NY State Bans "Stay Or Pay" Agreements With Workers

Effective immediately, New York employers are barred from utilizing certain "stay or pay" contracts with workers.Governor Kathy Hochul has signed into law the Trapped at Work Act, which restricts employers from requiring that workers pay them if they leave employment during a certain period of time, subject to limited exceptions.California enacted a similar law in October of this year.

The Act amends the New York Labor Law to prohibit employers, as of December 19, 2025, from requiring as a condition of employment that any current or prospective worker execute an "employment promissory note." The Act renders any such covered notes void and unenforceable.

The Act's restriction covers "any instrument, agreement, or contract provision that requires a worker to pay the employer, or the employer's agent or assignee, a sum of money if the worker leaves such employment before the passage of a stated period of time," including any provision stating that such repayment