New York Workers No Longer Can Be “Trapped at Work”

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Helena I. Poch Ciechanowski

January 7, 2026

Update: On December 19, 2025, New York’s Trapped at Work Act (Act) became effective (see details in our article below).  Don’t get too comfortable, folks, because the new law is already facing challenges by those who view it as overly broad or ambiguous.  Those challenges appear to have traction, as the Legislature is already considering an amendment, and rumors abound that Governor Hochul struck a deal to sign the amendment if and when it passes.

The proposal (A09452) under consideration in the next legislative session would:

• redefine “Employer” to exclude indirect employers (subsidiaries and training entities) and those who contract with non-employee workers.
• limit the application of the Act to “Employees” rather than all “Workers” (which would include independent contractors, volunteers, and temporary workers).
• eliminate the section of the law that says prohibited “Employment Promissory Notes” include contracts that say the payment of moneys constitutes reimbursement for training provided to the worker by the employer or a third party.
• clarify that tuition reimbursement agreements for tuition, fees, and required educational materials for transferrable credentials are permitted if they meet all of the following criteria:
  • The reimbursement obligation is contained in a written agreement offered separately from any contract for employment.
  • The transferrable credential is not a condition of employment.
  • The employer provides notice of the amount of the payment obligation before the employee agrees to the obligation.
  • The amount sought by the employer does not exceed the employer’s actual cost for training and materials.
  • The amount of the obligation decreases in an amount proportionate to the time that the employee works for the employer.
  • The agreement does not accelerate upon termination of employment and excuses repayment in the event of involuntary termination (except termination for misconduct).

• clarify that employers can enforce agreements with employees for the voluntary purchase or lease of property.
• clarify that the following types of clawback agreements with employees are permissible as long as the job duties were not misrepresented, the clawback is not tied to “specific job performance,” and no repayment is required in the event of involuntary termination (other than termination for misconduct):
  • repayment of a financial bonus
  • relocation assistance
  • Other non-educational incentives that are not tied to specific job performance

• allow employees and prospective employees to file a complaint with the commissioner if they believe the Act has been violated.
• suggest that before the commissioner assesses penalties, they consider factors such as good faith mistake, size of the employer’s business, history of previous violations, and the seriousness of the violation.

If the Amendment becomes law, the revised provisions of the Act would take effect one year after its passage.  Unless and until the Act is amended, employers should take the appropriate steps to comply with the original (and currently effective) law.

On the Friday before Christmas 2025, New York Governor Kathy Hochul gave a holiday present to all workers in the State of New York (employees, independent contractors, externs, interns, volunteers, apprentices, and sole proprietors alike) by signing into law Article 37 of the New York Labor Law (known as the Trapped at Work Act).  Effective immediately (e.g., as of December 19, 2025), New York employers cannot require workers to sign “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…employment.” 

 Those employers who violate the new law—either by including a prohibited provision in a contract or by trying to enforce it—are subject to fines of $1,000 to $5,000 per affected worker, and workers who are sued to enforce an illegal promissory note are entitled to attorney’s fees.

WAIT: Before employers start changing compensation policies to eliminate draws against commissions, payroll loans, salary advances, and similar compensation tools and benefits, let’s examine what the new law means.  After all, every promissory note is not the same, and not all loans or tuition agreement provisions are off the table.

RED MEANS STOP:  The law explicitly provides that agreements with New York workers can no longer include “training cost” provisions or “stay–or–pay” obligations.  If a worker needs training to perform their job duties, and the employer pays for the worker’s training (either in-house or by means of a third-party training program), the employer CANNOT (1) require the worker to remain employed for a specified period of time to “work off” the training expense; or (2) require the worker to repay the training expense as a condition of new or continued employment.

GREEN MEANS GO: Notwithstanding the new law, New York employers can still:

• Lend/advance money to workers as long as the purpose of the loan isn’t related to training, and if the worker accepts the loan, the worker can still be required to sign a loan document specifying the terms of repayment;
• Demand repayment for property or equipment sold or leased to the worker;
• Require educational workers on sabbatical leaves to comply with the terms and conditions of their leaves; and, finally,
• Honor the terms of collective bargaining agreements.

IT’S A GRAY AREA: The Trapped at Work Act appears to permit employers to enter into tuition reimbursement agreements for training or education in fields that are unrelated to the worker’s employment with the employer (for example, advanced degrees or study of a subject that is not related to the worker’s current job).  However, the Labor Commissioner is charged with promulgating rules and regulations necessary to carry out the intent of the new law, so it remains to be seen how expansive the term “related to the worker’s employment” will become.

For now, employers with workers in New York should review their employment policies and agreements to eliminate (and refrain from attempting to enforce) any contractual provisions that require a worker to remain employed with the employer for a specified time period to avoid incurring an obligation to repay costs associated with training for the worker’s current or prospective position.

The author of this article, Helena Ciechanowski, is a member of the Bars of New Jersey and Pennsylvania.  This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in New Jersey, Pennsylvania, New York, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist.  Always consult an attorney with specific legal issues.