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A proposed bill was introduced in the New York Assembly on January 6, 2026, to amend the recently enacted Trapped at Work Act (the Act), which bans certain clawback and other agreements that require workers to repay amounts to employers. The amendment would, among other things, delay the effective date of the Act by one year, create an exception for costs related to certain "transferrable" educational credentials, and include an exception for certain bonuses, relocation assistance payments and other non-educational payments.
The Trapped at Work Act
As discussed in our prior Insight, with limited eaxceptions, the Act, which became effective on December 19, 2025, prohibits employers from requiring, as a condition of employment, any worker or prospective worker to sign an agreement obligating the worker to pay an employer a sum of money if the worker leaves employment before a stated period.
As written, the Act left employers with multiple open questions, including whether agreements granting sign-on bonuses, relocation reimbursements or other payments, subject to repayment if the employee were to leave before a certain date, would be enforceable. Indeed, when signing the bill into law, Governor Hochul stated that she did so on the condition that the State Legislature would amend the Act to clarify its scope.
The Proposed Amendment to the Act
In what appears to be a response to Governor Hochul's concerns, on January 6, 2026, a proposed amendment to the Act, Bill A09452/S08822, was introduced in the New York Assembly, and later to the Senate. The key proposed changes to the Act are summarized as follows.
- Effective Date. The proposed amendment would delay the effective date of the Act until December 19, 2026.
- Application Only to Employees. The Act applies to all "workers" of an employer, which includes employees, contractors, volunteers, interns and other non-employees. The proposed amendment would limit the Act's application only to "employees."
- Modification of the Definition of "Employment Promissory Note." The Act defines "employment promissory note" as an agreement requiring a worker to pay the employer an amount if the worker leaves employment before the passage of a stated period of time. The proposed amendment expands the definition to an agreement requiring repayment if the employment relationship terminates before the passage of a stated period of time.
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Exceptions to the Act's Prohibitions.
The proposed amendment modifies the Act to make the following
repayment arrangements permissible:
- Requiring employees to reimburse the employer for the cost of tuition, fees and required education materials for a "transferable credential," so long as the agreement between the employee and employer meets the following conditions: (1) the agreement is in a separate written contract; (2) the agreement does not require the employee to obtain the transferable credential as a condition of employment; (3) the agreement specifies the repayment amount before execution of the contract, and the repayment amount is capped at the employer's cost; (4) the agreement provides for a prorated repayment amount, which cannot be accelerated upon separation of employment; and (5) the agreement does not require repayment if the employee is terminated, except for misconduct. The proposed amendment defines a transferable credential as "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 ... or that provides skills or qualifications that demonstrably enhance the employee's employability with other employers in the relevant industry." A "transferrable credential" does not include employer-specific or "non-transferable" training or mandated safety and compliance trainings.
- Requiring employees to repay 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 the duties or requirements of the job were misrepresented to the employee.
The proposed amendment continues to recognize exceptions for repayment agreements for any property sold or leased to the employee (so long as the sale or lease was voluntary) and for educational personnel to comply with sabbatical leave program terms, as well as agreements entered into through a collective bargaining agreement.
- Enforcement. Like the Act, the proposed amendment does not include an explicit private right of action for aggrieved employees. Instead, the proposed amendment allows employees and prospective employees to file a complaint with the New York State Department of Labor (DOL). In the event the DOL determines that an employer violates the Act, the employer will be fined between $1,000 and $5,000 for each violation. The proposed amendment also states that when assessing the amount of a penalty, the DOL must consider the size of the employer's business, the good faith basis of the employer to believe it was in compliance with the law, the gravity of the violation and any previous violations.
Considerations for Employers
Currently, the proposed amendment is a bill proposed to the Assembly and the Senate. Unless and until the proposed amendment is passed by the Legislature and signed by the Governor, the Act that was signed into law by Governor Hochul on December 19, 2025 remains in effect. Accordingly, employers should review their bonus and other repayment agreement templates to ensure the terms comply with the current statutory language.
Questions?
For questions or concerns regarding any of the issues raised in this alert, please contact a member of the HSF Kramer Employment Law Department in the U.S.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
