In a swift response to widespread concerns from both employers and employees, New York State lawmakers have introduced a set of legislative amendments aimed at clarifying the recently enacted Trapped at Work Act. The law, which was signed by Governor Kathy Hochul on December 19, 2025, was designed to end the practice of so-called "stay-or-pay" agreements—contracts that require workers to repay training costs if they leave their jobs before a designated period. But while the Act was celebrated by workers’ advocates for its broad protections, it quickly generated confusion and pushback from employers, legal experts, and even state officials over its sweeping scope and ambiguous language.
To address these issues, the New York Assembly introduced Bill A9452 on January 6, 2026, which proposes a series of chapter amendments to the Trapped at Work Act. According to Sheppard Mullin, these amendments are designed to refine the law’s scope and application, providing much-needed clarity for all parties. The amendments, also known as A.9452/S.8822, specifically limit the Act’s coverage to "employees," thereby excluding independent contractors, externs, interns, volunteers, apprentices, and sole proprietors from the Act’s prohibitions on reimbursement agreements. This marks a significant shift from the original law, which applied broadly to almost all categories of workers, a provision that many in the business community argued was simply too far-reaching.
Governor Hochul’s office has been vocal about the need for these clarifications. According to Ogletree Deakins, at the time of signing, the governor had already struck a deal with lawmakers to pursue chapter amendments that would address educational expenses and voluntary tuition assistance programs. The amendments, if enacted, would not only narrow the definition of who is protected under the law but also introduce several key exceptions and procedural safeguards for employers.
One of the most notable changes is the introduction of clear exceptions for certain types of repayment agreements. The amendments would allow employers to enter into written agreements with employees for the repayment of educational expenses incurred for obtaining "transferable credentials"—such as degrees, diplomas, licenses, certificates, or documented skill proficiencies—that go beyond the requirements of the employee’s current job. However, these agreements must meet strict criteria: they must be set out in writing, kept separate from employment contracts, specify the repayment amount (which cannot exceed the actual cost of tuition and fees), provide a prorated repayment schedule, and importantly, not require repayment if the employee is discharged for reasons other than misconduct.
The definition of "transferable credential" is also specifically outlined in the amendments. As reported by Sheppard Mullin, this term includes any credential that is "widely recognized in the relevant industry" or that "enhances the employee’s employability with other employers in the relevant industry." What’s excluded? Employer-specific or non-transferable training, such as instruction on proprietary processes, internal policies, or mandated safety and compliance training (like OSHA certifications or sexual harassment prevention training), cannot be subject to repayment agreements. This distinction aims to ensure that workers are not penalized for leaving a job after receiving training that does not benefit them outside the employer’s business.
Another important carve-out in the amendments involves repayment agreements for non-educational incentives such as financial bonuses, relocation assistance, or other benefits not tied to specific job performance. These agreements remain permissible so long as the repayment requirement is not triggered if the employee is terminated for reasons other than misconduct or if the employer misrepresented the job’s duties. However, as Ogletree Deakins notes, the bill does not define "misconduct" or "misrepresentation," leaving some gray areas that employers and employees will need to navigate carefully.
The amendments also address the timing of the law’s implementation. The original Trapped at Work Act took effect immediately upon being signed into law, but the proposed amendments would delay its effective date by one year—potentially pushing it to December 19, 2026. This gives employers time to review and revise existing agreements to ensure compliance. However, as both Sheppard Mullin and Ogletree Deakins point out, the legislation remains unclear on whether agreements signed prior to the new effective date would be grandfathered in or subject to the new restrictions, a question that could have significant legal and financial implications for both sides.
Enforcement of the Act remains the responsibility of the New York State Department of Labor (NYDOL), which is empowered to impose civil penalties ranging from $1,000 to $5,000 per violation. The amendments further specify that, in assessing penalties, the NYDOL must consider the size of the employer’s business, the employer’s good faith efforts to comply with the law, the gravity of the violation, and any history of previous violations. Notably, the Act does not provide a private right of action for employees, meaning that individuals cannot sue their employers directly under this law but must instead file complaints with the NYDOL.
For the financial services sector and other industries that rely heavily on upfront training, sign-on bonuses, or relocation packages, the amendments offer some relief by clarifying which agreements are permissible and which are not. Yet, as Ogletree Deakins cautions, the changes also create potential loopholes for disputes over whether an employee was discharged for "misconduct" or whether job duties were "misrepresented." Employers are advised to update job descriptions, review postings, and ensure that any repayment agreements comply with the new rules to avoid costly penalties and disputes.
To help employers and HR professionals navigate these changes, a webinar titled "New York’s Trapped at Work Act: What It Means for ‘Stay-or-Pay’ Agreements" is scheduled for January 15, 2026, from 2:00 p.m. to 3:00 p.m. EST. The session, featuring speakers Joseph B. Cartafalsa, Carly E. Grey, and Aaron Warshaw, promises to cover which agreements are covered, which are exempt, and practical steps for compliance under the evolving legal landscape.
While the proposed amendments answer many of the questions raised by the business community and legal experts, some uncertainties remain—particularly regarding the treatment of pre-existing agreements and the exact contours of "transferable credentials." As the legislation moves through the Assembly Standing Committee on Labor and potentially toward enactment, both employers and employees will be watching closely for further guidance from lawmakers and the NYDOL.
For now, the Trapped at Work Act, as signed by Governor Hochul, remains in effect, with the potential for significant changes on the horizon. As New York continues to balance worker protections with the realities of a competitive labor market, the ongoing debate over "stay-or-pay" agreements is far from settled.
