital” to ensure the viability of the pension system, he said on Monday.
A street march in Paris takes place later in the day.
‘BRUTAL’
The pension system reform would yield an additional 17.7 billion euros ($19.18 billion) in annual pension contributions, according to Labour Ministry estimates.
Unions say there are other ways to raise revenue, such as taxing the super rich or asking employers or well-off pensioners to contribute more.
“This reform is unfair and brutal,” said Luc Farre, the secretary general of the civil servants’ UNSA union. “Moving (the pension age) to 64 is going backwards, socially.”
French power supply was down by 4.5% or 3 gigawatts (GW), as workers at nuclear reactors and thermal plants joined the strike, data from utility group EDF (EDF.PA) showed.
TotalEnergies said deliveries of petroleum products from its French sites had been halted because of the strike, but that customers’ needs were met.
The government made some concessions while drafting the legislation. Macron had originally wanted the retirement age to be set at 65, while the government is also promising a minimum pension of 1,200 euros a month.
Prime Minister Elisabeth Borne has said the 64 threshold is “non-negotiable”, but the government is exploring ways to offset some of the impact, particularly on women.
Hard-left opposition figure Jean-Luc Melenchon, a vocal critic of the reform, said parliament would on Monday debate a motion calling for a referendum on the matter.
“The French are not stupid,” he said at a march in Marseille. “If this reform is vital, it should be possible to convince the people.”
Reporting by Forrest Crellin, Benjamin Mallet, Sudip Kar-Gupta, Leigh Thomas, Blandine Henault, Michel Rose, Dominique Vidalon, Benoit Van Overstraeten; Writing by Ingrid Melander and Richard Lough; Editing by Janet Lawrence
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63% worried about ECB’s ability to protect purchasing power
FRANKFURT, Jan 18 (Reuters) – (This Jan. 17 story has been corrected to restore the dropped words in paragraph 11)
European Central Bank staff are losing confidence in the institution’s leadership following the ECB’s failure to control inflation and a pay award that lagged the leap in prices, according to a survey by trade union IPSO.
The responses underline that even central banks, whose primary responsibility is fighting inflation, are not immune to staff dissatisfaction with the sharply rising cost of living.
The survey was organised in the context of a dispute between IPSO, which holds six out of nine seats on the ECB’s staff committee, and the central bank’s board over pay and remote-working arrangements.
An ECB spokesperson did not comment directly on IPSO’s findings when asked but pointed to a separate staff survey, run by the ECB itself last year, showing that 83% of nearly 3,000 respondents were proud to work for the ECB and 72% would recommend it.
Results of IPSO’s survey, which largely focused on pay and remote-working arrangements but also included questions about trust in the board, were sent to ECB staff on Tuesday in an email, seen by Reuters.
They showed two-thirds of roughly 1,600 respondents said their trust in Lagarde and the rest of the six-member ECB board had been damaged by recent developments such as high inflation and a pay increase that did not match the rise in prices.
Asked how much trust they had in Lagarde and the board when it comes to leading and managing the ECB, the central bank for the 20 countries that use the euro, just under half of respondents said “moderate” (34.3%) or “high” (14.6%).
But over 40% of respondents said they had “low” (28.6%) or “no” (12%) trust, while 10.5% could not say.
“This is a serious concern for our institution, as no one can correctly lead an organisation without the trust of its workforce,” the union said in its email.
INFLATION SURGE, PAY BATTLES
The survey was the first by IPSO to ask about trust in top management since Christine Lagarde took over as ECB President in late 2019.
A similar IPSO survey of ECB staff, taken just before her predecessor Mario Draghi stepped down, showed 54.5% of 735 respondents rated his presidency “very good” or “outstanding”, with support for his policy measures even higher.
Then, however, inflation in the euro zone had been low for a decade. Its recent surge to multi-decade highs in countries around the world has seen a revival in battles over pay between workers and the companies and institutions that employ them.
And a majority of respondents in the October 2019 survey also complained about a lack of transparency in recruitment and perceived favouritism under Draghi.
The most recent Bank of England staff survey, also conducted in 2019, showed 64% of respondents had “trust and confidence in the Bank’s leadership”.
