New York State Bans “Stay or Pay” Agreements

New York State enacted the Trapped at Work Act on December 19, 2025, which amended the New York Labor Law to limit an employer’s ability to enter into an “employment promissory note” with its workers.

Effective immediately, New York employers are barred from utilizing certain “stay or pay” contracts with workers.

An “employment promissory note” is defined as “any instrument, agreement, or contract provision that requires a worker to pay their employer, or the employer’s agent or assignee, a sum of money if the worker leaves” the job before a certain amount of time has passed. This explicitly includes “reimbursement for training provided to the worker by the employer or by a third party.” However, it excludes the following: 
– Repayment of money that was advanced to the worker, unless the money was used to pay for training related to the worker’s employment 
– Payment for property that it has sold or leased from the employer to the worker 
– Agreements that require educational personnel to comply with sabbatical leaves 
– Agreements entered into as part of a broader collective bargaining agreement

Morgan Lewis:
New York State Enacts ‘Trapped at Work Act’ to Prohibit Use of Employment Promissory Notes