On December 19, 2025, Governor Hochul signed into law New York’s Trapped at Work Act (S4070B/A584C) which—effective immediately—prohibits certain “stay or pay” agreements that require workers to repay their employer a sum of money if they leave their employment within a specified period of time. At the time of signing, Governor Hochul indicated that she had reached an agreement with lawmakers on chapter amendments to clarify ambiguities and to address prohibitions on certain voluntary tuition assistance programs.
In early January, the New York State Legislature followed through introducing chapter amendments A9452/S8822 to address Governor Hochul’s concerns. Among other things, the amendments would narrow application of the law; expand on existing carve-outs and create a new exception; and delay the effective date for another year. To learn more about the current law and potential changes under the proposed amendments, review these comparative highlights below.
Effective Date
While the current law became effective on December 19, 2025, the amendments would delay the effective date to December 19, 2026, providing employers additional time to come into compliance with the law.
General Prohibitions
As with current law, the amendments prohibit certain agreements that require repayment to the employer if the employment relationship terminates within a specified period of time. However, the amendments remove the current law’s express categorical prohibition on reimbursement for training provided by the employer or a third party, instead addressing training repayment primarily through clarified exceptions discussed below.
Covered Workers
The amendments narrow worker coverage by replacing the term “workers” with “employees,” effectively excluding coverage of contractors, externs, interns, and volunteers.
- Current: Covers any individual who is permitted to work for or on behalf of an employer, including employees, independent contractors, externs, interns, volunteers, apprentices, and sole proprietors providing services on behalf of an employer.
- Amendments: Covers only “employees,” defined as any person employed for hire by the employer.
Covered Employers
Likewise, the amendments narrow employer coverage to include only employers in the traditional sense and, additionally, would exclude coverage of subsidiaries or associated entities that provide training to workers.
- Current: Covers any person or entity that hires or contracts with a worker to work for the employer, and any subsidiaries or groups associated with the employer that provides training to workers.
- Amendments: Covers any person or entity employing any individual in any occupation, industry, trade, business or service.
Exceptions
The amendments preserve some existing carve-outs; clarify ambiguities regarding the reimbursement of certain educational expenses; and create a new exception for repayment of bonuses, relocation assistance, and other non-educational incentives or payments.
Currently, the law excludes from coverage any agreements that:
- Require educational personnel to comply with any terms or conditions of sabbatical leaves granted by the employer;
- Are part of a program agreed to by the employer and its workers’ collective bargaining agreement;
- Require payment for any property the employer sold or leased to the worker; or
- Require the worker to repay sums advanced by the employer, unless it was used to pay for employment-related training.
While the amendments preserve the first three listed carve-outs, it clarifies ambiguities in the fourth listed carve-out by permitting agreements that require reimbursement for the cost of tuition, fees, and required educational materials for a “transferable credit,” defined as “any degree, diploma, license, certificate, or documented evidence of skill proficiency or course completion” that provides skills or qualifications “independent of the employer’s specific business practices,” provided that the agreement:
- Is set forth in writing and offered separately from any employment contract;
- Does not require the employee to obtain the transferable credential as a condition of employment;
- Specifies the repayment amount, which must not exceed the cost of tuition, fees, and required materials;
- Provides the prorated repayment amount during any required employment period; and
- Does not require accelerated pay upon separation, or repayment if the employee is terminated, except for misconduct.
The amendments also add a new exception permitting agreements that require repayment of a financial bonus, relocation assistance, or other non-educational incentive or other payment or benefit that is not tied to specific job performance, unless the employee was terminated for any reason other than misconduct or misrepresentation of job duties or requirements to the employee.
Enforcement
The current law does not provide a private right of action; however, employees sued by an employer seeking to enforce a prohibited agreement may recover attorneys’ fees. Employers found to have violated the law may be fined up to $5,000 per violation.
The amendments provide the same and would additionally require the New York Department of Labor to consider employer size, good-faith compliance, violation history, and severity of the violation when determining the penalty amount.
While the current law prohibits “stay or pay” agreements entered into on or after the effective date, the statute does not expressly grandfather existing agreements leaving retroactive enforcement an open question.
Employer Takeaways
For employers scrambling to comply with the law, there is hope yet. The chapter amendments are moving quickly through the legislature: As of January 21, 2026, A9452 passed the Assembly and was delivered to the Senate. If the Senate passes the bill, it will then be delivered to the Governor’s desk. In the meantime, however, employers must comply with the current law and, accordingly, should consider taking the following steps:
- Evaluate all employment agreements and offer letters for any reference to repayment obligations tied to termination, resignation, or length of service.
- Revise or remove repayment terms that resemble prohibited “stay or pay” arrangements.
- Pending clarification, pause enforcement of agreements requiring a worker to repay money solely because they leave before a specified period of time.
- Review bonus and incentive arrangements to confirm they are not tied to training costs, and assess whether any repayment provisions could be construed as impermissible “stay or pay” obligations.
- Monitor legislative developments related to the proposed chapter amendments.
If you have any questions related to the Trapped at Work Act or chapter amendments, or need assistance reviewing your agreements for compliance, please feel free to reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100.