New York employers that sponsor foreign national employees for permanent residence are facing a materially different legal landscape under New York’s Trapped at Work Act (the Act). As amended in early 2026, the Act sharply restricts so called “stay or pay” arrangements and significantly limits an employer’s ability to recover costs from employees who leave before a specified period of service.
Although the Act does not explicitly reference immigration sponsorship, its structure, statutory language and legislative history strongly suggest that traditional green card reimbursement agreements are unlikely to be enforceable once the law becomes operative in February 2027. One of the most frequently debated — and unresolved — questions is whether employers can rely on the Act’s narrow “transferable credential” exception to justify reimbursement of immigration sponsorship costs.
This post examines that question and outlines practical, lower risk alternatives employers may consider to protect their investment while remaining compliant.
A Brief Overview of the Trapped at Work Act
As amended, the Act broadly prohibits employers from requiring an employee or prospective employee to enter into an “employment promissory note,” defined as any agreement requiring repayment of money if the employment relationship with a specific employer ends before a stated period of time.
The 2026 amendments adopted through Assembly Bill A9452 significantly narrowed the universe of permissible repayment arrangements. Most notably, the amended statute eliminated the prior authorization to recover “sums advanced” to employees and replaced it with a limited set of enumerated exceptions.
One of those exceptions permits repayment of tuition, fees, and required educational materials associated with a “transferable credential,” defined as a degree, diploma, license, certificate or documented evidence of skill proficiency or course completion that is widely recognized in the relevant industry and demonstrably enhances the employee’s employability with other employers. The statute imposes strict conditions on these agreements, including advance written disclosure, proration, caps on repayment amounts and limits on repayment following termination.
Can Permanent Residence Be a “Transferable Credential”?
At a conceptual level, it is not unreasonable to argue that lawful permanent residence enhances an individual’s employability across employers and industries. Unlike nonimmigrant statuses tied to a specific employer, permanent residence permits unrestricted participation in the U.S. labor market. For that reason, some employers have suggested that green card sponsorship could fit within the Act’s transferable credential exception.
That argument, however, is an uncomfortable fit with the statute as written.
First, immigration sponsorship does not resemble the type of credential the Act appears to contemplate. The statutory definition focuses on education related concepts – degrees, diplomas, coursework, licenses and documented skill proficiency. Immigration sponsorship costs are not educational expenses, are not tied to training or coursework, and do not result in a documented professional qualification or industry recognized certification. Instead, permanent residence provides legal authorization to work, not a credential grounded in education or skill acquisition.
Second, there is a structural mismatch. During much of the sponsorship process, immigration benefits are inherently employer specific. The process is designed to meet the sponsoring employer’s workforce needs, and the employee’s immigration status is often dependent on that employer for a significant period of time. Unlike a degree or license that exists independently of any single employer, green card sponsorship is inextricably tied to the employment relationship itself — precisely the type of dependency the Act was designed to prohibit.
Finally, the legislative history reinforces a narrow reading. The original version of the Act (Assembly Bill A584 C) permitted employers to recover “any sums advanced” to workers, subject to limited restrictions. That language was deliberately removed and replaced with the far more constrained transferable credential exception in Assembly Bill A9452. This narrowing strongly suggests a legislative intent to confine enforceable repayment arrangements largely to tuition reimbursement style educational programs, not broader cost recovery mechanisms such as immigration sponsorship.
For these reasons, while the transferable credential theory is not frivolous, it carries meaningful enforcement and litigation risk. In the absence of regulatory guidance or case law, employers should be cautious about treating this exception as a safe harbor for green card reimbursement provisions.
Practical Risk Considerations for Employers
Once the Act becomes effective in February 2027, employees and prospective employees may file complaints with the New York Department of Labor, and employers face civil penalties of up to $5,000 per violation. Even well intentioned agreements may draw scrutiny if they are viewed as conditioning continued employment on repayment obligations the statute no longer permits.
