On December 19, 2025, Governor Kathy Hochul signed the Trapped at Work Act (the “Act”), introducing sweeping new restrictions on certain employment-related repayment agreements. Effective immediately, the Act prohibits employers from requiring any worker or prospective worker to sign agreements that obligate the individual to repay moneys paid by the employer if the worker leaves before a designated period. These agreements – commonly referred to as “stay-or-pay” agreements – are now deemed unconscionable, contrary to public policy, and unenforceable under New York law.
Scope of the Act
“Employer” is broadly defined under the Act to include “any entity that hires or contracts with a worker to perform services,” inclusive of an employer’s subsidiaries. The Act defines a “worker” as any “individual who is permitted to work for or on behalf of an employer,” including employees, independent contractors, externs and interns, volunteers, apprentices, and sole proprietors providing services. The term “worker” does not include individuals whose only connection to the employer is as a vendor of goods, even if they perform incidental services.
Under the Act, employers may not require workers to execute an “employment promissory note” as a condition of employment. The Act defines an “employment promissory note” as “any instrument, agreement, or contract provision that requires a worker to pay the employer . . . a sum of money if the worker leaves such employment before the passage...
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