On February 13, 2026, New York Governor Kathleen Hochul signed into law an amendment to the Trapped at Work Act (the “Act”) that materially revised the Act. To review the operative Act, see our most recent publication. The article below covers the old version of the Trapped at Work Act, which is no longer operative.
On December 19, 2025, Governor Kathy Hochul signed into law the Trapped at Work Act (the “Act”), New York Labor Law (“NYLL”) §§ 1050–1055. Shortly thereafter, on January 1, 2026, New York’s statewide minimum wage increased once again. We summarize both developments and highlight key compliance considerations for employers.
Employment Promissory Notes Are Unenforceable
The Trapped at Work Act:
Effective immediately, the Act prohibits employment promissory notes, commonly referred to as “stay-or-pay” or “training-repayment” agreements, that require workers to repay their employers if they leave their jobs before a specified period of time. Such agreements are now “unconscionable, against public policy, and unenforceable” because of their potential to restrict worker mobility and deter employees from leaving undesirable work environments.
Under the new law, employers may not require, as a condition of employment, “any worker or prospective worker to execute an employment promissory note.” The law defines an “employment promissory note” to include “any such instrument, agreement, or contract provision” that requires a worker to pay their employer a sum of money if the worker leaves the job before a certain amount of time has passed. “Worker” is broadly defined as anyone “who is permitted to work for or on behalf of an employer” and includes employees, independent contractors, externs, interns, volunteers, apprentices, sole proprietors who provide a service or services to an employer or to a client or customer of an employer on behalf of such employer, and individuals who provide service through a business or nonprofit entity or association. “Worker” does not include an individual whose sole relationship with the employer is as a vendor of goods. If the employment promissory note is part of a larger agreement, that note is invalid, but its invalidity does not affect the other provisions of such agreement.
Certain repayment obligations are still permissible under the new law. Employers may enter into agreements that:
- Require the worker to repay the employer any advanced sums that are not for training;
- Require the worker to pay the employer for any property it has sold or leased to the worker (g., tools, equipment, uniforms);
- Require educational personnel to comply with any terms of sabbatical leave granted by their employers; and
- Are entered into as part of a program agreed to under a collective bargaining agreement.
Penalties:
The penalties for violating the Act are significant. Although the law does not provide a private right of action for employees, it allows employees to recover attorney’s fees if they successfully defend a lawsuit from an employer seeking to enforce the provisions of an employment promissory note. In addition, the Act provides that the New York State Department of Labor (“DOL”) Commissioner shall fine employers who violate the Act between $1,000 and $5,000 for each violation, with each worker or prospective worker affected considered to be a separate violation.
The law does not appear to apply retroactively, as it restricts employers from requiring workers or prospective workers to “execute” such agreements, and does not explicitly state that prior existing agreements are invalid. However, it is not clear whether the DOL will enforce the law retroactively to agreements signed before December 19, 2025. The law provides that the DOL may promulgate rules and regulations, so we may get additional clarification soon.
Next Steps for Employers:
Employers should immediately review their existing practices and onboarding materials, offer letters, reimbursement, and training-related agreements to understand if they have employment promissory notes. Employers should not seek to enforce any such provisions to avoid having to pay attorneys’ fees to the defending employee. It is especially important to avoid entering into new employment promissory notes, as they will not be enforceable and could expose employers to potentially hefty fines.
The legislature is expected to address certain ambiguities in the bill, including its potential to prohibit certain voluntary tuition assistance programs that employers sometimes offer employees, in the upcoming legislative session.
We are closely monitoring the situation. Employers should continue to look for future guidance and developments about the Trapped at Work Act and this evolving area of law.
Upcoming Minimum Wage Increase
New York employers should also be aware of the upcoming statewide minimum wage increase, which became effective January 1, 2026. The 2026 adjustment marks the third consecutive annual increase.
Beginning January 1, 2026, the minimum wage will increase to:
- $17.00 per hour in New York City, Westchester County, and Long Island; and
- $16.00 per hour in the remainder of the State.
Compared to the 2025 rates, these changes reflect a $0.50 per-hour statewide increase.
Employers should carefully review payroll systems, staffing models, and applicable wage notices to ensure timely compliance with the 2026 rates, particularly for multi-location operations where wage thresholds differ by region.
