Action Required: New York’s Amended Trapped at Work Act Changes Compliance Obligations

On February 13, 2026, Governor Hochul signed an amendment to New York’s “Trapped at Work Act.” Employers should review their policies and agreements to ensure compliance prior to the new effective date.

Background

The first iteration of New York’s Trapped at Work Act (the “Act”) was signed into law by Governor Hochul on December 19, 2025. Under its original language, the Act prohibited employers from requiring workers or prospective workers to enter into an “employment promissory note” as a condition of employment. An employment promissory note was defined to include any agreement or contract provision that requires a worker to pay an employer a sum of money if the worker separates from the employer before a specified date.

Unfortunately, the Act’s original language contained ambiguities that created confusion as to its scope. For instance, the original language could have been interpreted as prohibiting legitimate, mutually beneficial agreements between employers and employees that contain repayment components, such as tuition reimbursement programs, relocation assistance programs, and certain signing or retention bonuses. In an approval memorandum accompanying the signing of the Act, Governor Hochul recognized these issues and stated her signing the Act was pursuant to an agreement with the New York State Legislature to amend the Act in the next legislative session.

The Legislature quickly passed a chapter amendment to the Act, which was signed by Governor Hochul on February 13, 2026.

Employers should be aware of the following key changes to the Act as a result of the amendment.

Delayed Effective Date

The first iteration of the Act was signed on December 19, 2025, and the Act was to take effect “immediately.”

Pursuant to the amendment signed on February 13, the Act’s effective date is now delayed by one year. It is unclear whether this will be interpreted as one year from the Act’s original December 19, 2025, date or from the date of the amendment on February 13, 2026.

Employers should be prepared to bring their agreements into compliance by December 19, 2026.

Narrowing the Scope of Coverage Under the Law

The amendment narrowed the Act’s scope of coverage. Initially, the Act was drafted to cover all “workers” and “prospective workers.” The term “worker” included not just employees, but also independent contractors, volunteers, interns, apprentices, and sole proprietors who provided services to or on behalf of an employer. This is no longer the case, as the amendment now limits the Act’s application to just employees and prospective employees. An “employee” is defined as “any person employed for hire by an employer in any employment.”

Exceptions to Coverage

The amendment also clarifies certain types of agreements that do not fall under the Act’s prohibition on employment promissory notes. The amendment makes clear that the following types of agreements are not prohibited or voided by the Act:

• An agreement that requires an employee to pay an employer for property sold or leased to the employee, as long as such sale or lease was voluntary;
• an agreement that requires an employee to repay a financial bonus, relocation assistance, or other non-educational incentive or other payment or benefit that is not tied to specific job performance, unless the employee was terminated for any reason other than misconduct or the duties or requirements of the job were misrepresented to the employee;
• an agreement requiring educational personnel to comply with any terms or conditions of sabbatical leave granted by their employers;
• an agreement that is part of a program agreed to by the employer and its employees’ collective bargaining representative; and
• certain agreements that require an employee to reimburse an employer for the cost of tuition, fees, and required educational materials for a “transferrable credential” (discussed below).

Transferable Credentials

To address the concern that the Act could originally have been interpreted to prohibit tuition reimbursement and educational assistance programs, the amendment includes a carve-out related to agreements to repay for costs related to transferable credentials.

Under the amendment, a transferable credential is “any degree, diploma, license, certificate, or documented evidence of skill proficiency or course completion that is widely recognized by employers in the relevant industry as a qualification for employment, independent of the employer’s specific business practices, or that provides skills or qualifications that demonstrably enhance the employee’s employability with other employers in the relevant industry.”

Transferrable credentials do not include (i) non-transferrable training information that is internal or proprietary to a specific employer; (ii) instruction that would not qualify an employee for a new occupational title, classification, or industry-recognized credential; or (iii) mandated safety or compliance training.

An agreement that requires repayment of costs for tuition, fees, or required educational materials related to a transferable credential is valid and enforceable if all of the following conditions are met:

• The agreement is set forth in a written contract offered separately from any contract for employment.
• The agreement does not require the employee to obtain the transferable credential as a condition of employment.
• The agreement specifies the repayment amount before the employee agrees to the contract, and the repayment amount does not exceed the cost to the employer of the tuition, fees, and required educational materials for the transferable credential received by the employee.
• The agreement provides for a prorated repayment amount during any required employment period that is proportional to the total repayment amount and the length of the required employment period, and does not require an accelerated payment schedule if the employee separates from employment; and
• The agreement does not require the employee to repay the employer if the employee is terminated, unless the termination is for misconduct.

Potential Penalties

The Act does not create a private right of action, meaning an employee cannot directly sue their employer. Instead, an aggrieved employee or prospective employee seeking enforcement of the Act must file a complaint with the Department of Labor. The Department of Labor will review the complaint, and if it determines that the employer violated the Act, the Department shall impose a fine of not less than $1,000 and not more than $5,000 per violation. Under the Act, each employee or prospective employee who is required to execute an unlawful promissory note constitutes a separate violation of the Act. This means that penalties can add up quickly for large employers who are using a non-compliant template. When considering the penalty amount, the Commissioner of the Department of Labor shall consider various factors such as the size of the employer, the good faith basis for the employer to believe they were complying with the law, the gravity of the violation, and the previous history of violations. Additionally, the Act provides for attorney’s fees to be awarded to an employee who successfully defends an action by an employer for the enforcement of an unlawful promissory note.

In light of the above, employers should make a plan to review their policies and agreements to ensure compliance with the Act prior to its effective date.

For more information or to seek assistance with questions regarding compliance with New York’s amended Trapped at Work Act, please contact a member of the Hodgson Russ Labor and Employment Group.

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