New York Amends the “Trapped at Work Act”: Key Clarifications for Employers

As we earlier reported, on December 19, 2025, New York enacted the Trapped at Work Act (the “Act”), broadly restricting employer use of training repayment and “stay-or-pay” agreements. As originally drafted, the law created significant uncertainty for employers by covering not only employees, but also independent contractors, interns, volunteers, and other service providers, and by potentially invalidating many common tuition reimbursement and incentive programs. This week, the New York State Legislature adopted significant amendments that narrow and clarify the law while providing meaningful relief for employers. The amendments are anticipated to be signed by Governor Hochul.

Importantly, the Act now applies only to employees, not independent contractors or other non-employee workers. This substantially reduces the law’s scope.

Employers still may not require, as a condition of employment, that an employee sign an agreement requiring payment if they leave before a set time. Such provisions remain unenforceable.

However, the amendments create a clear path for lawful education repayment agreements. Employers may seek reimbursement for transferable, industry-recognized credentials (e.g., degrees, licenses, certifications that “enhance the employee’s employability with other employers”), but not for:

• Employer-specific training, such as instruction regarding internal policies, systems, or processes; and

• Proprietary systems, or

• Mandatory safety compliance training (such as OSHA, sexual harassment prevention, or diversity training).

To be enforceable, agreements must:

• Be in a separate written contract;

• Not require the employee to obtain transferable credentials as a condition of employment;

• Specify a predetermined, prorated repayment amount that does not exceed actual costs to the employer;

• Provide prorated repayment; and

• Waive repayment if the employee is terminated (except for misconduct).

The law continues to allow recovery of voluntary property purchases, certain bonuses or relocation assistance, sabbatical commitments, and collectively bargained arrangements.

Further, unlike the initial legislation that was effective immediately, the Act now takes effect one year after enactment (December 19, 2026), giving employers time to revise policies and agreements.

What Employers Should Do Now

Although the amendments tighten the Act’s scope and clarify key requirements, they impose specific conditions that may affect existing agreements and standard onboarding practices.

Employers should take advantage of the delayed effective date to review how training and repayment arrangements are structured and to ensure they align with the amended statutory framework. We recommend employers:

• Audit training and repayment agreements,

• Separate tuition agreements from offer letters,

• Add prorated and termination protections, and

• Remove broad “stay-or-pay” or mandatory repayment language tied to ordinary onboarding or internal training.

Bottom line, the amendments significantly narrow the Act and restore flexibility for legitimate tuition and incentive programs, but only if agreements are carefully structured. Proactive review now will help ensure compliance before the law takes effect. Employers should consult experienced labor and employment counsel to assess the impact of the Act and to assist in crafting legally compliant policies.

If you have any questions regarding this article or any Labor or Employment law issue, please contact Ryan T. Biesenbach at (585) 258-2865 or rbiesenbach@underbergkessler.com.