January Tip of the Month: New York’s “Trapped at Work Act” Addresses Repayment Agreements

On December 19, 2025, New York Governor Kathy Hochul signed into law the “Trapped at Work Act,” which prohibits employers from requiring employees to sign “employment promissory notes” as a condition of employment.

“Employment promissory notes” are broadly defined to include any agreements that require workers to repay sums to their employer if they leave employment before a specified period of time. The Act includes several notable exceptions, including for the repayment of “any sums advanced” to a worker, “unless such sums were used to pay for training related to the worker’s employment.” This carve-out appears to allow commonly used repayment provisions tied to sign-on bonuses and retention bonuses. However, the lack of clarity surrounding the scope of the exception has raised concerns for employers who rely on repayment provisions in compensation arrangements. In response, on January 6, 2026, the New York Legislature proposed amendments to the Act that would, among other changes, (1) delay the law’s effective date until December 19, 2026, and (2) clarify the scope of permissible repayment agreements. Employers who use repayment provisions in employment agreements should continue to monitor these developments to determine whether changes to their employment practices and agreements become necessary.