Until a court squarely addresses whether immigration sponsorship qualifies as a transferable credential, employers should assume that traditional green card reimbursement agreements are vulnerable and plan accordingly.
Alternative, Lower Risk Strategies to Protect Employer Investment
Although the Act restricts direct reimbursement tied to continued employment, employers are not without options. Depending on business objectives and workforce needs, alternative approaches may reduce risk while preserving flexibility:
Deferred reimbursement of discretionary immigration fees
Employers may also consider reimbursing discretionary immigration related expenses after an employee remains employed for a defined period of time. For example, an employer could reimburse Form I 140 or adjustment of status filing fees (including dependent applications) only after the employee completes a specified service milestone. Because reimbursement is contingent on continued employment and structured as a post employment benefit, rather than a clawback triggered by early departure, this approach may reduce risk under the Act if carefully drafted and not framed as a repayment obligation.
Relocation and non educational incentives
The Act expressly permits repayment of certain bonuses, relocation assistance and other non educational incentives, subject to statutory safeguards. Structuring immigration related support as part of a broader, compliant incentive program — rather than a sponsorship clawback — may lower risk if carefully designed.
Prospective compensation and retention incentives
Rather than seeking to recoup past costs upon separation, employers may consider prospective compensation strategies, such as bonuses, equity based incentives or salary adjustments, designed to encourage retention after permanent residence is obtained.
Employee funded optional immigration benefits
Where permitted under federal immigration law, employees may voluntarily pay for optional immigration benefits, such as dependent filings or premium processing, without tying repayment to continued employment.
Clear expectation setting
Transparent communication regarding sponsorship timelines, which costs the employer will cover, and which costs remain the employee’s responsibility, can reduce misunderstandings and disputes in the absence of enforceable reimbursement provisions.
Workforce planning over cost recovery
In many cases, employers may conclude the compliance risk associated with reimbursement agreements outweighs the financial benefit, and instead focus on workforce planning and retention strategies that do not rely on repayment obligations.
Bottom Line
The amended Trapped at Work Act represents a significant shift in New York’s approach to employment based repayment arrangements. While permanent residence undoubtedly enhances an employee’s long term employability, immigration sponsorship does not align neatly with the Act’s narrow transferable credential exception. Until courts or regulators provide clearer guidance, employers should proceed with caution, retire high-risk green card reimbursement provisions, and work closely with immigration and employment counsel to develop compliant strategies that protect both the organization and its workforce.
How Harris Beach Murtha Can Help
Harris Beach Murtha’s Immigration Practice Group advises New York employers on the evolving intersection of immigration sponsorship, employment law, and compliance risk under the Trapped at Work Act. We work closely with employers to assess the enforceability of existing reimbursement and retention arrangements, identify areas of heightened risk, and develop compliant sponsorship strategies that align with organizational goals and workforce planning needs.
Our attorneys assist clients in evaluating alternative approaches to immigration related costs, structuring lawful incentive and retention programs, and navigating sponsorship decisions in an unsettled legal landscape. We collaborate across immigration and employment law disciplines to provide practical guidance grounded in both statutory interpretation and real world business considerations.
If you have questions about how the Trapped at Work Act may affect your immigration sponsorship practices,
please contact attorney L.J. D’Arrigo at (518) 701-2770 and ldarrigo@harrisbeachmurtha.com; attorney Alexis E. Newman at (518) 701-2795 and anewman@harrisbeachmurtha.com; or the Harris Beach Murtha attorney with whom you most frequently work.
This alert is not a substitute for advice of counsel on specific legal issues.
Harris Beach Murtha’s lawyers and consultants practice from offices throughout Connecticut in Bantam, Hartford, New Haven and Stamford; New York state in Albany, Binghamton, Buffalo, Ithaca, New York City, Niagara Falls, Rochester, Saratoga Springs, Syracuse, Long Island and White Plains, as well as in Boston, Massachusetts, and Newark, New Jersey. For more immigration law insights, visit Harris Beach Murtha’s Immigration Practice Group and subscribe to our Immigration Blog.