A 2022 U.S. government survey of employees at departments and federal agencies found that 61% of respondents had “a high level of respect” for their organisation’s senior leaders – roughly stable compared to the previous two years.
The ECB spokesperson also pointed to internal surveys in 2020-21 that found roughly 80% of respondents were satisfied with health-and-safety measures taken by the ECB in response to the coronavirus pandemic.
The latest IPSO survey showed 63% of staff who responded were worried about the ECB’s ability to protect their purchasing power after being handed a pay increase of just 4% last year – or roughly half the rise in consumer prices.
The ECB has been criticised by politicians, bankers and academics for initially underestimating a surge in the cost of living and then making up for it with large and painful increases in borrowing costs.
Lagarde, who is not an economist and had not been a central banker before joining the ECB, colourfully defended her board at an event with staff last month.
“If it wasn’t for them I’d be a sad, lonely cowgirl lost somewhere in the Pampa of monetary policy,” Lagarde said, according to a recording of the Dec. 19 town hall seen by Reuters.
She and fellow board members have long worried about the risk of a potential “wage-price spiral”, where higher salaries feed into prices, which they argue would make it harder for the ECB to bring inflation back down to its 2% target.
But IPSO said that concern is misplaced and workers should not be made to bear the brunt of the current bout in inflation.
“The ECB might be preaching lower real wages, but this is not our stance as your staff union,” it wrote in its message to ECB employees.
Editing by Catherine Evans
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Jan 14 (Reuters) – Twitter Inc has secured a ruling allowing the social media company to force several laid-off workers suing over their termination to pursue their claims via individual arbitration than a class-action lawsuit.
U.S. District Judge James Donato on Friday ruled that five former Twitter employees pursuing a proposed class action accusing the company of failing to give adequate notice before laying them off after its acquisition by Elon Musk must pursue their claims in private arbitration.
Donato granted Twitter’s request to force the five ex-employees to pursue their claims individually, citing agreements they signed with the company.
Twitter did not immediately respond to a request for comment.
The San Francisco judge left for another day “as warranted by developments in the case” whether the entire class action lawsuit must be dismissed, though, as he noted three other former Twitter employees who alleged they had opted out of the company’s arbitration agreement have joined the lawsuit after it was first filed.
The lawyer who represents the plaintiffs, Shannon Liss-Riordan, said on Monday that she had already filed 300 demands for arbitration on behalf of former Twitter employees and would likely file hundreds more.
Those workers all claim they have not received the full severance package promised by Twitter before Musk took over. Some have also alleged sex or disability discrimination.
Last year, Donato had ruled that Twitter must notify the thousands of workers who were laid off after its acquisition by Musk following a proposed class action accusing the company of failing to give adequate notice before terminating them.
The judge said that before asking workers to sign severance agreements waiving their ability to sue the company, Twitter must give them “a succinct and plainly worded notice”.
Twitter laid off roughly 3,700 employees in early November in a cost-cutting measure by Musk, and hundreds more subsequently resigned.
In December last year, Twitter was also accused by dozens of former employees of various legal violations stemming from Musk’s takeover of the company, including targeting women for layoffs and failing to pay promised severance.
Twitter is also facing at least three complaints filed with a U.S. labor board claiming workers were fired for criticizing the company, attempting to organize a strike, and other conduct protected by federal labor law.
Reporting by Mrinmay Dey in Bengaluru, Nate Raymond in Boston, and Daniel Wiessner in Albany, New York, Editing by Angus MacSwan and Deepa Babington
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PARIS, Jan 10 (Reuters) – The French should work two years longer to age 64 before retiring, the government said on Tuesday, announcing an unpopular pension system overhaul that immediately prompted unions to call for strikes and protests.
The right to retire at a relatively young age is deeply cherished in France and the reform will be a major test of President Emmanuel Macron’s ability to deliver change as social discontent mounts over the cost of living.
The reform’s passage through parliament will not be easy. Macron’s government says it is vital to keep the pension budget out of the red. Unions argue the reform is unfair and unnecessary.
