AINsight: Training Contract Ethics and Accountability

I’ve never been a fan of pilot training contracts. Meaning a legal document that binds a pilot to a flight department for a set period of time after earning a type rating or the pilot owes his or her employer for some portion of the training investment.

I’ve always thought of these kinds of agreements as a red flag, and I know I am not alone. To many, it suggests a low-paying job or a toxic work culture where a pilot might not want to stick around. Perhaps it means the job equates to “indentured servitude.”  

But given the high cost of certain type ratings and the difficulty to obtain them today, I’ve been thinking about the pros and cons of contracts for initial pilot training. And also about the moral obligation that a high-cost investment in training requires of both parties. 

It’s led me to wonder: is it time to reexamine the agreement between an employer and their employee who secures an expensive type-rating?

First, in business aviation, it’s not uncommon for a skilled pilot to join a flight department and have his/her initial type rating paid for by their employer. After all, it’s a best practice to “hire for fit and train for skill.”

It’s also common for an existing pilot to receive a type rating when their company or principal purchases a new aircraft. This considerable expense is usually considered part of the cost of doing business. 

However, to the pilot the benefit of a highly valuable type-rating is that he or she will increase their competitiveness and earning potential. Once hiring managers and recruiters find out, they’ll be calling. So employers need to offer commensurate compensation coupled with a level of life balance and a healthy work culture in return.

In both cases, the assumption, of course, is that the pilot will be a long-term employee and the training cost would be amortized over time. But the current pilot shortage has challenged that for sure. And many operators have seen their investment walk out the door for myriad reasons.  

So, I am starting to hear more about the resurgence of training contracts to protect the employer. Especially operators that have recently been burned with pilots leaving within months of a significant training investment. 

If some sort of agreement is indeed needed, the question that arises is what stipulations should go into a pilot’s offer letter? What would make them sign on the dotted line? Is it okay to obligate them to stay for two years, or just one? If I were being asked to sign something, I’d want to see their commitment in writing. 

It’s a case of give and take on both sides. An agreement should be written fairly to protect both sides. An employer should commit to at least guarantee a fair compensation increase on an annual basis. And, even better, provide transparency in terms of schedule and expectations for a positive workplace culture. 

A training agreement that says, “If you leave, you have to pay back part of the training,” is a rather negative way to enforce retention.

“But there are other ways to skin the cat,” explained Dallas-based aviation attorney Katherine A. Staton, a partner at law firm Jackson Walker. “A more positive incentive might look like, ‘We'll get you a type rating on this aircraft, and we're going to contribute heavily to your retirement.’ Or, ‘We're going to give you a type rating and if you stay six months, we'll give you a $10,000 bonus.’ That's a more positive way to frame it.”

As the old adage says: “You catch more flies with honey than vinegar.”

Interestingly, Staton also noted that, today, offer letters and employment contracts depend on state law. She informed me of the proposed Federal Trade Commission legislation that would ban non-competes (the ability to use these type of offer letters or contracts to repay). If the legislation passes, it might override state law.

“Paying for a type-rating is reasonably related to training the worker, but employment lawyers out there say this new FTC regulation might impact it,” she said.

Making a decision to leave after a significant investment raises some moral and ethical questions. What’s the right thing to do here? Regardless of a contract, should it be to commit to an employer for a period of time? Or repay a portion of the training costs?

If an employer keeps their word and offers a fair schedule and a wage increase, it seems fair that the pilot should repay that employer at some level—preferably through service.

But what if the opportunity of a lifetime comes along in six months and this pilot wants to leave? What if an unexpected health issue necessitates a relocation to be closer to family? What happens if they’re recruited away because they can earn significantly more money, thanks to their new type rating?

And, as an operator, if I were hiring someone who had just gotten training from another company and left rather prematurely, how should I assess them from an ethical standpoint? Is it possible they might do the same thing to me? Burning bridges in a small industry can come back to haunt you.  

One person I know of who left his employer for that “job of a lifetime” worked with his new employer to negotiate a sign-on bonus so he could repay his former employer. Not because he had to, but because he felt a moral obligation to do so. 

There is no clear answer to this, as ethics are personal.  But each time a large training investment does not get amortized fairly in the employers’ eyes, it chips away at the integrity of our workforce.  

In HR circles, there’s a lot of current debate on the impact/practicality of obliging an employee to stay in a role for a period of time, following a relocation or an educational investment (for example, an executive MBA). But if someone has mentally moved on, how much sense does it make to force them to stay? At the same time, companies should expect to get a return on investment.

Speaking of educational investments, years ago when I was in corporate America, my then-boss sent me to get my MBA, all expenses paid. I offered to sign an agreement and he declined saying, “It's my job to make you want to stay.”

I also offered to use vacation days to go to school. Instead, they let me take off every other Friday to attend class, as well as the two weeks of my practicum in South America and considered it work time. For that kind of loyalty to and investment in me, I was indebted to my employer. They incentivized me in a positive way and, in return, I gave them my best for the next several years.

I believe it all comes down to culture. You walk your talk. If you don't have the right culture to keep your team happy, then they’ll get burned out and start searching. If they are disgruntled, then it all becomes a Catch-22 situation. 

But, that said, it remains a two-way street, with obligations—moral, ethical, and otherwise—on both sides.

Staton has the right sense of it, I believe. “I think the main takeaway is that we've got to adjust our attitude and we've got to be more on the side of life balance and fairness,” she said. “We need to positively incentivize people to stay versus using penalties.”

Sheryl Barden, CAM, is the president and CEO of Aviation Personnel International, the longest-running recruiting and HR consulting firm exclusively serving business aviation. A thought leader on all things related to business aviation professionals, Barden is a former member of NBAA’s board of directors and currently serves on the NBAA advisory council.

The opinions expressed in this column are those of the author and not necessarily endorsed by AIN Media Group.