Colorado Attorney General Brings Suit Against PetSmart Due to Misuse of Contracts Requiring Employees to Repay Allegedly “Free” Training
Colorado Attorney General Brings Suit Against PetSmart Due to Misuse of Contracts Requiring Employees to Repay Allegedly “Free” Training
Brett Whitley, Associate
On July 29, 2025, the Colorado Attorney General, Philip Weiser (“Attorney General”), filed a Complaint against PetSmart, alleging that PetSmart violated the Colorado Consumer Protection Act (“CCPA”)[1] and the Colorado Restrictive Employment Agreements Act (“CREAA”)[2] by misrepresenting to its employees that its dog grooming training program was free. The Attorney General alleges that PetSmart’s training program was actually not free because PetSmart required its employees in the program to pay back the value of the program if they were terminated or quit prior to the two-year anniversary of their beginning the program, which resulted in an illegal restriction on their employment. The Attorney General, via the lawsuit, seeks injunctive relief, civil penalties ranging from $20,000.00 - $50,000.00 per violation of the CCPA and $5,000.00 per worker per violation of the CREAA, attorneys’ fees, and costs against PetSmart as a result of its alleged wrongdoing.
Brief Background
PetSmart has 35 stores in Colorado, each of which offer grooming services for dogs. PetSmart has a dog grooming training program called the “Grooming Academy.” The Grooming Academy is a four-week training program where employees can learn skills and best practices for grooming dogs. After employees finish the Grooming Academy, they can progress to a “Stylist-in-Training,” which requires the employee to spend twelve (12) weeks grooming dogs. Employees then can spend six (6) months as Stylists-in-Training in order to become a “Salon Leader.”
To attract current and prospective employees to the Grooming Academy, PetSmart advertised the program as a “4-Week FREE” program beginning in 2019 and persisting throughout 2022. PetSmart also advertised that all grooming tools supplied during the training were free.
Due to the high turnover amongst its dog groomers after they completed their training, PetSmart, from approximately 2018 to 2022, began entering training repayment agreement provision contracts (“TRAPS”) with its dog groomers. The TRAPS that PetSmart entered into with its dog groomers, however, evidence that neither the Grooming Academy, nor the tools provided during the training, were free. Per the Attorney General, PetSmart instructed its managers to have the lower-level employees in the Grooming Academy sign the non-negotiable TRAP once they were enrolled in the program.
The TRAPS provided that “FOR VALUE RECEIVED through [PetSmart’s Grooming Academy]” the employee promised to pay either $5,000.00 or $5,500.00 (if the employee accepted the toolkit) “upon voluntary or involuntary termination” of their employment before the second anniversary of the start date of the Grooming Academy, with such sum being reduced by one half if the employee remained employed past the first anniversary of the start date of the Grooming Academy. PetSmart would send groomers who entered the TRAPS and refused or failed to pay the $5,000.00-$5,500.00 to collections, despite the Attorney General finding that the training provided was inadequate and not up to par with the description of said training.
The Attorney General’s Claims Against PetSmart
The Attorney General alleges entitlement to relief under the CCPA and the CREAA in its Complaint against PetSmart for its use of TRAPS to keep dog groomers. Under the CCPA, it is an unfair or deceptive trade practice to (1) knowingly or recklessly make false representations of the characteristics of services to another and (2) make false or misleading statements concerning the price of services. The Attorney General claims PetSmart engaged in both (1) and (2) by misrepresenting the cost of the Grooming Academy to its dog groomers, which was actually valued at $5,000.00-$5,500.00, as evidenced by PetSmart’s TRAPS.
Under the CREAA, a covenant not to compete that restricts the right of an individual to receive compensation for performance of labor is void, unless the covenant falls within an exception. In 2022, the CREAA was amended to provide that an employer may only recover the reasonable costs of training provided to the employee if four elements are present: a) where the training is distinct from normal, on the-job training, b) the employer’s recovery is limited to the reasonable costs of the training, c) the reasonable costs of the training decreases over the course of two years subsequent to the training proportionately based on the number of months that have passed since the completion of the training, and d) the employer’s recovery for the costs would not violate the Fair Labor Standards Act. However, per the Attorney General, because PetSmart entered into a TRAP with a dog groomer after these amendments took effect and because the amount to be owed if the groomer was to leave PetSmart prior to the two-year anniversary of their beginning the Grooming Academy did not decrease at all, PetSmart violated the CREAA.
Employer Considerations
As the cost to recruit and train new hires increases, employers may consider was to recover training costs when employees leave their employment. However, the Attorney General’s lawsuit against PetSmart demonstrates that Colorado is adhering to its general disapproval of restrictive covenants, even if the covenant at issue is not a traditional covenant not to compete and is instead something like a TRAP. The lawsuit also shows that Colorado will utilize the CCPA as well to prevent illegal restrictive covenants and enhance consumer protection. Consequently, Colorado employers should consider if their agreements for the repayment of training costs for their employees meet the standards articulated above, prior to seeking to enforce them because substantial civil penalties could result if these types of agreements are illegal. Campbell Litigation is available to review, analyze, and modify any non-compete agreements or agreements for the repayment of training costs to ensure the same comply with Colorado law.
[1] Colo. Rev. Stat. § 6-1-101 et seq.
[2] Colo. Rev. Stat. § 8-2-113.