“Nothing justifies such a brutal reform,” Laurent Berger, leader of the moderate, reform-minded CFDT union, told reporters after trade union leaders agreed on a nationwide strike for Jan. 19, which will kick off a series of strikes and protests.
An Odoxa poll showed four out of five citizens oppose the higher retirement age.
“I’m well aware that changing our pension system raises questions and fears among the French,” Prime Minister Elisabeth Borne had told a news conference shortly before.
“We offer today a project to balance our pension system, a project that is fair,” she said, adding that France had to face reality.
Overhauling the pension system was a central pillar of Macron’s reformist agenda when he entered the Elysee Palace in 2017. But he shelved his first attempt in 2020 as the government battled to contain COVID-19.
The second attempt will not be any easier.
“It’s one slap in the face after another,” said 56-year-old Frederic Perdriel during a small protest in the western city of Rennes ahead of Borne’s announcement. “There are other ways to finance pensions than raising the retirement age.”
“BRUTAL, CRUEL”
Macron and Borne will need to win support among conservative Les Republicains (LR) lawmakers in the coming months to pass the reform in parliament.
That looks less challenging than it did a few weeks ago after concessions on the retirement age – Macron had originally wanted it to be 65 – and a minimum pension.
Olivier Marleix, who leads the LR group in the lower house of parliament, reacted positively to Borne’s announcements.
“They heard us,” he said, while asking for more efforts to ensure employment for people close to retirement age.
Even so, LR is divided on the issue, so every vote counts.
The Socialists, the hard-left La France Insoumise (France Unbowed) and the far-right’s National Rally were swift to denounce the reform. Left-wing lawmaker Mathilde Panot branded the plan “archaic, unfair, brutal, cruel.”
“The French can count on our determination to block this unfair reform,” the far-right’s Marine Le Pen said.
Under the government plan, the retirement age will be raised by three months per year from September, reaching the target age of 64 in 2030.
From 2027, eight years earlier than planned in past reforms, it will be necessary to have worked 43 years to receive a full pension.
Other measures aim to boost the employment rate among 60 to 64-year-olds, which is one of the lowest among leading industrialised nations.
With one of the lowest retirement ages in the industrialised world, France also spends more than most countries on pensions at nearly 14% of economic output, according to the Organisation for Economic Cooperation and Development.
Reporting by Elizabeth Pineau, Leigh Thomas, Stephane Mahe, Tassilo Hummel, Blandine Henault; writing by Ingrid Melander; editing by Richard Lough, Alexandra Hudson and Josie Kao
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Unemployment rate steady at 3.7%; participation rate falls
Average hourly earnings rise 0.6%; up 5.1% year-on-year
WASHINGTON, Dec 2 (Reuters) – U.S. employers hired more workers than expected in November and increased wages, shrugging off mounting worries of a recession, but that will probably not stop the Federal Reserve from slowing the pace of its interest rate hikes starting this month.
Despite the strong job growth, some details of the Labor Department’s closely watched employment report on Friday were a bit weak, which economists said could be flagging upcoming labor market weakness. Household employment decreased for a second straight month. About 186,000 people left the labor force, keeping the unemployment rate unchanged at 3.7%.
Labor market tightness and strength keeps the Fed on its monetary policy tightening path at least through the first half of 2023, and could raise its policy rate to a higher level where it could stay for sometime. It also underscores the economy’s resilience heading into was is expected to be a tough year.
“November’s labor market report was clearly bad news for the Fed’s war on inflation,” said Jan Groen, chief U.S. macro strategist at TD Securities in New York. “The Fed has no other choice than to remain in tightening mode for the near future, with 50 basis points hikes in December and February.”
Nonfarm payrolls increased by 263,000 jobs last month. Data for October was revised higher to show payrolls rising 284,000 instead of 261,000 as previously reported. Monthly job growth of 100,000 is needed to keep pace with growth in the labor force.
Economists polled by Reuters had forecast payrolls increasing 200,000. Estimates ranged from 133,000 to 270,000. Employment growth has averaged 392,000 per month this year compared with 562,000 in 2021.
