NY Trapped at Work Act’s Narrowed Scope + Delay: Impact on Employer Repayment Agreements

Takeaways

• An amendment to the New York “Trapped at Work Act,” which prohibits employers from requiring “employment promissory notes” as a condition of employment, narrows the law’s scope and delays its effective date to 02.13.27.
• The amendment narrows coverage to “employees” and provides additional carve-outs to the broad definition of “employment promissory notes.” The new carve-outs include agreements related to repayment of bonuses, relocation assistance, and other non-educational or non-training incentives.
• The amendment introduces detailed rules for repayment of training costs associated with “transferable credentials,” defining what qualifies and expressly excluding employer specific or mandatory compliance training.

Related links

• New York State and City Legislative Update: Changes for All Employers in 2025 and 2026
• NYS Assembly Bill A9452

Article

An amendment to the New York “Trapped at Work Act” was signed by Gov. Kathy Hochul on Feb. 13, 2026. The Act, enacted Dec. 19, 2025, prohibits employers from requiring “employment promissory notes” as a condition of employment.

A9452 seeks to clarify the scope of the law, including whether it impacts forfeiture or clawback of relocation bonuses, incentive compensation, or restricted stock plans, and its impact on programs such as tuition reimbursement plans. The amendment resolves many (but not all) of these lingering questions and delays the Act’s effective date to Feb. 13, 2027.

Despite its preamble indicating the intent was narrow in scope, the initial enactment broadly stated that it applied to “workers” (including employees, independent contractors, and interns) and generally prohibited “employment promissory notes,” including those for training, without limitation except for the narrow exceptions provided for repayment of advances, the sale or lease of property, sabbatical leaves, and programs as part of a collective bargaining agreement.

Definitions: “Employees” and “Employment Promissory Notes”

The amendment limits the Act’s applicability to “employees,” defined as “any person employed for hire by an employer in any employment.”

It also updates “employment promissory notes” to mean any instrument, agreement, or contract provision that requires an employee to pay the employer a sum of money if the employee leaves employment before the passage of a stated period of time.

Training and “Transferable Credential”

The amendment removes the reference that incorporated any document that states payment of monies constitutes reimbursement for training provided to the worker by the employer or by a third party.

Similar to California AB 692, the amended statute more clearly outlines which training expenses may have repayment obligations and provides detailed guidance for repayment of tuition reimbursement related to “transferable credentials.” “Transferable credentials” is defined as 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 for 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. The amendment states that a “transferable credential” does not include any employer-specific or non-transferable training or mandated safety and compliance training.

Reimbursement of the cost of tuition, fees, and required educational materials for a transferable credential is permissible if the following requirements are met:

(i) The agreement is in a written contract that is offered separately from any contract for employment.

(ii) The agreement does not require the employee to obtain the transferable credential as a condition of employment.

(iii) 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.

(iv) The agreement provides for a prorated repayment amount during any required employment period that is proportional to the total repayment amount and the length of the required employment period and does not require an accelerated payment schedule if the employee separates from the employment.

(v) 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.

Authorized Agreements

The amendment also provides clarity on other repayment obligations and specifically authorizes the following:

• Agreements that require the employee 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.
• Agreements requiring the employee to pay the employer for any property sold or leased to the employee, as long as such sale or lease was voluntary.
• Agreements requiring educational personnel to comply with the terms of sabbatical leaves.
• Agreements entered into as part of a program agreed by the employee’s collective bargaining representative.

Violations

The law does not provide a private right of action. However, it calls for a complaint procedure with the commissioner of labor.

Additionally, if an employee successfully defends an employer’s lawsuit to enforce a promissory note made void by the law, the employee can recover attorney’s fees. Violations of the law can subject the employer to fines of not less than $1,000, but not more than $5,000, for each violation. The amendment provides that the commissioner of labor would consider the size of the employer’s business, good faith, the gravity of the violation, and history of prior violations in assessing the amount of the penalty.

* * *

Although the effective date has been delayed to Feb. 13, 2027, employers are encouraged to review their existing agreements in New York for compliance with the terms of the Act, including but not limited to tuition reimbursement agreements.

Further guidance and regulations from the New York Department of Labor are expected closer to the law’s effective date.

Jackson Lewis attorneys are available to answer inquiries regarding this and other workplace developments.