New York state recently enacted the Trapped At Work Act (the Act), prohibiting “employment promissory notes” and certain other stay-at-work-or-pay provisions. The Act will become effective as of Dec. 19, 2026. This article provides guidance on understanding and complying with the Act and compares it to a recent California enactment aimed at providing similar employee protections.
What is a Stay-or-Pay Provision Generally?
Stay-or-pay provisions require employees to repay money to their employers if the employment relationship ends before a certain date. Employers use stay-or-pay provisions for a variety of reasons, including for retention purposes and to recoup costs the employers believe would be unfair to bear if employees do not remain employed for a certain period of time. These provisions can take many forms, including signing bonuses tied to a mandatory employment period, educational repayment contracts, quit fees and damages clauses.
One common form of a stay-or-pay provision is a training repayment agreement provision (often abbreviated as TRAP). Under a TRAP, employers pay for employees’ training, and then require employees to repay some or all of the training costs if employees leave the company before a set period of time.
What Does the Trapped at Work Act Prohibit?
The Act prohibits employers from requiring employees or prospective employees to execute any employment promissory note as a condition of employment, and declares any such contract is unconscionable...
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