Making drivers repay training costs: stay-or-pay agreements and the 2026 state bans

What you are trying to recover

For a new NEMT driver, the course fees are small next to the paid hours of training. A typical stack for a wheelchair route looks like this:

• PASS. CTAA’s PASS Basic online course costs $28 for CTAA members and $55 for non-members. It has 19 modules but no hands-on securement, which CTAA highly recommends adding through an in-person class or its two-day classroom course. A PASS driver certificate is valid for two years.
• CPR and first aid. The American Heart Association’s Heartsaver Total First Aid CPR AED online course is $24.50, plus a hands-on skills session sold separately by a training center, and the card is valid for two years.
• Broker and company training. Broker modules, your own policies, and ride-alongs.
• The hours. Training you require is work time. 29 CFR 785.27 lets an employer skip paying for training only when attendance is outside regular hours, optional, unrelated to the job, and free of productive work. Required PASS or broker courses fail every one of those tests.

As an example, a company paying the non-member PASS price, the online CPR portion, and 16 required training hours at $17 an hour spends $79.50 in fees and $272 in wages, before the CPR skills session and any trainer’s time. In this example the wages are more than three times the fees.

Many of these requirements come from brokers. Modivcare, for example, lists a PASS wheelchair certificate with hands-on training, a valid first aid and CPR certificate, and a defensive driving certificate among its driver requirements. That matters for the exceptions in the new state laws, as the sections below explain. The driver training guide covers what each broker and state requires.

The federal floor on any repayment

No federal statute bans training repayment agreements for private employers, but federal wage law limits how you collect.

The Fair Labor Standards Act requires wages to be paid free and clear (29 CFR 531.35). Taking a training debt out of pay, or having the driver hand back cash, is legal only while the driver keeps minimum wage for all hours worked that week, and overtime pay stays off limits. The Labor Department’s Fact Sheet 16 applies the same limit to cash repayments as to payroll deductions.

Heder v. City of Two Rivers (2002) shows how this plays out. A city’s deal with the firefighters’ union required anyone who left within three years of paramedic training to repay its cost. One firefighter quit two and a half years after starting the training, and the city withheld money from his final checks. The Seventh Circuit ruled that his last two paychecks still had to carry at least the minimum wage, leaving the city to pursue the rest of the debt as an ordinary creditor.

State deduction laws often add more. Illinois (820 ILCS 115/9) wants the driver’s written OK at the moment money comes out, and Minnesota (Minn. Stat. 181.79) wants a signed authorization dated after the debt exists that names a per-paycheck amount. Those statutes reach a training debt just as they reach a damage claim, and the guide to deducting damage from pay walks through them.

California: AB 692 bans most stay-or-pay terms

California’s AB 692 added Business and Professions Code 16608 and Labor Code 926, effective January 1, 2026. For contracts entered into on or after that date, an employer may not include, or require a worker to sign, a term that does any of the following:

• Requires the worker to pay the employer, a training provider, or a debt collector for a debt if the job ends.
• Lets any of them start or resume collecting a debt, or end forbearance, when the job ends.
• Imposes a penalty, fee, or cost when the job ends. The statute names replacement hire fees, retraining fees, quit fees, and liquidated damages as examples.

The law reaches any worker, which it defines to include employees, prospective employees, and others in a work relationship. “Debt” includes employment-related and education-related costs, whether or not the amount is certain.

The exceptions, and why PASS does not fit

The exception that sounds closest is for repaying tuition for a “transferable credential”. California defines that as a degree offered by an accredited third-party institution, not required for the worker’s current job, and useful beyond your company. A PASS certificate or a CPR card is not a degree, and broker-required training is required for the job. That exception does not help a NEMT company recover onboarding costs.

The exception that can help is a sign-on bonus, an unearned payment at the start of employment not tied to job performance. Repayment is allowed only if all of these hold:

1. The repayment terms are in an agreement separate from the main employment contract.
2. The worker is told of the right to consult a lawyer and gets at least five business days to do so before signing.
3. No interest accrues, and repayment is prorated over a retention period of no more than two years from the payment.
4. The worker can choose to take the bonus at the end of a fully served retention period instead, with nothing to repay.
5. Repayment applies only if the worker leaves on their own or is fired for misconduct.

