Effective December 19, 2025, a new law prohibits New York employers from trapping employees by obligating them to repay certain costs if they don’t remain employed for a defined period of time.
The so-called Trapped At Work Law specifically bans employers from requiring workers or job applicants to agree to repay money to the employer if the worker departs employment before a specific period of time. This prohibition includes repayment for training as well as other repayments if the worker leaves before a stated time period.
Scope of the Law
The law automatically protects traditional W-2 employees. Its scope is much broader, however, and it also protects any:
independent contractor, extern, intern, volunteer, apprentice, sole proprietor who provides a service or services to an employer or to a client or customer of an employer on behalf of such employer, and an individual who provides service through a business or nonprofit entity or association. “Worker” does not include an individual, even if the individual performs incidental service for the employer, whose sole relationship with the employer is as a vendor of goods.
Promises to Repay Employers
A repayment promise or employment promissory note is defined in the law as:
any instrument, agreement, or contract provision that requires a worker to pay the employer, or the employer’s agent or assignee, a sum of money if the worker leaves such employment before the passage of a stated period of time. “Employment promissory note” includes any such instrument, agreement, or contract provision which states such payment of moneys constitutes reimbursement for training provided to the worker by the employer or by a third party.
Exceptions to the Law
The following items of repayment are specifically excluded from the law. Stated differently, these sorts of repayment promises still remain lawful:
- repayment of advances not related to training;
- payment for property sold or leased by the employer to the worker;
- any terms or conditions relating to an educator’s use of sabbatical leave; or
- payment programs that are collectively bargained.
Existing Promissory Notes
The law seems to make it clear that promises extracted from workers after its effective date, that is, December 19, 2025, are automatically unlawful as violating public policy. However, the law does not appear to be retroactive, but the courts will need to interpret the law for there to be certainty on this. As a result, then, existing promissory notes that require repayment may still be enforceable.
Enforcement
As of this writing, the law does not permit a private right of action, meaning that an individual can’t sue for damages as a result of the new law. The law does give an employee who’s sued by her employer the right to defend against a promissory note claim using this law and to recover her attorneys’ fees if the defense is successful
That said, employers that fail to comply with the law can face civil penalties of $1,000–$5,000 per violation from the New York State Department of Labor.
Practice Pointers
Employers are well advised to review their records immediately, including:
- Audit agreements. Immediately review existing agreements. Seek counsel on enforceability to avoid risk.
- Reconsider retention arrangements. Reimagine incentives for retaining professional and other team members.
- Pause and review aggressive action. If your company currently is litigating against a departed employee on the basis of this kind of agreement, reconsider your position given this new law and consider mediation as a realistic way to end the battle.
- Assess templates and SOPs. If your company automatically makes repayment a quid pro quo for training programs or otherwise, reassess whether the templates remain compliant or should be modified to ensure compliance.
Questions?
In light of this significant change in the law, feel free to reach out with questions and concerns – or just to run something by an objective legal listener.
Call us at 716.839.9700 or email us at info@coppolalegal.com anytime.
