Among the year-end employment law developments in New York for 2025, one statute in particular, the “Trapped at Work” Act (the “Act”), has remained top of mind for employers statewide well into 2026. Since the Act’s introduction, we have closely monitored its progress and provided ongoing updates in our prior alerts, “New York Issues Four Year-End Employment Law Changes,” and “New Developments in the Trapped at Work Act and Potential Implications for NY Employers.”
As initially enacted, the Act imposed sweeping prohibitions on stay-or-pay agreements, referred to within the statute as “employment promissory notes.” The Act further provided that any agreement requiring an employee to reimburse an employer for training-related costs also fell within the definition of an impermissible “employment promissory note.”
These broad prohibitions generated significant concerns among New York employers, as the statutory language appeared to bar several common reimbursement arrangements, including agreements requiring repayment of tuition assistance, relocation expenses, and certain financial bonuses, effectively rendering these practices unlawful.
Echoing the concerns raised by employers, Governor Hochul noted in her Approval Memorandum that “[t]he bill as drafted was ambiguous in important respects and would have prohibited certain voluntary tuition assistance programs that provide real benefits to their participants.”
In response, the New York State Assembly introduced Assembly Bill A9452 (the “Bill”) on January 6, 2026, proposing to amend the Act. The Bill addressed the Act’s effective date, revised several key definitions and introduced new carveouts that expanded upon the narrow exceptions set forth in the original statute.
Following several weeks of uncertainty regarding the future of the proposed amendments, Gov. Hochul signed the Bill into law on February 13, 2026, formally amending the Act and providing employers with much needed clarity.
Overview of the Amended “Trapped at Work” Act
- Effective Date
As originally enacted, the Act was scheduled to take effect “immediately.” However, the amendments provide that “this Act…shall take effect one year after it shall have become a law.” As a result, the Governor’s approval of the amendments establishes that the Act will not take effect until on or about December 19, 2026. Currently, the Act and its restrictions are not yet in force; however, employers must ensure compliance in advance of the new effective date.
- Scope of the Act
As amended, the Act applies to “employees,” defined as “any person employed for hire by an employer in any employment.” Accordingly, the Act no longer applies to “workers,” previously defined to include independent contractors, externs, interns, volunteers or apprentices under the original version of the statute.
The amended act also defines “employer” as “any person, corporation, limited liability company, or association employing any individual in any occupation, industry, trade, or business or service including the state and its political subdivisions.” This definition effectively encompasses all public and private employers operating within the state.
- Prohibition of Employment Promissory Notes and Exceptions
The amended Act continues to prohibit employers from utilizing “employment promissory notes,” defined as “any instrument, agreement, or contract provision that requires an employee to pay the employer, or the employer’s agent or assignee, a sum of money if the employee’s employment relationship with a specific employer terminates before the passage of a stated period of time.
Nonetheless, the amended Act revises the prior statutory language by adding several exceptions to this general prohibition. In total there are now five key exceptions. These exceptions include:
First, and most notably, employers are permitted to seek reimbursement for expenses associated with “transferrable credentials.” In addition, the amended Act removes the prior reference to contract provisions related to training from the definition of employment promissory notes.
Under the amended Act, a “transferrable credential” means “any degree, diploma, license, certificate, or documented evidence of skill proficiency or course completion that is widely recognized by employers in the relevant industry as a qualification of employment, independent of the employer’s specific business practices, or that provides skills or qualifications that demonstrably enhance the employee’s employability with other employers in the relevant industry.”
Employers may seek repayment only if the agreement between the employer and the employee satisfies the following requirements:
(a) The agreement is set forth in a written contract that is offered separately from any contract for employment;
(b) The agreement does not require the employee to obtain the transferable credential as a condition of employment;
(c) The agreement specifies the repayment amount before the employee agrees to the contract, and the repayment amount does not exceed the cost to the employer of the tuition, fees and required educational materials for the transferable credential received by the employee;
(d) The agreement provides for a prorated repayment amount during any required employment period that is proportional to the total repayment amount and length of the required employment period and does not require an accelerated payment schedule if the employee separates from the employment; and
(e) The agreement does not require repayment to the employer by the employee if the employee is terminated, except if the employee is terminated for misconduct.
The amended Act specifies that employers remain prohibited from requiring reimbursement for “employer-specific or non-transferable training,” which is “instruction regarding the employer’s proprietary processes, proprietary systems, internal policies, proprietary software, or proprietary equipment unique to the employer,” as well as instruction that “consists of skillful variations of general processes known to the relevant trade or industry” that does not necessarily qualify the employee for another job or occupation. Additionally, employers may not seek reimbursement for any training required by federal, state or local law for workplace safety compliance.
Second, employers are permitted to seek reimbursement for property voluntarily sold or leased to an employee.
Third, employers may require repayment of a financial bonus, relocation assistance or other non-educational incentive or benefit not tied to specific job performance, except where the employee is terminated for any reason other than misconduct or where the job duties or requirements were misrepresented to the employee.
Fourth, employers in the education sector may continue to require educational personnel to comply with the terms and conditions of sabbatical leave agreements.
Fifth, and finally, the amended Act permits reimbursement provisions pursuant to a collective bargaining agreement.
- Penalties for Non-Compliance
Failure to comply with the amended Act may result in civil penalties. An employee or job applicant who believes they have been subjected to a violation may file a complaint with the Commissioner of the Department of Labor. If the commissioner determines that an employer has violated the Act, the employer may be issued a civil penalty ranging from $1,000 to $5,000.
In determining the appropriate penalty, the commissioner is required to consider the size of the employer, the gravity of the violation, any prior violations, and the employer’s good-faith basis for believing its conduct complied with the law.
- Impact on Employers and Next Steps
Employers have finally received the clarity they’ve been seeking. With Gov. Hochul’s approval of the employer-friendly amendments, which appear to confirm the validity of tuition-assistance programs and other common benefit agreements, New York employers may once again enter into such agreements with greater confidence and a clearer understanding of their limitations. Nevertheless, employers must remain mindful of these additional requirements imposed by the amended Act to ensure compliance in advance of its delayed effective date. Taking steps now to align existing practices and agreements with the amended Act is critical to avoiding the penalties associated with non-compliance once the amended Act takes effect in December of this year.
Harris Beach Murtha’s Labor and Employment Practice Group attorneys are closely following these developments and related matters. Should you have questions, please reach out to attorney Roy R. Galewski at (585) 419-8661 and rgalewski@harrisbeachmurtha.com; attorney Daniel J. Palermo; at (585) 419-8946 and dpalermo@harrisbeachmurtha.com; attorney Corey J. Butts at (585) 419-8612 and cbutts@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, Newark, New Jersey.
