Revisions to New York’s Trapped at Work Act Already in the Works

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Quick Hits

• New York Assembly Bill A9452 seeks to amend the newly enacted Trapped at Work Act, which prohibits stay or pay agreements that require employees to repay training expenses if they leave their job.
• The proposed chapter amendments would narrow the scope of the original law to apply specifically to employees, excluding independent contractors and other workers from the prohibitions on reimbursement agreements.
• The amendments would also allow employers to enter written agreements with employees providing for the repayment of certain educational expenses for degrees, skills, or qualifications not required for the job with the employer or that are beyond the employer’s specific business.
• The amendments also provide that repayment agreements for bonuses, relocation assistance, and other non-educational incentives or payments remain permissible, unless the employee was “terminated for any reason other than misconduct or the duties or requirements of the job were misrepresented to the employee.”

Introduced in the state Assembly on January 6, 2025, Assembly Bill A9452 would amend the “Trapped at Work Act” (Article 37, N.Y. Lab. Law §§ 1050–55), which generally prohibits the use of certain “employment promissory notes”—defined as agreements that require employees to pay the employer “a sum of money” if the employee “leaves such employment before the passage of a stated period of time”—as a condition of employment or prospective employment.

Governor Hochul signed the Trapped at Work Act into law on December 19, 2025. At the time of the signing, she indicated that she had reached an agreement with lawmakers on chapter amendments, which are amendments passed by lawmakers to revise a bill after it has been signed, concerning educational expenses and voluntary tuition assistance programs.

As anticipated, A9452 would revise the Trapped at Work Act, clarifying the distinction between “training” expenses and “education” expenses. A9452 would also eliminate independent contractors from coverage, and prohibit reimbursement agreements in circumstances when employees have been discharged for reasons other than “misconduct” or when job duties were “misrepresented.”

Effective Date

Notably, the bill would delay the effective date of the act, which took effect immediately, to one year after “it” becomes law. The amendment draft does not specify whether this is measured from the date of enactment of the act (that is, December 19, 2025) or from the date of the amendment. It also does not clarify whether agreements that could constitute promissory notes entered into before the effective date are exempt from the prohibition.

Covered Employers and Employees

The Trapped at Work Act applies to all “workers,” including employees, independent contractors, externs, interns, volunteers, and apprentices. However, the new bill would significantly narrow the application of the law to “employee[s],” defined as “any person employed for hire by an employer in any employment.”

Transferrable Credentials

The amendment would clarify that the law would exclude agreements with employees to “reimburse the employer for the cost of tuition, fees, and required educational materials for a transferable credential” that is beyond what is required for the specific job. Specifically, a “transferrable credential” would mean “any degree, diploma, license, certificate, or documented evidence of skill proficiency or course completion” that provides the employee skills or qualifications separate from the “employer’s specific business practices” and would “demonstrably enhance the employee’s employability with other employers.”

The amendment would still prohibit employers from requiring reimbursement for “employer-specific or non-transferrable training,” meaning “instruction regarding the employer’s proprietary processes, proprietary systems, internal policies, proprietary software, or proprietary equipment unique to the employer” or 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.

Furthermore, employers would be prohibited from requiring repayment for mandated federal, state, or local safety or compliance training, including Occupational Safety and Health Administration (OSHA) certifications, sexual harassment prevention training, and diversity training.

Valid Reimbursement Agreements

The bill would require that agreements for repayment of educational expenses:

• be set forth in writing and be separate from any employment contract;
• not require the employee to obtain the transferrable credential as a condition of employment;
• specify the repayment amount that is not to exceed the cost of tuition, fees, and other required materials;
• provide the prorated repayment amount during any required employment period; and
• not require repayment if the employee is discharged, except if discharged for misconduct.

Additionally, the bill would exclude agreements to require employees “to repay a financial bonus, relocation assistance, or other non-educational incentive or other payment or benefit that is not tied to specific job performance, unless the employee was terminated for any reason other than misconduct or the duties or requirements of the job were misrepresented to the employee.”

The bill does not specify what it means for a payment or benefit to be tied to specific job performance, nor does it define “misconduct” or provide insight into what would constitute “misrepresentation” of job duties. If the proposed amendments are adopted, employers may want to consider articulating that the employee had been discharged for “misconduct” as well as updating their job descriptions and carefully reviewing job postings to prevent claims of misrepresentation.

Penalties

The Trapped at Work Act does not provide a private right of action but allows the New York State Department of Labor (NYDOL) to seek civil penalties ranging from $1,000 to $5,000 per violation. However, A9452 would enable aggrieved employees to file a complaint with the NYDOL. Further, in assessing the penalties, the NYDOL would be required to give “due consideration to the size of the employer’s business, the good faith basis of the employer to believe that its conduct was in compliance with the law, the gravity of the violation, and the history of previous violations.”

Next Steps

The Trapped at Work Act comes amid a broader trend of prohibiting “stay or pay” agreements, but it has created significant uncertainty for employers in the state. Such expense repayment agreements are often used in the financial services industry, both for jobs that require significant upfront training and/or regulatory licenses, as well as for sign-on and retention bonuses and relocation expenses. As such, the prohibitions on requiring repayment of training expenses and the proposed limitations on repayments of bonuses and other payments under the New York law could have a major impact on financial services employers.

The proposed amendments, if enacted, would provide more clarity around reimbursable and nonreimbursable educational expenses, but also create a potential loophole for discharged employees to argue that they were not discharged for “misconduct” or that their job duties were “misrepresented.” The bill has been referred to the Assembly Standing Committee on Labor. For now, the Trapped at Work Act as signed remains in effect.

For more information, please join us for our upcoming webinar, “New York’s Trapped at Work Act: What It Means for ‘Stay-or-Pay’ Agreements,” which will take place on Thursday, January 15, 2026, from 2:00 p.m. to 3:00 p.m. EST. The speakers, Joseph B. Cartafalsa, Carly E. Grey, and Aaron Warshaw, will discuss which agreements are covered and which are exempt from coverage under New York’s Trapped at Work Act, as well as how employers can effectively navigate the changes. Register here.

Ogletree Deakins’ New York offices will continue to monitor developments and will provide updates on the Employee Benefits and Executive Compensation and New York blogs as additional information becomes available.

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