On December 19, 2025, New York Governor Kathy Hochul signed three employment-related bills into law and vetoed a fourth.

What You Need to Know:

The three new laws—two of which took immediate effect upon signature—have a wide range of implications for employers:

• “Stay or Pay” Banned: Most contracts creating debts for workers who leave employment—known as “TRAP” agreements—are now void and unenforceable in New York. Limited exceptions, including for payroll advances, remain permissible.
• Background Check Limits Expanded: With some exceptions, New York employers will be barred from using consumer credit history to evaluate job candidates.
• Disparate Impact Codified: New York State law now formally recognizes that discrimination claims can be proven based on unequal outcomes of a policy or practice.

The vetoed fourth bill would have created a blanket provision that Governor Hochul characterized as “putting a thumb on the scale” in favor of employees in legal disputes with New York employers.

The “Trapped at Work” Act

Governor Hochul signed A584C, the “Trapped at Work Act” (TAWA), which prohibits all employers—including subsidiaries and contractors—from requiring current or prospective workers to sign employment-related promissory notes as a condition of employment. The law took immediate effect on December 19, 2025, and added a new Article 37 to the New York Labor Law (NYLL). It is similar to a new California law that likewise voids agreements that tie continued employment...

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