Amendments To New York's Trapped At Work Act Become Law

On February 13, 2026, Gov. Hochul signed into law an amendment to the New York Trapped at Work Act (the Act). The Act bans certain clawback and other agreements that require workers to repay amounts to employers. As we discussed in a prior Insight, when Gov. Hochul first signed the Trapped at Work Act into law on December 19, 2025, she requested that the state legislature amend the law to clarify certain provisions. With Gov. Hochul's signature, the amendment officially becomes law and the operative terms of the original statute are no longer in effect. While the amendment helps clarify, among other things, the scope of what constitutes a prohibited "employee promissory note," several questions remain.

The Act bars employers from requiring as a condition of employment that an employee execute an "employment promissory note" — meaning an agreement requiring the employee to pay the employer for certain covered costs if the employment relationship terminates before the passage of a stated period of time. As amended, the Act carves 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," provided the agreement meets certain enumerated conditions. The amended Act also carves 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." Our prior Insight discusses these exceptions and the differences between the original Act and the Act as amended.

Even with the amendments, questions remain. For one, the amendment provides that the operative provisions of the Act will take effect "one year after it shall have become a law." This language raises the question of whether the one-year period results in an effective date of December 19, 2026 (i.e., based on the date the original Act was signed into law), or February 13, 2027 (i.e., based on the date the amendment was signed into law). In addition, the Act, even as amended, does not explicitly state that the statute will not apply retroactively to agreements executed before the effective date of the law. However, attempting to apply new restrictions on certain "promissory note[s]" retroactively would likely face substantial legal challenges.

The Act provides that the New York Department of Labor maypromulgate rules and regulations to carry out the provisions of the law, which we will continue to monitor.

As for next steps, employers should not wait until the Act becomes effective to review their existing employment agreements, offer letters, incentive compensation awards and tuition reimbursement agreements to ensure that they are in compliance with the law, as amended. Unless the state provides more clarity concerning the effective date of the Act, employers should prepare to comply with the new law by December 19, 2026.

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