Hiring remains strong despite announcements of thousands of job cuts by technology companies, including Twitter, Amazon (AMZN.O) and Meta (META.O), the parent of Facebook.
Economists say these companies are right-sizing after over-hiring during the COVID-19 pandemic, noting that small firms remain desperate for workers.
There were 10.3 million job openings at the end of October, with 1.7 openings for every unemployed person, many of them in the leisure and hospitality as well as healthcare and social assistance industries.
The gains in employment last month were led by the leisure and hospitality sector, which added 88,000 jobs, most of them at restaurants and bars. Leisure and hospitality employment remains down 980,000 from its pre-pandemic level.
There were 45,000 jobs added in healthcare, while government payrolls increased 42,000. Construction employment increased by 20,000 jobs despite the housing market turmoil, while manufacturing added 14,000 jobs.
But retail trade employment fell by 30,000 jobs, with most of the losses in general merchandise stores. Transportation and warehousing payrolls decreased by 15,000 jobs. Temporary help jobs, a segment normally considered a harbinger of future hiring, decreased by 17,200.
“The labor market might encounter some bumps in the road next year, but it’s heading into 2023 cruising,” said Nick Bunker, head of economic research at the Indeed Hiring Lab.
Fed Chair Jerome Powell said on Wednesday the U.S. central bank could scale back the pace of its rate hikes “as soon as December.” The Fed has raised its policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range in the fastest rate-hiking cycle since the 1980s.
Policymakers meet on Dec. 13 and 14. Attention now shifts to November’s consumer price data due on Dec. 13.
Stocks on Wall Street fell. The dollar rose against a basket of currencies. U.S. Treasury prices were lower.
WAGES ACCELERATE
With the labor market still tight, average hourly earnings increased 0.6% after advancing 0.5% in October. That raised the annual increase in wages to 5.1% from 4.9% in October. Wage growth peaked at 5.6% in March.
Reuters Graphics Reuters Graphics
The broad wage gains suggest that the moderation in inflation, evident in October data, will be gradual. Economists said this also raised concerns about a wage-price spiral that could keep service prices rising outside the shelter component. Fed officials have shied away from calling a price-wage spiral.
“The broad-based nature of the increase and its consistency with other data on wages makes us think that around 5% average hourly earnings growth is not an aberration,” said Andrew Hollenhorst, chief U.S. economist at Citigroup in New York.
Strong wage gains are helping to drive consumer spending, which surged in October, leading economists to believe that an anticipated recession next year would be short and shallow. But there are some signs of weakness emerging in the labor market.
Household employment decreased by 138,000 jobs, the second straight monthly decline. Though household employment tends to be volatile as it is drawn from a smaller sample compared to nonfarm payrolls, economists said the divergence between these two measures was important to watch.
“The household survey may be better in capturing turning points in the labor market than the payroll survey, since the payroll survey is unable to adequately capture activity in opening and closing firms while the household survey can,” said Sophia Koropeckyj, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Others, however, argued nonfarm payrolls were a better gauge and expected household employment to converge with payrolls.
The participation rate, or the proportion of working-age Americans who have a job or are looking for one, slipped to 62.1% from 62.2% in October. Some of the decrease in household employment and participation was likely because of illness, with 1.6 million people saying they were absent from work because they were sick, up 265,000 from October.
The participation rate for Americans 55 years and older fell, possibly reflecting retirements. The employment-to-population ratio dipped to 59.9% from 60.0% in October.
Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci
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WASHINGTON, Nov 4 (Reuters) – U.S. employers likely hired the fewest workers in nearly two years in October and increased wages at a moderate pace, suggesting some loosening in labor market conditions, which would allow the Federal Reserve to shift towards smaller interest rates increases starting in December.
The Labor Department’s closely watched employment report on Friday is also expected to show unemployment ticking up to 3.6% from 3.5% in September. The Fed on Wednesday delivered another 75-basis-point interest rate hike and said its fight against inflation would require borrowing costs to rise further.
But the central bank signaled it may be nearing an inflection point in what has become the fastest tightening of monetary policy in 40 years.
