New York Enacts “Trapped at Work Act,” Restricting Worker Repayment Agreements

On December 19, 2025, Governor Kathy Hochul signed the Trapped at Work Act (the “Act”) into law, amending the New York Labor Law to significantly curtail an employer’s ability to require workers to repay money if they leave employment before a specified period of time. The Act took effect immediately and reflects New York’s continued scrutiny of contractual provisions restricting employee mobility.

Covered Employers and Workers

The Act adopts an expansive definition of both “employer,” which includes any individual or entity, along with subsidiaries, that hires or contracts with a worker to perform services or provides training to workers. Similarly broad, a “worker” is defined to include not only employees, but also independent contractors, interns, externs, volunteers, apprentices, and sole proprietors providing services. The only express exclusion applies to individuals whose sole relationship with the business is as a vendor of goods.

What is an “Employment Promissory Note”?

The Act targets what it defines as an “employment promissory note.” This term encompasses any agreement or contractual provision requiring a worker to pay money to an employer – or to the employer’s agent or assignee – if the worker separates from employment before a designated period expires. Notably, the definition expressly includes provisions requiring repayment of training costs, whether the training is provided directly by the employer or through a third party.

Certain arrangements are excluded from the definition, including:

• Repayment of funds advanced to a worker, unless those funds were used for employment-related training;

• Payment for property sold or leased by the employer to the worker;

• Agreements governing sabbatical leave obligations for educational personnel; and

• Provisions negotiated as part of a collective bargaining agreement.

Prohibition and Enforceability

The Act prohibits employers from conditioning employment on the acceptance or execution of an employment promissory note. Such provisions are deemed contrary to public policy, unconscionable, and unenforceable.

Importantly, however, the invalidation of a prohibited repayment provision does not affect the enforceability of the remainder of the employment agreement.

Enforcement and Penalties

The Act does not create a private right of action for workers. Enforcement authority rests with the New York State Department of Labor, which may impose civil penalties ranging from $1,000 to $5,000 per violation.

In addition, workers who successfully defend against an employer’s attempt to enforce a prohibited repayment provision may recover reasonable attorneys’ fees.

Practical Guidance for Employers

Given the Act’s immediate effective date, employers should review offer letters, training agreements, and other employment documents for repayment or reimbursement provisions. Employers currently seeking to enforce such clauses should consult experienced labor and employment counsel to assess the impact of the Act.

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.