You want to know what’s turning away your top candidates?
If you guessed a competitive salary, you’d be wrong. More than anything else, it’s likely a clause hidden inside the employment contract.
Contracts that strip employee rights, punish workers for leaving, and trap people in jobs they want to escape are increasingly turning away top talent before they even start.
But here’s the kicker…
Most employers don’t even realize they’re doing it.
In This Article
- What Are TRAP Agreements Anyway?
- The Top Contract Red Flags That Drive Away Top Talent
- Three Reasons These Clauses Are Doing More Harm Than Good
- What Leading Employers Are Doing Instead
- Conclusion
What Are TRAP Agreements Anyway?
A TRAP agreement (aka Training Repayment Agreement Provision) is a clause hidden inside an employment contract that requires workers to pay back “training costs” if they quit before a certain period of time.
It sounds reasonable when you put it that way, doesn’t it?
Think about how most people interview and onboard new employees.
Companies are not investing in training.
They’re investing in sourcing a new worker who will complete that training. If that worker quits before their investment is recouped, companies see it as loss.
That’s why TRAP agreements, repayment clauses, and “stay-or-pay” provisions are nothing more than quit penalties in disguise. They trap employees in roles they want to leave by saddling them with absurd bills ranging from thousands to tens of thousands of dollars.
These agreements have seriously impacted employee rights lately. According to the Student Borrower Protection Center, major employers across the country use TRAP agreements in over 50 industries that make up more than one-third of all private sector workers.
Already bad enough? Here’s the worst part.
These lawsuits are only going to increase. States across the country are starting to ban TRAP agreements, too. California’s AB 692 will take effect in January of 2026 and prohibit most stay-or-pay clauses. Employees facing illegal quit penalties in LA now have real options, and several other states are following suit.
TRAP agreements are here to stay. But fair contracts that respect employee rights aren’t quitting anytime soon.
The Top Contract Red Flags That Drive Away Top Talent
Top-tier candidates know their value. And when they see these contract red flags, they run in the opposite direction.
Rip-Off Training Repayment Clauses
This is non negotiable. If a contract demands that you repay thousands of dollars for onboarding training or basic job functions, trash it.
Good talent knows these clauses are…
Quit penalties in disguise.
Don’t make candidates prove their commitment to your company by paying you not to leave. Smart workers will see right through it. And they won’t apply anywhere that tries to financially handcuff them to a job.
Unclear Non-Compete Agreements
Overly broad and ambiguous non-compete clauses are another huge talent repellent.
If a contract explicitly states that you can’t work anywhere in your industry for a year+ after leaving, that’s cause for concern. But if the language is vague, you may as well have it written in stone.
Top candidates refuse to waive their employee rights. Don’t make them.
Unilateral Termination Statements
This one kind of sneaks up on people…
If a contract lets the employer terminate “at will” but punishes employees for leaving early, why would anyone sign it?
It’s obvious the company does not treat their employees well.
The moral of the story? Balanced agreements build trust. Onesided contracts scare good people away.
Covert Money Punishments
Some employers hide deal breaking fines deep within the contract. Relocation repayment clauses, signing bonus traps, and vague “administrative charges” for early termination all fit into this bucket.
Scrap the whole contract if you find yourself in any of these situations.
Every single one of these red flags are preventing top candidates from accepting your job offers.
Three Reasons These Clauses Are Doing More Harm Than Good
Posting jobs and losing great candidates to bad contracts is frustrating. But here’s the thing…
It’s completely unnecessary.
Too many employers waste their time with these types of clauses. They think they’re protecting their business. But they’re really just harming it.
Here’s what the data says:
According to Gallup, it costs between 50-200% of a worker’s annual salary to replace that employee, depending on the position. For technical roles and leadership positions, that number can be devastating.
So when your beautifully worded trap clause scares away a top candidate…
The hassle (and cost) of NOT hiring that person is far more expensive than the clause is worth.
But there’s more to it than money.
Employers that insist on forcing traps into their contracts are damaging their:
- Brand: Other candidates hear about awful contracts and think twice about applying. One bad employee can blacklist your company with their network.
- Applicant Quality: The best people always have options. Why work somewhere that clearly doesn’t value you when you can work somewhere that does?
- Retention Rates: Guess what happens when you trap people into staying at your company? They absolutely hate their job. Sure they can’t leave, but that won’t motivate anyone to produce.
Restrictive contract clauses are the worst when you realize what they’re really doing.
They’re keeping good employees. Not great ones.
What Leading Employers Are Doing Instead
The most successful companies don’t trap employees. They create environments that nobody would dare quit.
How?
Simple.
They:
- Don’t require employees to sign restrictive agreements.
- Invest in company culture so employees don’t want to quit.
- Treat employees as humans with families, hobbies, and lives outside of work.
- Pay employees what they’re worth so there’s no reason to leave.
There’s your recruitment and retention strategy. Throw in a competitive compensation package and you’re golden.
Workplace cultures that focus on employees drive business successes. Restrictive contracts hold companies back.
Conclusion
Contract clauses that punish workers for leaving trap good employees into taking jobs they don’t want.
But they also trap your company into:
- Hiring less qualified candidates (because good ones won’t apply)
- Paying more to recruit, hire, and train new employees
- Sticking with contracts that drive away top talent
The employee rights movement is only going to grow. More states are banning TRAP agreements, non-competes, and repayment provisions every week. Candidates are becoming more aware of their rights. Companies who don’t evolve with the times are going to find it far harder to hire and retain top talent.
Let’s review:
- TRAP agreements scare away qualified candidates
- Bad contract clauses increase employer costs
- Leading edge employers don’t restrict employees with contracts
- Employee rights are being recognized across the U.S.
- Treating employees fairly is the best recruitment and retention strategy
A contract should protect your business. Not serve as a roadblock for hiring quality candidates.
Companies that figure that out are going to win the talent game.