A banned term is void as against public policy. Under Labor Code 926, a worker or worker representative can sue, and an employer found liable owes actual damages or $5,000 per worker, whichever is greater, plus injunctive relief and attorney’s fees. The law voids only contracts made on or after January 1, 2026. Older agreements are still subject to the federal floor and California’s wage laws.

New York: the Trapped at Work Act from December 19, 2026

New York added Article 37 to its Labor Law. The current text, revised in February 2026, takes effect December 19, 2026. It makes any “employment promissory note” unenforceable and void when required as a condition of employment. The law defines that term as any instrument, agreement, or contract provision requiring an employee to pay the employer if employment with that employer ends before a stated period passes.

The exceptions are narrower than they first look:

• Transferable credentials. New York’s definition is broader than California’s. It includes a certificate or documented course completion widely recognized by employers in the industry. It excludes employer-specific training on your own systems and policies, and legally mandated safety and compliance training. Even for a qualifying credential, repayment is allowed only if the contract is separate from the employment contract, obtaining the credential is not a condition of employment, the amount is set in advance and capped at your cost, repayment is prorated with no acceleration if the employee leaves, and nothing is owed after a firing except for misconduct.
• Bonuses and relocation help. An employee can be required to repay a financial bonus, relocation assistance, or another non-educational incentive not tied to specific job performance. Repayment cannot be required if the employee was fired for a reason other than misconduct, or if the job was misrepresented.
• Property. An employee can be required to pay for property the employer sold or leased to them voluntarily.

The condition-of-employment test is where PASS usually fails in New York. If drivers must hold PASS to run broker trips, getting it is a condition of the job, so the credential exception does not apply. The commissioner can fine an employer $1,000 to $5,000 per violation, with each affected employee counted separately, and an employee who successfully defends a lawsuit on a void note recovers attorney’s fees. If you have New York repayment agreements in use, review them with counsel before December 19, 2026.

Colorado: allowed, but prorated over two years

Colorado’s 2022 noncompete law (HB22-1317, amending C.R.S. 8-2-113) did not ban training repayment. It allows a provision for recovering the expense of educating and training a worker when all of these are true:

• The training is distinct from normal, on-the-job training.
• Recovery is limited to the reasonable costs of the training.
• The amount decreases over the two years after the training, in proportion to the number of months that have passed since it ended.
• Recovering the costs would not violate the FLSA or Colorado’s wage law.

As an example, if $300 of qualifying training ended eight months before a driver quit, 8 of the 24 months have passed, so the most you could recover is $200.

The provision also needs notice to be valid. A prospective worker must get it before accepting the offer, and a current worker at least 14 days before it takes effect. The notice must be a separate document in clear terms, in the language you use with the worker about performance, and the worker must sign it. Presenting or trying to enforce a void covenant exposes an employer to actual damages and a $5,000 penalty per worker.

In other states, read the wage payment act and the rules on restrictive covenants before you use a repayment clause. Colorado’s limit, for example, sits inside its noncompete statute.

Keeping drivers without a repayment clause

Repayment clauses recover small amounts and create risk. These tools address the same problem, which is drivers leaving soon after you train them:

1. Pay a retention bonus after the stay. A bonus paid at 90 days or six months has nothing to pay back, so there is no repayment term for these laws to void. Because it is promised in advance, it goes into the regular rate when you figure overtime.
2. Use a lawful sign-on bonus. In California and New York, follow the bonus exceptions above to the letter.
3. Cut the cost of training. CTAA member pricing roughly halves the PASS Basic fee, and an in-house trainer can run classroom and hands-on sessions. The PASS trainer guide covers when that pays off.
4. Hire for staying power. The driver retention guide covers why drivers leave in the first months and what keeps them.

A non-compete is a different tool with its own state limits. The non-compete guide covers what you can do to protect facility accounts when a driver leaves to start a van company.

Tracking training dates in HealthRide

HealthRide keeps each driver credential, such as a CPR card or a training record, in one registry with its expiration date. You get a reminder ahead of each expiration, and if a credential has expired, dispatch sees a warning while assigning the trip. See fleet for how expirations are tracked for drivers and vehicles.