“The labor market is basically OK, but it does seem to be slowing,” said Guy Berger, principal economist at LinkedIn
in San Francisco. “The Fed is going to try to thread the needle where they slow down the labor market enough to put downward pressure on wages and inflation, without causing a recession.”
Nonfarm payrolls likely increased by 200,000 jobs last month after rising 263,000 in September, according to a Reuters survey of economists. That would be the smallest gain since December 2020, when payrolls declined under an onslaught of COVID-19 infections. Estimates ranged from 120,000 to 300,000.
Employment gains were probably almost evenly distributed among industry sectors, in line with recent patterns, with the leisure and hospitality industry leading the way. Leisure and hospitality employment remains below its pre-pandemic level by at least a million jobs. Interest rate-sensitive industries like financial activities as well as transportation and warehousing probably shed jobs as they did in September. Government payrolls are seen declining further.
Hurricane Ian is expected to have put a small dent in payrolls. The storm slammed into Florida in late September and boosted unemployment claims in mid-October, when the government surveyed businesses for last month’s employment report.
“Hurricane Ian should have at least some downward impact on nonfarm payrolls,” said Lou Crandall, chief economist at Wrightson ICAP in Jersey City. “We have lowered our forecast slightly to show an increase of 150,000 (from 200,000) on the assumption that at least some workers were sidelined in the areas hit hardest by the hurricane.”
BACKFILLING POSITIONS
Job growth has remained solid even as domestic demand has softened amid higher borrowing costs because of companies replacing workers who would have left. But with recession risks mounting, this practice could end soon. A survey from the Institute for Supply Management on Thursday found some service industry companies “are holding off on backfilling open positions,” because of uncertain economic conditions.
Still, the labor market remains tight, with 1.9 job openings per unemployed person at the end of September.
Average hourly earnings are forecast to have increased 0.3%, matching September’s gain. But there is a risk of an upside surprise because of Hurricane Ian as well as a calendar quirk. According to Wrightson ICAP’s Crandall, storms and other events that keep people away from work during the payrolls survey week can artificially raise the reported level of hourly earnings.
The government surveys businesses and households during the during the week that includes the 12th day of the month.
“The payroll survey week included the 15th of the month, which tends to bias the month/month change higher, since wage increases secured by those workers paid at mid-month and month-end rather than bi-weekly are more likely to have been captured,” said Kevin Cummins, chief U.S. economist at NatWest Markets in Stamford, Connecticut.
Stripping out any distortions from the weather and calendar quirk, wage growth is cooling. Average hourly earnings are forecast to have increased 4.7% year-on-year in October after rising 5.0% in September. Other wage measures have also come off the boil, which bodes well for inflation.
“We believe we’ve seen wage growth peak,” said Michelle Green, principal economist at Prevedere in Columbus, Ohio. “So while we will continue to see year-over-year growth in average hourly earnings across all private sector employees, the velocity of that growth really is starting to slow down.”
Reporting by Lucia Mutikani; Editing by Cynthia Osterman
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PARIS, Oct 18 (Reuters) – Regional train traffic in France was cut by about half on Tuesday as several unions called a nationwide strike, seeking to capitalise on anger with decades-high inflation to expand a weeks-long industrial action at oil refineries to other sectors.
There were also some disruption to schools, as the strike primarily affected the public sector.
Trade union leaders were hoping workers would be energised by the government’s decision to force some of them to go back to work at petrol depots to try and get fuel flowing again, a decision some say put in jeopardy the right to strike.
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But a survey by Elabe pollsters for BFM TV showed only 39% of the public backed Tuesday’s call for a nationwide strike, while 49% opposed it, and growing numbers opposed the strike by oil refinery workers.
The refinery workers’ strike has become one of President Emmanuel Macron’s stiffest challenges since his re-election in May.
Government spokesperson Olivier Veran said the requisition of more staff for refineries could occur during the day, as queues of motorists worried about supply disruption grow at petrol stations.
“There will be as many requisitions as deemed necessary … Blocking refineries, when we have reached an agreement on wages, this is not a normal situation,” Veran told France 2 TV.
