New York: The Trapped at Work Act prohibits employment promissory notes

At a glance

• New York’s Trapped at Work Act took effect on December 19, 2025, prohibiting most employment promissory notes requiring repayment if a worker leaves early.
• The law broadly defines covered 'workers' and 'employment promissory notes' and imposes civil penalties of USD1,000–5,000 per violation.
• A proposed chapter amendment, introduced January 6, 2026, would create additional exceptions and delay the effective date to December 19, 2026.
• Exceptions may apply for repayment of certain bonuses, relocation payments, tuition for transferable credentials, and voluntary property arrangements.
• Employers should review onboarding documents, training‑repayment provisions and template agreements in light of the new law and pending amendments.

On December 19, 2025, Governor Kathy Hochul signed the Trapped at Work Act, effective immediately, on the condition that the legislature make amendments to the law in the next legislative session.

The new law prohibits New York employers from requiring workers to sign employment promissory notes promising to pay the employer a sum of money if the worker leaves employment before the passage of a stated period of time. These so-called 'stay-or-pay' agreements are unconscionable, against public policy and unenforceable.

The law defines 'employment promissory note' broadly to include any instrument, agreement, or contract provision requiring a worker to pay the employer or its agent a sum of money if the worker leaves before a specified period, including provisions framed as 'reimbursement' for training provided by the employer or a third party. The definition of 'worker' is also expansive and includes employees, independent contractors, interns, volunteers, apprentices, and individuals providing services through entities, among others. Limited exceptions apply—such as repayment of non‑training advances, payment for employer‑provided property, certain sabbatical‑leave agreements, and collectively bargained arrangements. Employers violating the law face civil penalties of USD1,000 to USD5,000 per violation.

On January 6, the New York State Assembly introduced a proposed chapter amendment that would revise several provisions of the law. If adopted, the amendment would:

• Allow exceptions for the repayment of:
• Financial bonuses, relocation assistance or other non-educational incentives, or other payments or benefits that are not tied to specific job performance, unless (1) the employee is terminated for any reason other than misconduct, or (2) the duties or requirements of the job were misrepresented to the employee.
• Tuition for transferable credentials (under certain conditions).
• Property the employer has sold or leased to the employed, provided such sale or lease was voluntary.
• Delay the law's effective date to December 19, 2026 (at the earliest).

Employers are encouraged to monitor the pending bill and review template agreements, onboarding documents, and policies with provisions requiring training repayment or other stay-or-pay obligations.