Colorado AG files lawsuit against PetSmart to stop predatory training debt scheme

A recent lawsuit filed by Colorado Attorney General Phil Weiser has brought to light concerning practices within PetSmart, alleging that the popular pet retailer has been engaging in an illegal training debt scheme with its pet groomers. This lawsuit claims that PetSmart enticed individuals into employment by offering supposedly “free” training and equipment, only to later charge them significant amounts, reaching as high as $5,500. Moreover, the retailer reportedly employed third-party debt collectors to pursue former groomers who left their demanding, low-wage positions, using the looming threat of debt collection to deter others from leaving. This lawsuit is part of a broader wave of state-level efforts to address Training Repayment Agreement Provisions (TRAPs) utilized by companies to exploit employees.

Chris Hicks, a Senior Policy Advisor at SBPC and co-author of the 2022 report “Trapped at Work,” which initially raised concerns about PetSmart’s practices, commended the Colorado Attorney General for taking action to rectify the situation. He argued that the prevalence of debt-for-training schemes across various industries amounts to a contemporary form of indentured servitude. Hicks lauded the state-level endeavors to combat TRAPs and ensure the liberation of workers from exploitative agreements like those seen at PetSmart.

In a particularly noteworthy case from 2022, former PetSmart groomer BreAnn Scally initiated a class action lawsuit against the company in California, drawing parallels to the recent Colorado lawsuit. Scally challenged her employer’s unfair training debt policies but was obstructed from representing other groomers due to arbitration clauses embedded in her employment contract. This incident underscores the importance of state officials like Attorney General Weiser intervening directly to hold companies accountable, especially when individual employees encounter legal barriers.

The release of SBPC’s “Trapped At Work” report coincided with Scally’s legal action and shed light on the exploitation of workers through TRAPs by various corporations, including PetSmart. Over the years, a diverse coalition of stakeholders, including labor groups, advocates for workers’ rights, and public officials, have united to combat these abuses of corporate power.

Recent multi-state settlements targeting companies like HCA Healthcare exemplify the intensified enforcement efforts at the state level to safeguard workers from exploitative practices, with specific attention to training debt schemes. As federal oversight in this area recedes, individual states like California, Colorado, Nevada, and New York are stepping up to protect workers. Legislative initiatives in states such as California, New York, Colorado, and others underscore a growing urgency to prohibit TRAPs and similar practices that restrict employee mobility and perpetuate labor market imbalances.

In light of these developments, Massachusetts recently considered a bill aimed at prohibiting large corporations from utilizing TRAPs to retain workers unjustly. The testimony of SBPC’s Persis Yu emphasized the adverse impact of such agreements on employees, pointing to PetSmart as a key example of a company leveraging TRAPs to suppress wages and benefits, thus underscoring the urgency of such legislative measures.

Additional scrutiny on PetSmart’s employment practices arose in 2024 when a settlement was reached with Pennsylvania Attorney General Michelle Henry over the company’s use of TRAPs in the state. The agreement required PetSmart to cease employing TRAPs and make financial reparations, given that Pennsylvania law found the retailer’s grooming training representations deceptive, rendering the resulting debts unenforceable.

The concerted efforts of state governments, advocacy groups, and legal experts in addressing TRAPs signify a significant shift in prioritizing worker protection and curbing exploitative corporate practices. These developments underscore the necessity of ongoing vigilance and legislative action to safeguard workers from unjust employment conditions and ensure a fair and equitable labor landscape.