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.
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Before proceeding, please note: If you are not a current client of Perkins Coie, please do not include any information in this e-mail that you or someone else considers to be of a confidential or secret nature. Perkins Coie has no duty to keep confidential any of the information you provide. Neither the transmission nor receipt of your information is considered a request for legal advice, securing or retaining a lawyer. An attorney-client relationship with Perkins Coie or any lawyer at Perkins Coie is not established until and unless Perkins Coie agrees to such a relationship as memorialized in a separate writing.