French students block the entrance of the Lycee Montaigne high school to protest as part of a nationwide day of strike in Paris, France, October 18, 2022. REUTERS/Gonzalo Fuentes
Just under 10% of high school teachers were on strike on Tuesday, with numbers even lower in primary schools, education ministry data showed. The call for strike was most observed in vocational schools, where teachers oppose planned reforms.
On the transport front, Eurostar said it was cancelling some trains between London and Paris because of the strike.
French public railway operator SNCF said that traffic on regional connections was down 50% but that there were no major disruptions to national lines.
As tensions rise in the euro zone’s second-biggest economy, strikes have spilled over into other parts of the energy sector, including nuclear giant EDF (EDF.PA), where maintenance work crucial for Europe’s power supply will be delayed.
A representative of the FNME-CGT union on Tuesday said strikes were affecting work at nuclear power plants, including at the Penly plant.
The strikes are happening as the government is set to pass the 2023 budget using special constitutional powers that would allow it to bypass a vote in parliament, Prime Minister Elisabeth Borne said on Sunday.
Demonstrations are scheduled all over the country, with one in Paris from 1200 GMT.
Thousands of people took to the streets of Paris on Sunday to protest against soaring prices. The leader of hard-left La France Insoumise (France Unbowed) party, Jean-Luc Melenchon, marched alongside this year’s Nobel Prize winner for Literature, Annie Ernaux.
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Additional reporting by Ingrid Melander, Forrest Crellin and Juliette Jabkhiro; Editing by Angus MacSwan and Gerry Doyle
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WASHINGTON, Oct 17 (Reuters) – When a Washington state beauty salon charged Simran Bal $1,900 for training after she quit, she was shocked.
Not only was Bal a licensed esthetician with no need for instruction, she argued that the trainings were specific to the shop and low quality.
Bal’s story mirrors that of dozens of people and advocates in healthcare, trucking, retail and other industries who complained recently to U.S. regulators that some companies charge employees who quit large sums of money for training.
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Nearly 10% of American workers surveyed in 2020 were covered by a training repayment agreement, said the Cornell Survey Research Institute.
The practice, which critics call Training Repayment Agreement Provisions, or TRAPs, is drawing scrutiny from U.S. regulators and lawmakers.
On Capitol Hill, Senator Sherrod Brown is studying legislative options with an eye toward introducing a bill next year to rein in the practice, a Senate Democratic aide said.
At the state level, attorneys general like Minnesota’s Keith Ellison are assessing how prevalent the practice is and could update guidance.
Ellison told Reuters he would be inclined to oppose reimbursement demands for job-specific instruction while it “could be different” if an employer wanted reimbursement for training for a certification like a commercial driving license that is widely recognized as valuable.
The Consumer Financial Protection Bureau has begun reviewing the practice, while the Justice Department and Federal Trade Commission have received complaints about it.
The use of training agreements is growing even though unemployment is low, which presumably gives workers more power, said Jonathan Harris who teaches at the Loyola Law School Los Angeles.
“Employers are looking for ways to keep their workers from quitting without raising wages or improving working conditions,” said Harris.
The CFPB, which announced in June it was looking into the agreements, has begun to focus on how they may prevent even skilled employees with years of schooling, like nurses, from finding new, better jobs, according to a CFPB official who was not authorized to speak on the record.
“We have heard from workers and worker organizations that the products may be restricting worker mobility,” the official said.
TRAPs have been around in a small way since the late 1980s primarily in high-wage positions where workers received valuable training. But in recent years the agreements have become more widespread, said Loyola’s Harris.
Licensed esthetician Simran Bal, who was taken to court by her former employer to repay $1900 in trainings they required her to attend, poses for a portrait outside the King County District Court in Shoreline, Washington, U.S., October 13, 2022. Bal, whose case was dismissed, says she was already licensed for services the trainings covered. REUTERS/Lindsey Wasson
One critic of the CFPB effort was the National Federation of Independent Business, or NFIB, which said the issue was outside the agency’s authority because it was unrelated to consumer financial products and services.
“(Some state governments) have authority to regulate employer-driven debt. CFPB should defer to those governments, which are closer to the people of the states than the CFPB,” it added.
