Update: New York’s Newly Amended Trapped at Work Act

On February 13, 2026, New York Governor Kathleen Hochul signed into law an amendment to the Trapped at Work Act (the “Act”) that materially revises the Act. For background on the Act as originally enacted, see our prior client alert summarizing the Act’s key provisions.

The Amendment implements significant changes to both the scope and the effective date of the Act. We summarize the operative Act below.

Delayed Enforcement of the Act

One significant change in the Amendment is a revised effective date. The Amendment replaces the Act’s “effective immediately” language with a provision stating that the law will take effect “one year after it shall have become law,” establishing a new effective date of December 19, 2026. This change provides employers with additional time to review, evaluate, and align new and existing agreements before the law takes effect.

New Exception Concerning “Transferable Credentials” / Tuition Reimbursement

The purpose of the Act is to prohibit 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.

However, with the Amendment employers may seek reimbursement for certain costs associated with “transferable credentials,” which are defined as “any degrees, diplomas, licenses, certificates, or documented evidence of skill proficiency” that are widely recognized by employers in the relevant industry and “enhance the employee’s employability with other employers in the relevant industry.” Excluded from this definition are employer-specific trainings, including internal policies and equipment “unique” to the employer, as well as legally mandated safety compliance trainings under federal, state, or local law.

To qualify for this exception, the arrangements must meet stringent requirements:

1. Separate Agreement – The reimbursement obligation must be set forth in a written agreement separate and distinct from the employment contract;
2. Voluntary Participation – The agreement must not be a condition of employment;
3. Cost Disclosure and Cap – The repayment amount must be disclosed in advance and may not exceed the employer’s actual costs for tuition, fees, and required materials;
4. Prorated Repayment – Any repayment obligation must be prorated with no acceleration if the employee separates from employment; and
5. Termination Protection – No repayment is required if the employee is terminated, except in cases involving misconduct.

In addition, the Act still allows employers to 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.

Refinement of Existing Definitions and Penalties

The Amendment also refines several key definitions. Importantly, it replaces the term “worker” with “employee,” defined as “any person employed for hire by an employer in any employment,” thereby limiting the Act’s reach to traditional employment relationships. In addition, the Amendment removes specific references and examples of “employment promissory notes.”

The Act provides that the New York State Department of Labor 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 Act does not have a private right of action, meaning employees cannot sue employers for violations. However, the Amendment expressly permits employees to file formal complaints with the Commissioner of the New York State Department of Labor. When assessing penalties under the Act, the Commissioner is required to consider a range of factors, including the size of the employer’s business, good-faith compliance efforts, the severity of the violation, and any history of prior violations.

With the Amendment, the Act does not take effect until December 19, 2026.  However, looking ahead to the end of the year, employers should keep the new law in mind when reviewing or amending existing repayment arrangements.

For questions about the Act or the matters discussed here, please contact your Hinckley Allen attorney, the authors of this publication, or a member of our Labor & Employment Group.