{"id":89843,"date":"2026-01-05T15:43:13","date_gmt":"2026-01-05T15:43:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/89843\/"},"modified":"2026-01-05T15:43:13","modified_gmt":"2026-01-05T15:43:13","slug":"new-yorks-trapped-at-work-act-takes-effect-and-prohibits-certain-stay-or-pay-agreements-employee-rights-labour-relations","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/89843\/","title":{"rendered":"New York’s “Trapped At Work Act” Takes Effect And Prohibits Certain “Stay Or Pay” Agreements – Employee Rights\/ Labour Relations"},"content":{"rendered":"

On December 19, 2025, New York enacted the “Trapped at Work Act<\/a>” which, effective
\nimmediately, adds a new chapter to the New York Labor Law barring
\nemployers from entering into “employment promissory
\nnotes” with employees, contractors, and other workers. This
\ndevelopment follows a similar measure enacted in California earlier
\nthis year which was broader and prohibited, or otherwise placed
\nmaterial restrictions around, many “stay or pay”
\narrangements (which we covered here<\/a>). While the Act does not ban all
\n“stay or pay” arrangements, it does prohibit certain
\ntypes of agreements and creates a new hurdle for employers to clear
\nin structuring employee incentive programs.<\/p>\n

The Scope of Restrictions<\/p>\n

The Act regulates certain agreements between
\n“employers” (broadly defined to cover individuals or
\nentities that “hire or contract” with a worker to work
\nfor the employer or that provide training to workers) and
\n“workers” (also broadly defined to cover employees,
\nindependent contractors, interns, externs, volunteers, apprentices,
\nand sole proprietor service providers, though individuals
\n“whose sole relationship with the employer is as a vendor of
\ngoods” are not covered).<\/p>\n

Specifically, New York employers are now prohibited from
\nrequiring workers to enter into an employment promissory note as a
\ncondition of employment. Such agreements are now void and
\nunenforceable because they are “against public policy”
\nand “unconscionable.”<\/p>\n

The Act defines a prohibited “employment promissory
\nnote” as “any instrument, agreement, or contract
\nprovision that requires a worker to pay the employer, or the
\nemployer’s agent or assignee, a sum of money if the worker
\nleaves such employment before the passage of a stated period of
\ntime.” An “employment promissory note” explicitly
\nincludes “any instrument, agreement, or contract provision
\nwhich states [that] payment of moneys constitutes
\nreimbursement for training provided to
\nthe worker by the employer or by a third party.”<\/p>\n

Notable Exceptions<\/p>\n

Despite the seemingly broad set of agreements covered, the Act
\nlists several arrangements which do not
\nconstitute prohibited “employment promissory notes.”<\/p>\n

First, the Act is clear that it does not “prohibit or
\nrender void or unenforceable any agreement between a worker and an
\nemployer that requires the worker to repay to the employer any
\nsums advanced to such worker by the
\nemployer, unless such sums were used to pay for training related to
\nthe worker’s employment with the employer.”<\/p>\n

Second, the Act does not apply to agreements that require a
\nworker to pay the employer for property sold or leased to the
\nworker.<\/p>\n

Third, the Act excludes incentive programs contained in
\ncollective bargaining agreements, as well as programs for
\neducational personnel that allow for sabbatical leaves.<\/p>\n

The Act’s Effective Date<\/p>\n

The Act’s restrictions do not
\nappear to apply retroactively. Instead, employers are restricted
\nfrom requiring workers or prospective workers to
\n“execute” agreements containing prohibited provisions
\non\/after the Act’s December 19, 2025 effective date. However,
\nemployers should still tread carefully with respect to agreements
\nthat were executed before the effective date. For example, if an
\nexisting agreement containing provisions covered by the Act is
\namended or revised following the effective date, these new
\nrestrictions could apply to the updated and\/or amended version.<\/p>\n

Enforcement and Penalties<\/p>\n

The Act does not create a private
\nright of action for workers. Instead, the New York State Department
\nof Labor (NYSDOL) may issue civil penalties between $1,000 and
\n$5,000 for each violation. However, workers
\nare allowed to recover attorneys’
\nfees if they successfully defend against an employer’s attempt
\nto enforce any agreements prohibited by the Act. Accordingly,
\nemployers should doubly confirm that pre-existing agreements are
\nenforceable before attempting to assert rights under such
\nagreements, as an unsuccessful attempt could result in a worker
\nrecovering attorneys’ fees even if the underlying agreement did
\nnot include a provision providing for such recovery.<\/p>\n

Next Steps and Takeaways<\/p>\n

This robust set of exceptions to the general prohibition aligns
\nwith the Act’s legislative summary, which focuses on banning
\n“training reimbursement agreements” as opposed to more
\nbroadly prohibiting all such repayment agreements. That said,
\nadditional clarity is needed, including whether signing or
\nretention bonuses would fall under the “sums advanced”
\nexception along with other agreements providing employees
\ncontingent incentives to stay (provided such arrangements do not
\nfocus on recoupment for “training” programs). Those types
\nof agreements appear to satisfy the exceptions, but we will look
\nfor confirmation from the NYSDOL via regulations it may promulgate
\nand\/or other guidance it may issue. Indeed, Governor Hochul
\nexpressed concerns about such ambiguities when signing the Act into
\nlaw and urged clarifications after signing the Act into law. Until
\nthe NYSDOL issues further guidance, the precise contours of these
\nprohibitions will remain somewhat ambiguous.<\/p>\n

To ensure compliance with the Act, New York employers should
\nreview their existing agreements requiring repayment, including
\nthose with clawback components, to better ensure they can meet one
\nof the act’s exemptions. For signing and retention bonuses,
\nemployers should consider whether to update their agreements to
\nconfirm that the amounts paid to employees are sums that are being
\nadvanced. Alternatively, employers may also consider restructuring
\ncertain incentive compensation to pay bonuses to employees only
\nafter they meet certain tenure milestones.<\/p>\n

The content of this article is intended to provide a general
\nguide to the subject matter. Specialist advice should be sought
\nabout your specific circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"On December 19, 2025, New York enacted the “Trapped at Work Act” which, effective immediately, adds a new…\n","protected":false},"author":2,"featured_media":35966,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[9,24,63,134,136,135],"class_list":{"0":"post-89843","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-staten-island","8":"tag-new-york","9":"tag-new-york-city","10":"tag-nyc","11":"tag-staten-island","12":"tag-staten-island-headlines","13":"tag-staten-island-news"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/89843","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=89843"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/89843\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/35966"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=89843"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=89843"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=89843"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}