On December 19, 2025, Governor Kathy Hochul signed into law the “Trapped at Work Act” (TWA), a landmark employment law designed to protect workers from “employment promissory note” agreements, commonly referred to as “stay-or-pay” provisions, that require employees to repay employers if they leave their job before a specified period.[1]
Recognizing ambiguities in the original legislation that could create compliance challenges for employers, Governor Hochul signed amendment A9452 on February 13, 2026, substantially narrowing the law’s scope and providing clearer guidance on permissible repayment arrangements. The amendment also delayed the effective date, stating that “this act shall take effect one year after it shall have became a law,” providing employers with additional time to review and revise their employment agreements, bonus structures and training reimbursement policies.
However, this language has created confusion. Most sources interpret “this act” to refer to the original TWA, yielding an effective date December 19, 2026, one year after the original signing. A competing interpretation, however, suggests the effective date could be February 13, 2027, one year after the amendment was signed.[2] Employers should monitor the NY Department of Labor website for official clarification, and plan for December 19, 2026, as the most likely effective date.
Narrowed Coverage
One of the most significant changes under the amended Trapped at Work Act is the narrowing of the class that is protected. The original law applied broadly to “workers” which included employees, independent contractors, interns, externs, volunteers, and apprentices.[3] The amendments now limit the law’s applicability only to “employees,” leaving other types of workers outside the Act’s scope.
This narrowed scope provides considerably more flexibility for employers utilizing non-employee work arrangements.
Transferable Credentials Exception for Tuition Reimbursement
The amendment also created a specific exception for “transferable credentials” allowing employers to require repayment for education or training that results in a degree, license, certificate, or other credential that is “widely recognized” in the industry and transferable to employers.[4] To qualify under this exception, the repayment obligation must: be in a separate written contract; not be a condition of employment; the amount or repayment must be disclosed prior to agreement; repayment must be prorated. Further, the repayment obligation will be invalid if the employee is terminated (except for cause). [5]
It is important to note that this exception does not apply to employer-specific training, nor mandated safety and compliance training, that does not result in a recognized credential.
Benefit Repayment Exception
The amendment also creates a narrow exception permitting employers to require repayment of certain benefits, including signing bonuses, relocation assistance, and other non-performance-based benefits. However, this exception does not apply if the employee is terminated for any reason other than misconduct or if the employee’s job duties were materially misrepresented at the time of hire.[6]
Employers seeking to enforce repayment under this exception should maintain clear documentation supporting any determination of misconduct.
Enforcement and Penalties
The amended law maintains the penalty structure of $1,000 to $5,000 per violation. Employees may file complaints with the New York State Department of Labor, but there is no private right of action.[7]
What Employers Should Do to Ensure Compliance
With the effective date of the amended Trapped at Work Act approaching, employers should act proactively to avoid penalties and maintain positive employee relations by taking the following steps:
- Audit existing agreements, including letters, employment contracts, bonus agreements, relocation assistance polices, and training reimbursement agreements to identify stay-or-pay provisions;
- Modify the agreements as necessary to conform to the Act;
- Ensure any permissible repayment obligations are in separate written contracts rather than embedded in employment agreements;
- If relying on the misconduct exception for the benefit repayment exception, maintain through documentation of any performance issues; and
- Consider alternative retention strategies that do not involve repayment obligations
Please reach out to Vincent Costa for guidance on auditing existing agreements, revising polices, and ensuring compliance before the effective date.
Thank you to Isabella Marmo for her research and writing assistance.
[1] NY State Assembly Bill 2025-A9452, https://legislation.nysenate.gov/pdf/bills/2025/a9452; N.Y. Lab. Law § 1052 (McKinney).
[2] Compare NY Trapped at Work Act’s Narrowed Scope + Delay: Impact on Employer Repayment Agreements, https://www.jacksonlewis.com/insights/ny-trapped-work-acts-narrowed-scope-delay-impact-employer-repayment-agreements with New York Amends the Trapped at Work Act, https://ogletree.com/insights-resources/blog-posts/new-york-amends-the-trapped-at-work-act-what-changed-and-what-remains-unclear/.
[3] NY State Assembly Bill 2025-A9452, https://legislation.nysenate.gov/pdf/bills/2025/a9452; N.Y. Lab. Law § 1050 (McKinney).
[4] NY State Assembly Bill 2025-A9452, https://legislation.nysenate.gov/pdf/bills/2025/a9452; N.Y. Lab. Law § 1052 (McKinney).
[5] Id.
[6] NY State Assembly Bill 2025-A9452, https://legislation.nysenate.gov/pdf/bills/2025/a9452; N.Y. Lab. Law § 1052 (McKinney).
[7] NY State Assembly Bill 2025-A9452, https://legislation.nysenate.gov/pdf/bills/2025/a9452; N.Y. Lab. Law § 1053 (McKinney).
