A commuter airline has taken legal action against former pilots who resigned from their positions, claiming that they owe the company thousands of dollars in training costs. The airline, Southern Airways Express based in Florida, is invoking a controversial employment clause known as a “training repayment agreement provision” that has recently garnered national attention. These agreements require employees to reimburse the company a specific amount of money if they leave before completing a designated period of employment.
Advocates of these agreements argue that they ensure employees do not immediately quit for higher-paying jobs after receiving valuable training. However, critics, including President Joe Biden’s Federal Trade Commission, argue that such agreements restrict worker mobility in the labor market and can unfairly bind them to their jobs, suppressing wages.
In July, Southern Airways filed 19 complaints against former pilots in small-claims and county court in Florida’s Palm Beach County. The airline alleges that each pilot signed a promissory note upon accepting the job, committing to fly as a captain for at least 12 months after accumulating enough flight hours. The lawsuits state that if the pilots voluntarily resigned, were terminated for cause, or became unable to fulfill their duties before fulfilling the agreed-upon time, they could be liable for up to $20,000. Most of the promissory notes were for $16,000, but the amount owed could be reduced based on their duration as captains prior to leaving.
Stan Little, CEO of Southern Airways, explained that the company chose to enforce the agreements after several pilots quit, prompting the flurry of lawsuits. Although he denies any mass resignations, he believes that competitors offering signing bonuses and other incentives have enticed some pilots away. Little stated, “If there weren’t a pilot shortage, this wouldn’t be an issue at all.”
Little emphasized that most pilots join Southern Airways with little flight experience, and the company provides a fast route to accumulate flight hours and become captains. They expect pilots to stay and train new recruits before seeking higher-paying opportunities. Starting wages for pilots were $12 per hour and increased to $18 and $21 per hour as they gained more flight time.
Rachel Dempsey, an attorney with the legal aid group Towards Justice, expressed surprise at the high number of lawsuits filed by Southern Airways in July. Towards Justice has been critical of training repayment agreements and has called on federal agencies to prohibit their use, citing concerns that they depress wages and discourage workers from addressing workplace issues. Dempsey stated, “Employers who offer competitive pay and working conditions don’t need to use these agreements.”
Little estimated that over 90% of the company’s pilots stay at least a year as captains before moving on, often to subsidiary airlines like SkyWest, which holds a minority stake in Southern Airways. Acknowledging that the industry faces a shortage of pilots, SkyWest recently established a subsidiary to circumvent pilot training hour requirements and attract more pilots.
Training repayment agreements have faced scrutiny beyond the aviation industry. Last year, PetSmart sued a former dog groomer for training costs after she quit. However, comprehensive data on the prevalence of these agreements in the broader economy is lacking.
While the Federal Trade Commission has proposed a rule to ban noncompete agreements, which restrict employees from working for competitors, the agency’s jurisdiction does not extend to aviation companies. Progressive groups have called on the Department of Transportation and other federal agencies to independently implement bans on these agreements where the FTC rule does not apply.
Employers may be more inclined to enforce these agreements during periods of low unemployment, such as the current market conditions. Despite recent signs of a slightly softer labor market, the rate of job quits remains higher than pre-pandemic levels, indicating that workers still hold considerable bargaining power for better wages and benefits. In the aviation sector, carriers have been offering attractive signing bonuses to attract pilots. Little remarked, “If there weren’t a pilot shortage, this wouldn’t be an issue at all.”
Regarding the lawsuits against departed pilots, Little stated, “There will be more to come.”
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