NURSING AND TRUCKING
Bal said she was happy when she was hired by the Oh Sweet salon near Seattle in August 2021.
But she soon found that before she could provide services for clients, and earn more, she was required to attend trainings on such things as sugaring to remove unwanted hair and lash and brow maintenance.
But, she said, the salon owner was slow to schedule the trainings, which would sometimes be postponed or cancelled. They were also not informative; Bal described them as “introductory level.” While waiting to complete the training, Bal worked at the front desk, which paid less.
When she quit in October 2021, Bal received a bill for $1,900 for the instruction she did receive. “She was charging me for training for services that I was already licensed in,” said Bal.
Karina Villalta, who runs Oh Sweet LLC, filed a lawsuit in small claims court to recover the money. Court records provided by Bal show the case was dismissed in September by a judge who ruled that Bal did not complete the promised training and owed nothing. Villalta declined requests for comment.
In comments to the CFPB, National Nurses United said they did a survey that found that the agreements are “increasingly ubiquitous in the health care sector,” with new nurses often affected.
The survey found that 589 of the 1,698 nurses surveyed were required to take training programs and 326 of them were required to pay employers if they left before a certain time.
Many nurses said they were not told about the training repayment requirement before beginning work, and that classroom instruction often repeated what they learned in school.
The International Brotherhood of Teamsters said in comments that training repayment demands were “particularly egregious” in commercial trucking. They said firms like CRST and C.R. England train people for a commercial drivers license but charge more than $6,000 if they leave the company before a certain time. Neither company responded to a request for comment.
The American Trucking Associations argues that the license is portable from one employer to another and required by the government. It urged the CFPB to not characterize it as employer-driven debt.
Steve Viscelli, a sociologist at the University of Pennsylvania who spent six months training and then driving truck, said the issue deserved scrutiny.
“Anytime we have training contracts for low-skilled workers, we should be asking why,” he said. “If you have a good job, you don’t need a training contract. People are going to want to stay.”
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Reporting by Diane Bartz; Editing by Chris Sanders and Lisa Shumaker
Our Standards: The Thomson Reuters Trust Principles.
Diane Bartz
Thomson Reuters
Focused on U.S. antitrust as well as corporate regulation and legislation, with experience involving covering war in Bosnia, elections in Mexico and Nicaragua, as well as stories from Brazil, Chile, Cuba, El Salvador, Nigeria and Peru.
PARIS, Oct 16 (Reuters) – Thousands of people took to the streets of Paris on Sunday to protest against soaring prices as weeks of strikes for higher wages at oil refineries spurred demands for a general strike.
The leader of hard-left party La France Insoumise (France Unbowed), Jean-Luc Melenchon, marched alongside this year’s Nobel Prize winner for Literature, Annie Ernaux. He called a general strike for Tuesday.
“You’re going to live a week like no other, we are the ones who started it with this march,” he told the crowd.
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Melenchon followed the footsteps of four unions – but not France’s biggest, the moderate CFDT – which have called for strikes and protests on Tuesday for wage increases.
Jean-Luc Melenchon, leader of French far-left opposition party La France Insoumise (France Unbowed), and leader of the New Ecologic and Social People’s Union (NUPES), takes part in a protest against soaring inflation and what they call a lack of government action to fight climate change, in Paris, France October 16, 2022. REUTERS/Stephane Mahe
The four unions also called the protests to help protect the right to strike, after the government ordered the requisitioning of some oil refinery workers, a move seen by unions as a violation of their constitutional rights.
The march followed a call by the NUPES parliamentary coalition, which hopes to turn the page on domestic violence accusations that have recently dogged senior members.
Budget Minister Gabriel Attal said the left-wing coalition was attempting to exploit the current situation, marked by ongoing strikes at French utility EDF’s nuclear plants and at French oil refineries.
“Today’s march is a march of supporters who want to block the country,” he said on French radio station Europe 1.
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Reporting by Lucient Libert and Stépahne Mahe; Additional reporting by Bertrand Boucey; Writing by Mathieu Rosemain; Editing by Nick Macfie
Our Standards: The Thomson Reuters Trust Principles.