Key Takeaways

• New York’s Trapped at Work Act prohibits “stay-or-pay” agreements that require workers to reimburse employers if they leave before a set time.
• The law applies to employees, interns, contractors, volunteers, apprentices, and sole-proprietor service providers.
• The law contains exceptions: permissible agreements include agreements requiring repayment of certain advances, property repayment agreements, sabbatical agreements for educators, and agreements entered into as part of a program agreed upon during collective bargaining.
• The New York Legislature has already proposed amendments, which, if enacted, would postpone the effective date of the law and meaningfully expand the scope of permissible repayment agreements. Currently, though, the law is in effect.

New York has joined California in banning the use of almost all “stay-or-pay” agreements in employment. Often called “TRAPs” (Training Repayment Agreement Provisions), these obligations require workers to pay back their employer for certain advanced payments if they leave their job before a set time. The recently signed “Trapped at Work Act” (the “Act”) amends the New York Labor Law to ban “employment promissory notes” – which are defined as agreements or contract provisions obligating workers to pay employers if they depart before a specified period – as a condition of employment. The Act, which deems all such promissory notes “unconscionable, against public policy, and unenforceable,” applies to all...

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