New York has taken a decisive step toward increasing worker mobility and limiting restrictive employment practices with the enactment of the Trapped at Work Act.
Signed by Governor Kathy Hochul on December 19, 2025, this legislation effectively curtails the use of stay-or-pay agreements, which are contractual provisions that require workers to repay their employers if they leave their jobs before a specified period. These agreements, often framed as reimbursement for training or onboarding costs, have long been criticized for effectively trapping workers in roles by creating significant financial barriers to resignation.
The End of Employment Promissory Notes in New York
The Act prohibits employment promissory notes. Under the law, any agreement that requires a worker to pay an employer a sum of money upon leaving their employment before a certain date is now unlawful and unenforceable in New York courts. The legislation marks a significant shift in the state’s employment law, aligning New York with other jurisdictions like California that have recently moved to abolish or strictly limit these types of coercive financial arrangements.
The Scope of Prohibited Agreements
The Act’s definition of an employment promissory note is broad, extending beyond traditional negotiable instruments to include any contract provision or side agreement that mandates repayment for costs associated with the worker’s employment.
This specifically targets Training Repayment Agreement Provisions, commonly known as TRAPs, which have become a frequent tool for employers seeking to recoup costs for internal training or specialized certifications. By designating these as void, the law ensures that the financial risk of training and development remains with the employer rather than being shifted to the worker as a condition of their continued employment.
Narrow Exceptions for Repayment
While the Act is expansive, it does not ban all forms of financial reimbursement between an employer and an employee. There are specific exceptions where repayment remains permissible.
Employers may still require the repayment of payroll advances that are unrelated to training, and they may enforce agreements regarding the sale or lease of employer-provided property to the worker. Additionally, the law does not invalidate repayment terms included within a collective bargaining agreement or those related to sabbatical leaves for educational personnel. These exceptions ensure that legitimate business transactions and negotiated employment agreements remain intact while still protecting the individual worker from predatory retention tactics.
Pending Amendments & Compliance Timelines
Shortly after the Act was signed, Governor Hochul and the New York Legislature introduced chapter amendments to clarify the law’s reach and provide a smoother transition for the business community. These proposed changes, introduced in early 2026, aim to postpone the full effective date of certain provisions until December 19, 2026.
The amendments are also expected to clarify that voluntary tuition assistance programs may still be permissible under strict conditions. This distinction helps protect programs that provide genuine professional development while still barring training that only serves the employer’s specific internal needs.
Enforcement & Penalties
The Trapped at Work Act carries meaningful consequences for non-compliance. While the law does not currently provide an express private right of action for workers to sue their employers directly for including these clauses, it provides a powerful defensive tool. If an employer attempts to sue a worker to enforce a void promissory note, the worker is entitled to recover their attorneys’ fees upon a successful defense.
Furthermore, the New York State Department of Labor is authorized to impose civil penalties on employers who violate the Act, with fines ranging from $1,000 to $5,000 per violation.
If you have questions about employer repayment programs in your employment agreement, or if a prospective employer has provided you with an agreement to review, contact the employment attorneys at Potomac Legal Group to schedule a consultation. Our employment lawyers have experience in providing counseling and negotiating assistance with these burdensome employment contracts.
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