Coalition of Consumer, Worker, and Anti-Monopoly Advocates Urge DOT to Protect Aerospace Workers From Predatory TRAPs
January 31, 2023 | SAN JUAN, PR — Former cargo pilot Kate Fredericks filed a class action lawsuit alleging that Ameriflight, the nation’s largest Part 135 cargo airline, indebted pilots with unlawful training costs of up to $30,000 beginning in early 2020.
Ameriflight is a fixture in the U.S. supply chain, serving as a key middleman for global shipping giants UPS and DHL. This groundbreaking lawsuit alleges Ameriflight used illegal debts to lock pilots into grueling work for wages starting as low as $12.50 an hour, even as the rest of the industry suffered from a pilot shortage.
The use of such predatory contracts, known as Training Repayment Agreement Provisions or TRAPs, has been gaining momentum in recent years. In July 2022, retail pet supply giant PetSmart was accused of operating a similar scheme to trap low-wage pet groomers in illegal training debts. Recent research shows that as many as 1-in-3 private sector workers are employed in an industry found to use these contracts.
In response to new evidence of abusive TRAPs in the aviation industry, a coalition of consumer, worker, and anti-monopoly advocates sent a letter to Transportation Secretary Pete Buttigieg demanding that the U.S. Department of Transportation (DOT) use its authority to protect aerospace workers and prevent airlines from engaging in unfair methods of competition by prohibiting airlines from imposing TRAPs on workers.
A copy of the complaint in Fredericks v. Ameriflight, filed yesterday in federal court in Puerto Rico, is available here.
A copy of a sample Ameriflight TRAP is available here.
A copy of the letter signed by the American Economic Liberties Project, Open Markets Institute, Student Borrower Protection Center, and Towards Justice to Transportation Secretary Pete Buttigieg is available here.
The complaint alleges that Ameriflight routinely used TRAPs to limit pilots’ mobility and suppress wages. In particular, the complaint asserts that the company threatened to sue pilots who leave their jobs with Ameriflight within 18 to 24 months of receiving training. Pilots allege that the company:
Saddled workers with debt for job training that is required of Ameriflight by the FAA and cannot be transferred—so if pilots changed jobs, they would need to repeat most or all of the training.
Demanded pilots pay between $20,000 and $30,000 for job training that is done in-house using software that is decades out of date.
Paid pilots below-market wages of as little as $12.50 an hour or $30,000 a year to fly out-of-date planes.
Aggressively enforced the TRAPs by sending pilots to collections and refusing to provide pilots with an accounting of Ameriflight’s actual training costs.
Ms. Fredericks is represented by Towards Justice, FairWork PC, Tremain Artaza PLLC, DTS Law, LLC and Student Borrower Protection Center (SBPC).
“This TRAP was a way to prevent us from going somewhere else. This hurts pilots, customers, and the entire industry. When your holiday flight is cancelled because the airline doesn’t have enough pilots, well, here is one of the reasons why,” said Kate Fredericks, a former Ameriflight pilot in San Juan, Puerto Rico, and the plaintiff in Fredericks v. Ameriflight. “All workers deserve opportunities to better themselves and their families—and they deserve to be safe from debt traps set by their employers. I am standing up to Ameriflight’s practices because this has to change. Pilots cannot, and should not, have to work under these conditions.”
“There’s an easy way to retain employees—provide them with competitive wages and decent working conditions,” said Rachel Dempsey, an attorney at Towards Justice. “Employers that use TRAPs are looking for a workaround, but using debt to trap employees violates the law.”
Ameriflight serves as a critical part of the UPS, FedEx, and DHL supply chains. This lawsuit reveals that Ameriflight has used TRAPs to maintain a captive workforce rather than compete for pilots by offering fair wages and benefits, even as the pilot labor market started heating up due to COVID-19 supply chain issues.
“Airlines that routinely rely on unfair and deceptive practices, and engage in unfair methods of competition to drive record profits at air travelers’ and workers’ expense must be held accountable. It is long past time to eliminate TRAPs and other anti-competitive terms from employment contracts,” said SBPC deputy executive director Persis Yu. “We call on Secretary Buttigieg to let airlines know: it’s wheels down on predatory, illegal contract terms.”
Background
A growing body of evidence indicates that employers nationwide are utilizing “shadow” student debt to trap workers into unfair contracts and substandard working conditions. Training Repayment Agreement Provisions are a key mechanism that require payment for often subpar or job-specific “training” if the worker leaves before a set period of time. Employers frequently use TRAPs to lock workers in jobs through debt, especially during times of high turnover and demand for workers like we’re seeing now.
This lawsuit also alleges that Ameriflight’s TRAPs violate federal law by functioning as an illegal kickback on wages to Ameriflight. This kickback denies workers their right to receive their wages free and clear, restrains trade, and imposes an unreasonable penalty on workers seeking new opportunities. Further, the complaint alleges that TRAPs like Ameriflight’s undermine the foundations of the American employment relationship by leaving workers unable to exercise their fundamental right to control who they work for. This case highlights in particular how coercive contracts and a lack of regulatory accountability in the aerospace sector have led airlines to routinely rely on unfair methods of competition such as TRAPs that limit pilots’ mobility.
The Department of Transportation has the sole authority and responsibility to regulate competition for pilots and other aviation industry workers. Just this month, the Federal Trade Commission (FTC) proposed a historic rule banning non-compete and de facto non-compete agreements. This rule would outlaw many of the most harmful terms in employment agreements, including the most abusive TRAPs. However, because of a carveout blocking the FTC’s ability to enforce the FTC Act against air carriers, this proposed rule would not protect those employees. Accordingly, DOT must act now to ensure that pilots receive the same protections from abusive non-compete agreements that FTC is contemplating for other sectors—and have the freedom to leave a job without taking on crushing debt.