New York Bans “Stay-or-Pay” Provisions in Employment Contracts - HR ALERTS
New York Bans “Stay-or-Pay” Provisions in Employment Contracts
Effective Date: December 19, 2026
New York has postponed and amended its “Trapped at Work Act,” which restricts certain repayment provisions in employment agreements.
Beginning December 19, 2026, employers in New York may not require a current or prospective employee, as a condition of employment, to sign an employment promissory note that requires the employee to repay the employer a sum of money if employment ends before a specified period has elapsed.
The law defines an employment promissory note broadly as any agreement or contract provision that requires such repayment.
The statute includes limited exceptions for certain agreements that meet specific statutory requirements, including qualifying training-related provisions.
The law was originally set to take effect December 19, 2025, but A.B. 9452, signed February 13, 2026, delayed the effective date by one year and clarified definitions related to covered training, employees, and employers.
What This Means for Employers
“Stay-or-pay” repayment provisions tied to continued employment may be prohibited beginning December 19, 2026.
Employers using training repayment agreements, sign-on bonus clawbacks, relocation repayment terms, or similar provisions should review agreements carefully.
Certain training-related repayment provisions may still be permissible if structured to meet statutory requirements.
Templates, offer letters, and onboarding documents should be reviewed well in advance of the effective date.
Action Recommended
New York employers should audit employment agreements and consult counsel regarding repayment provisions to ensure compliance before December 19, 2026.
Reference: NY A.B. 9452 (amending NY A.B. 584)
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