Key Highlights

• New York prohibits arrangements requiring employees to repay or reimburse their employer: The newly enacted Trapped at Work Act bars employers from enforcing agreements that require workers to repay or reimburse training or other costs or payments if they leave employment before a specified period.
• Ambiguous language creates risk for common compensation practices: Although motivated by controversial training repayment arrangements, many commonplace practices like education stipends, tuition assistance programs, forgivable loans, advanced retention bonuses and certain consulting arrangements may now face challenges.
• Law applies broadly to workers beyond employees: The Act covers not only employees, but also independent contractors, interns, volunteers, apprentices and other service providers, with only limited statutory exceptions.

New York employers are now prohibited from enforcing or requiring so-called “stay-or-pay” contracts that obligate employees to repay money to their employer if they leave employment prior to a stated date. With the new “Trapped at Work Act,” New York joins other states, including Colorado and California, in protecting employees from requirements to reimburse their employer for employer-provided training. Although the Act and other similar laws have been motivated by criticisms of employer training repayment requirements, the breadth and ambiguity of New York’s new law threaten to go beyond that immediate concern and prohibit or...

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