On December 19, 2025, New York Governor Kathy Hochul signed the Trapped at Work Act into law. The legislation targets “stay‑or‑pay” arrangements that require workers to repay their employer if they leave before completing a specified period. These clauses are sometimes labelled training repayment agreement provisions (TRAPs). Because the Act took effect immediately upon the Governor’s signature, employers need to understand its prohibitions, who is covered, and how it will be enforced.
If enforced as written, the Trapped at Work Act would invalidate a wide range of repayment and retention-based arrangements across both employment and non-employment relationships.
As noted below, amendments have been introduced (but not yet acted upon) in the New York State Assembly.
What the NY Trapped at Work Act Prohibits
Effective immediately, employers may not require workers or prospective workers to execute an employment promissory note as a condition of employment. If an employer insists on such a note, it is deemed “unconscionable, against public policy, and unenforceable.” Thus, any such contract provision is legally null and void. If the prohibited clause is part of a larger agreement, the remainder remains enforceable.
The New York Trapped at Work Act defines “employment promissory note” broadly as any provision that requires a worker to pay the employer (or its agent) if the worker leaves before a stated period. The definition expressly includes agreements that label such payments as reimbursement for training.
Exceptions
The law does allow repayment agreements for “sums advanced” to a worker, unless those “sums” pay for training related to the worker’s employment. Agreements that require payment for property sold or leased to the worker, sabbatical leave conditions for educational personnel, or provisions negotiated as part of a collective bargaining agreement are also expressly preserved.
Who the Act Covers (as Enacted)
The Trapped at Work Act legislation casts a wide net, covering both employers and workers broadly:
- Employers: Any individual, partnership, corporation, limited‑liability company, trust, government, or subdivision, or any organized group that hires or contracts with a worker. The term also includes subsidiaries and any organization associated with an employer that provides training.
- Workers: Any individual permitted to work for or on behalf of an employer, including employees, independent contractors, externs, interns, volunteers, apprentices, and sole proprietors who provide services through a business or nonprofit. The only exclusion is a person whose sole relationship with the employer is as a vendor of goods. This expansive definition means the Act applies to gig workers, contractors, and volunteers, along with traditional employees.
Enforcement and Penalties
The NY Trapped at Work Act does not create a private right of action, but it contains two enforcement mechanisms:
Attorneys’ Fees
If an employer sues a worker to enforce a promissory note voided by the Act, and the worker successfully defends, the worker may recover attorney’s fees.
Civil Penalties
The New York Commissioner of Labor may fine an employer between $1,000 and $5,000 per violation. Each worker or prospective worker required to execute a promissory note constitutes a separate violation. The DOL is authorized to promulgate rules to implement the law.
Proposed Amendments
Governor Hochul signed the Trapped at Work Act but issued an approval memorandum expressing concerns about certain “ambiguities.” Her approval memo noted that the law’s broad phrasing could be read to cover some voluntary tuition‑assistance programs. The Governor explained that the Act was not intended to prohibit programs that offer such educational benefits. She stated that she had reached an agreement with legislative leaders to amend the Trapped at Work Act during the upcoming session to address this concern.
On January 6, 2026, New York Assemblymember Phil Steck introduced amendments to the Trapped at Work Act (A.09452). Steck was a co-sponsor of the original bill. As proposed, Steck’s amendments would dramatically alter the scope of the law. (NYS Senator Rachel May introduced the same bill in the Senate (S.08822) on January 8, 2026.)
Although proposed amendments are not law, chapter amendments introduced shortly after enactment—particularly where they address concerns raised in the Governor’s approval memorandum—often signal the direction in which the statute is likely to move.
Diminished Scope
Most notably, the amendments narrow coverage to the employment relationship. The broader definitions of “employer” and “worker” are narrowed to traditional “employee” arrangements. Governor Hochul had not publicly signaled her intent to eliminate protection for independent contractors and volunteers. This change goes beyond clarifying ambiguity in the original statute and would materially narrow what was originally a much broader law. Nonetheless, it would still apply to most scenarios where the targeted repayment obligations have existed.
