New York State Trapped At Work Act Amended And Effective Date Delayed

Governor Kathy Hochul has signed into law a bill amending New York State's "stay or pay" law. Among key changes, the law's enforcement date has been delayed by one year.

As we previously reported, on December 19, 2025, Governor Hochul signed into law the Trapped at Work Act which prohibits employers from requiring as a condition of employment that any current or prospective worker execute "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," including any provision stating that such repayment "constitutes reimbursement for training provided to the worker by the employer or by a third party." The Act as originally drafted contained certain exclusions; however, Governor Hochul raised concerns about ambiguities in the original Act thus spurring prompt amendment of the original law. The original Act also provided that it was effective immediately.

Under the Act as now amended, the Act will expressly carve out any agreement that "requires the employee to reimburse the employer for the cost of tuition, fees, and required educational materials for a transferable credential" where the agreement:

• is set forth in a written contract that is offered separately from any contract for employment;
• does not require the employee to obtain the transferable credential as a condition of employment;
• specifies the repayment amount before the employee agrees to the contract, and the repayment amount does not exceed the cost to the employer of the tuition, fees, and required educational materials;
• provides for prorated repayment during the repayment period proportional to the total repayment amount and does not require an accelerated payment schedule if the employee separates from the employment; and
• does not require repayment if the employee is terminated, unless terminated for misconduct.

The amendments define a "transferable credential" as a degree, license, certificate, etc. that evidences skills or proficiency that is relevant to employers generally throughout an industry and would distinguish it from both: (a) training that is employer-specific (such as training on an employer's proprietary systems or processes or other instruction that does not qualify an employee for a new title, classification, credential, etc.); and (b) training that is mandated by federal, state or local law.

Notable for employers that offer signing bonuses, retention bonuses, and the like, the amended Act will now also specifically carve out any agreement requiring an employee 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."

Further, the amendments limit the scope of covered individuals under the Act from the previous "worker" (which would have included not only employees but also independent contractors, interns, externs, and volunteers) to only "employee," defined as "any person employed for hire by an employer in any employment."

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As noted above, the amendments revise the effective date of the Act to "one year after it shall have become a law." There is some ambiguity, however, as to whether this means one year after the signing date of the original Act (December 19, 2025) or one year after the signing of the amendments to the Act (February 13, 2026). We will continue to monitor for any clarifications on this point, but in no event will enforcement of the amended Act begin prior to December 2026.

New York State Trapped At Work Act Amended And Effective Date Delayed

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