New York State Introduces Chapter Amendment to ‘Trapped at Work Act’

New York lawmakers have introduced proposed amendments to the Trapped at Work Act aimed at clarifying the statute’s scope and addressing concerns about unintended impacts on employer training and tuition assistance programs. If enacted, the amendment would modify the effective date and scope of the Act.

Background

On December 19, 2025, New York Governor Kathy Hochul signed the Trapped at Work Act (the Act) into law, which prohibits an employer from entering into an “employment promissory note” with its workers. As previously discussed, the stated legislative intent of the Act was to eliminate agreements that require employees to repay employers for the cost of training if they separate from employment before a certain period. The Act, however, contains several ambiguities that could extend the Act’s reach beyond its intended purpose.

In signing the Act, Governor Hochul’s Approval Memorandum noted as much, stating that “[t]he bill as drafted was ambiguous in important respects, and would have prohibited certain voluntary tuition assistance programs that provide real benefits to their participants.” Governor Hochul therefore had “reached an agreement with the Legislature to address these concerns in the upcoming legislative session.”

THE PROPOSED CHAPTER AMENDMENT

On January 6, 2026, the New York State Assembly introduced a chapter amendment (A09452) (Amendment) to the Act in an effort to clarify some of the ambiguities, including those raised by Governor Hochul. Absent further modifications, the Amendment would make the following changes:

• Effective Date Change: Postpone the Act’s effective date from December 19, 2025 to December 19, 2026.
• Tuition Repayment Agreement Carveout: Create a carveout to allow repayment agreements related to “transferable credentials,” provided the repayment agreements meet the following additional criteria:
  • The agreement is set forth in a written contract that is offered separately from any employment contract
  • The agreement does not require the employee to obtain the transferable credential as a condition of their 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 repayment schedule if the employee separates from the employment
  • The agreement does not require repayment by the employee if the employee is terminated, except if the termination is for misconduct

  Transferable credentials would include “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 provide skills or qualifications that demonstrably enhance the employee’s employability with other employers in the relevant industry.” It would not include employer-specific or non-transferable trainings or mandated safety and compliance training.

• New Exception for Non-Training Related Agreements: Replace the Act’s existing carveout for agreements requiring repayment of “any sums advanced” as long as they are unrelated to training with one that allows for agreements that require employees to “repay a financial bonus, relocation assistance, or non-education incentive or other payment or benefit that is not tied to specific job performance.” Employers would be prohibited from receiving repayment under such agreements, however, where the employee was terminated other than for “misconduct” (including, potentially, if the employee resigns) or if the job’s duties and requirements were misrepresented to the employee. “Specific job performance” and “misconduct” are not defined by the proposed amendment.
• Scope of Coverage: Whereas the Act covers “workers,” including employees, independent contractors, externs, interns, volunteers, apprentices, sole proprietors who provide a service to an employer or to a client or customer of an employer on behalf of the employer, and individuals who provide services through a business or nonprofit entity or association, the chapter amendment would replace “worker” with “employee,” which is defined as “any person employed for hire by an employer in any employment.”
• Complaint Mechanism: Allow employees to directly file complaints with the Commissioner of Labor over violations of the law. In determining the appropriate penalty, the commissioner would be able to consider the size of the employer’s business, the employer’s good faith belief that its conduct was compliant with the law, the severity of the violation, and any history of previous violations.

While the Amendment remains pending before the Assembly’s Labor Committee, the Senate advanced their companion bill (S08822) to third reading on January 12, 2026, making it eligible for debate and a full Senate vote.

NEXT STEPS AND BEST PRACTICES

The Act as signed is currently in effect, though, if enacted, the Amendment would postpone the Act’s effective date to December 19, 2026. Either way, employers should continue to take the following steps:

• Review existing offer letters, training agreements, and documentation of any repayment provisions
• Consider utilizing other retention incentives, such as deferred vesting incentives, profit sharing, or bonuses
• Consider pausing current collection efforts on training repayment notes and other repayment agreements
• Continue to monitor for any updates that may come through during the amendment process as well as any further regulations and guidance