On December 19, 2025, New York Governor Kathy Hochul signed the “Trapped at Work Act” (Article 37 of the New York Labor Law, §§ 1050–1055) into law. The statute took effect immediately and generally prohibits the use of “stay or pay” agreements, also referred to as employment promissory notes, as a condition of current or prospective employment.

The law defines employment promissory notes as agreements requiring a worker to pay the employer a sum of money if the worker leaves employment before a specified period of time, including provisions that characterize such payment as reimbursement for training provided by the employer or a third party. Requiring the execution of an employment promissory note as a condition of employment is deemed unconscionable, against public policy, and unenforceable, rendering any such agreement null and void.

Importantly, the law applies broadly to “workers,” not just employees. Covered individuals include employees, independent contractors, externs, interns, volunteers, and apprentices.

Although the statute does not create an explicit private right of action, workers may recover attorneys’ fees if an employer attempts to enforce an unlawful agreement. In addition, the New York State Department of Labor may assess civil penalties ranging from $1,000 to $5,000 per violation.

Exceptions and Practical Considerations

The law does not apply to advances or payments that are unrelated to training costs, such as sign-on bonuses, retention bonuses, or similar incentives. It also excludes agreements requiring repayment for property sold to the worker, including certain equity compensation arrangements such as restricted stock purchases or early exercise of stock options.

However, the statute leaves some uncertainty regarding education-related expenses, particularly where the education closely aligns with job duties and could be viewed as training. Employers should carefully review and draft tuition assistance programs and related agreements—including those offered under Internal Revenue Code sections 127 and 132—to ensure compliance.

The Governor has indicated that lawmakers intend to address these ambiguities, including clarifying the treatment of voluntary tuition assistance programs, in an upcoming legislative session.