On December 19, 2025, New York Governor Kathy Hochul signed a bill into law that prohibits certain “stay or pay” agreements that require employees to repay their employer for specific training costs if the employee leaves before a specified period. The law took effect immediately.

• New York’s “Trapped at Work Act” bans “stay or pay” agreements that require repayment of training costs if employees leave employment.
• The law applies to all workers, including employees and independent contractors, classifying repayment agreements for training costs as unconscionable and unenforceable.
• Employers may want to revise documents and agreements to ensure compliance, particularly regarding tuition assistance and training distinctions.

The “Trapped at Work Act” (Article 37, N.Y. Lab. Law §§ 1050–55), generally prohibits the use of “employment promissory notes” as a condition of employment or prospective employment. The law applies to “workers,” including employees, independent contractors, externs, interns, volunteers, and apprentices.

Promissory Notes Prohibited

Employment promissory notes are defined as agreements that require “a worker to pay the employer … a sum of money if the worker leaves such employment before the passage of a stated period of time,” including provisions that “payment of moneys constitutes reimbursement for training provided to the worker by the employer or by a third party.”

The law states that the “execution of an employment promissory note as a condition...

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