Seyfarth Synopsis: As we close out 2025, Governor Kathy Hochul signed into law an amendment to the New York Labor Law, entitled the New York Trapped at Work Act, which bans “employment promissory notes” and similar stay‑or‑pay clauses used as a condition of employment. The statute took effect immediately on December 19, 2025.
New York’s Trapped at Work Act (the “Act”) prohibits employers from requiring workers or job applicants to sign agreements that obligate repayment if the worker leaves before a stated time period, including provisions characterizing repayment as reimbursement for training. These agreements are now deemed unconscionable, contrary to public policy, and unenforceable.
What’s Prohibited
Under the Act, employers may not require, as a condition of employment, any “employment promissory note” or agreement that (i) requires payment to the employer if the worker leaves before a specified time, or (ii) labels repayment as reimbursement for employer-provided training. Any such agreement is now deemed null and void.
The Act defines the term “employer” broadly to include subsidiaries and any entity that provides training to workers. Additionally, the term “worker” includes employees, independent contractors, interns and externs, volunteers, apprentices, and sole proprietors providing services. The term does not include individuals “whose sole relationship with the employer is as a vendor of goods.”
The Act further defines “employment promissory note” as “any instrument, agreement, or contract provision that requires a worker to pay the employer, or the employer’s agent or assignee, a sum of money if the worker leaves such employment before the passage of a stated period of time.” The definition includes, but is not limited to, a provision requiring “reimbursement for training provided to the worker by the employer or by a third party.”
The prohibition on these employment promissory notes specifically excludes:
- Repayment of payroll advances unrelated to training.
- Payment for employer‑provided property sold or leased to the worker.
- Agreements tied to sabbatical leave for educational personnel.
- Programs agreed to under a collective bargaining agreement.
Employers that fail to comply with the Act can face civil penalties of $1,000–$5,000 per violation from the New York State Department of Labor (“NYSDOL”), as well as attorneys’ fees for workers who successfully defend against enforcement of a void agreement. However, there is no stand‑alone private right of action.
Under the Act, employers are prohibited from requiring employees “to execute” prohibited agreements after the effective date. Less clear is whether the NYSDOL will enforce the law retroactively to agreements signed before the effective date of December 19, 2025. Any such retroactive application would be expected to draw legal challenges. The NYSDOL is authorized to issue “rules and regulations” to implement the Act, so this point may be addressed if and when it does so.
Employer Action Items
Employers operating in New York should take the following steps to ensure compliance with the Act:
- Audit agreements: review offer letters, onboarding documents, training acknowledgments, and bonus agreements.
- Redesign retention incentives: avoid linking repayment to training costs.
- Inventory training programs: ensure no repayment obligations in document templates.
- Coordinate with unions: confirm compliance for collectively bargained programs.
- Pause enforcement: consider pausing collection efforts on existing training repayment notes.
- Plan for multi‑state compliance: align strategies with similar laws in other jurisdictions.
Outlook
New York has now joined a growing number of jurisdictions (including California) that have moved to restrict or eliminate “stay‑or‑pay” provisions and training repayment agreements. These laws reflect a broader policy trend aimed at curbing practices viewed as limiting worker mobility and imposing financial penalties on employees who change jobs.
Employers operating in New York and other such jurisdictions should immediately review and revise any agreement templates or policies that include training repayment provisions. Failure to comply could result in significant penalties and litigation exposure. That said, we anticipate legal challenges to any potential retroactive application of the Act, particularly under contract and constitutional theories.
Please reach out to any of the authors – or your Seyfarth attorney – with any questions.
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