“Transferable Credential”
More directly addressing the Governor’s stated concerns, the amendments introduce a new exception based on “transferable credentials.” They define this to mean “any degree, diploma, license, certificate, or documented evidence of skill proficiency or course completion that is widely recognized by employers in the relevant industry as a qualification for employment, independent of the employer’s specific business practices, or that provides skills or qualifications that demonstrably enhance the employee’s employability with other employers in the relevant industry.”
With the amendments, the law would not prohibit employers from entering into or enforcing agreements requiring employees to reimburse the cost of obtaining a “transferable credential.” However, such requirement must be in a separate written contract (not an employment agreement) that does not require the employee to obtain the credential as a condition of employment. Additional conditions must also be met to preserve the enforceability of such arrangements. For example, repayment could not be required if the employee is terminated for reasons other than misconduct.
For employers, this change would meaningfully reduce risk around bona fide educational programs that enhance employee mobility rather than restrict it.
Other Exceptions
The amendments enumerate two additional new exceptions.
One is relatively straightforward. It would permit arrangements under which an employee repays their employer for property the employer has voluntarily sold or leased to the employee.
The other is more nuanced. An employer could require repayment of a financial bonus, relocation assistance, or other payment or benefit that is not tied to specific job performance. However, that exception is contingent on the employee not having been terminated “for any reason other than misconduct” and “the duties or requirements of the job” not having been “misrepresented to the employee.”
This last proposed exception could most fundamentally undermine the apparent impact of the original law. Yet, even if it is consistent with current legislative intent, rewording of the exception seems warranted. As with the “transferable credential” exception, the reference to “termination” of the employee “for misconduct” creates problematic ambiguity. At a minimum, regulations would need to address that careless draftsmanship.
Delayed Enforcement
The proposed amendments would also revise the effective-date, potentially delaying enforcement and giving employers additional time to adjust their agreements and practices. Under the introduced amendment, the Trapped at Work Act’s provisions would not apply until December 19, 2026—a year after its initial enactment.
Enforcement Provisions
The amendments introduce a new administrative complaint process for employees. They also specify factors for the Commissioner of Labor to consider in issuing civil penalties.
Practical Takeaways for Employers
From a compliance standpoint, employers must assess risk based on the statute as enacted. From a planning standpoint, however, the proposed amendments provide meaningful insight into how the Legislature and Governor appear to be recalibrating the law.
Here are some initial action items employers should consider while amendments are pending:
Audit Existing Agreements
Review offer letters, employment contracts, training agreements, and repayment arrangements to identify provisions requiring employees to repay training costs or other sums upon early departure. Any clause that fits the definition of an employment promissory note is now unenforceable.
Stop Using Training Reimbursements for Retention
Agreements that require employees to repay training costs upon early resignation are void under the Act. Consider replacing them with retention bonuses or claw‑back clauses that fall within the permitted exceptions.
Check Voluntary Education and Tuition Programs
With the anticipated amendments, programs that provide genuine educational benefits (such as tuition assistance for continuing education) may remain permissible. Monitor the legislation and subsequent rulemaking carefully if you offer such programs.
Recognize the Broad Definition of “Worker”
The statute, as originally enacted, applies to independent contractors, interns, externs, volunteers, and sole proprietors. Repayment provisions in vendor agreements may also be scrutinized if they involve individuals providing services through a business entity. Employers should ensure that any repayment terms with contractors or volunteers comply with the Trapped at Work Act.
Note that proposed amendments would limit the coverage to employment relationships.
Monitor Further Developments
The Act authorizes the Commissioner of Labor to issue interpretive rules. Employers should monitor regulatory developments that may provide further guidance on permissible repayment agreements.
For employers, the takeaway (in light of the anticipated amendments) is not that the Trapped at Work Act is inconsequential, nor that it will necessarily upend existing practices. Rather, it is a reminder that New York employment legislation often evolves rapidly after enactment, and that early compliance decisions should account for both current statutory text and credible signals of legislative revision.
Take This Seriously
Although the Trapped at Work Act was enacted with broad and immediate effect, the proposed amendments—if adopted—would significantly narrow its reach and provide employers with greater clarity and flexibility. Until then, employers should comply with the law as written while monitoring developments that may change their obligations.
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