The Scope of Restrictions
The Act regulates certain agreements between “employers” (broadly defined to cover individuals or entities that “hire or contract” with a worker to work for the employer or that provide training to workers) and “workers” (also broadly defined to cover employees, independent contractors, interns, externs, volunteers, apprentices, and sole proprietor service providers, though individuals “whose sole relationship with the employer is as a vendor of goods” are not covered).
Specifically, New York employers are now prohibited from requiring workers to enter into an employment promissory note as a condition of employment. Such agreements are now void and unenforceable because they are “against public policy” and “unconscionable.”
The Act defines a prohibited “employment promissory note” as “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 such employment before the passage of a stated period of time.” An “employment promissory note” explicitly includes “any instrument, agreement, or contract provision which states [that] payment of moneys constitutes reimbursement for training provided to the worker by the employer or by a third party.”
Notable Exceptions
Despite the seemingly broad set of agreements covered, the Act lists several arrangements which do not constitute prohibited “employment promissory notes.”
First, the Act is clear that...
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