Governor Hochul Addresses Clarity Concerns and Delays Implementation

On February 13, 2026, Governor Hochul signed a chapter amendment to the Trapped at Work Act, delaying its effective date to December 19, 2026, revising the scope of the Act, and providing new exceptions. As noted in our prior Client Alert (“What Employers Need to Know About New York State’s Trapped at Work Act”), when Governor Hochul signed the Trapped at Work Act on December 19, 2025, she lamented the Act’s lack of clarity and urged the Legislature to “address these concerns.” The chapter amendment seeks to do just that.

Effective Date Pushed Back

Originally, the Act was “effective immediately.” The amendment revises that provision, stating that the Act “shall take effect one year after it shall have become a law.” Because the original Act was signed on December 19, 2025, the amendment retroactively alters the effective date so that the law will now become effective on December 19, 2026.

Although the original Act was valid for a brief period of less than two months, the amendment appears to postpone all operative duties and limitations until December 19, 2026.

Scope of Coverage Revised

The amendment limits the Act’s coverage to “employees,” replacing the earlier, broader “worker” definition. The original version of the Act applied to independent contractors, interns, externs and anyone providing services to an employer, among others. Now, the Act aligns the definitions of “employee” and “employer” with the use of these terms in the NY Labor Law.

The amendment also clarifies what is an “employment promissory note” under the Act: any instrument, agreement, or contract provision that requires an employee to pay the employer if the employee’s employment relationship terminates before a stated period, unless it falls under one of the enumerated exceptions. The Act’s original language required an employee to “leave” employment in order for the protections to apply, implying that the law might only cover workers who quit.

The primary rule remains unchanged: Employers may not require, as a condition of employment, any such repayment obligation unless it falls within an applicable exception.

Exceptions Clarified and Expanded

The amended Act permits agreements that:

require reimbursement for “the cost of tuition, fees, and required educational materials for a transferable credential” under the statute’s five strict conditions (discussed below);
require an employee to pay for “any property the employer has sold or leased to the employee”;
require repayment of “a financial bonus, relocation assistance, or other non-educational incentive or other payment or benefit that is not tied to specific job performance,” subject to limits on terminations and misrepresentation of job duties;
require educational personnel to comply with sabbatical leave terms; and
are entered into as part of a collective bargaining agreement.

These five exceptions are explained in further detail below.

(1) Tuition‑Repayment for “Transferable Credentials”

The chapter amendment creates an exception allowing reimbursement to an employer for the cost of certain educational expenses—provided that five strict conditions are satisfied and the credential is “transferable.” The Act defines a “transferable credential” as “any degree, diploma, license, certificate, or documented evidence of skill proficiency or course completion that is widely recognized by employers in the relevant industry as a qualification for employment, or that provides skills or qualifications that demonstrably enhance the employee’s employability with other employers in the relevant industry.”

It does not include employer‑specific/non‑transferable training, nor does it include mandated safety or compliance training.

To be compliant, a tuition-repayment agreement must satisfy all five of these requirements:

“be set forth in a written contract that is offered separately from any contract for employment”
- This ensures it is truly a voluntary arrangement and that the employee has time to review and consider it.
“not require the employee to obtain the transferable credential as a condition of employment”
- This ensures that it is not a condition of employment and that the employee is not pressured into the arrangement.
“specify the repayment amount before the employee agrees to the contract, and the repayment amount must not exceed the cost to the employer of the tuition, fees, and required educational materials for the transferable credential”
- Thus, employers may not charge interest or fees, and the amounts must be disclosed up front and “to the penny.” The agreement cannot contain estimates, conditional amounts, or ranges. This requirement may prove to be an impediment to employers offering to cover educational expenses. For example, tuition reimbursement agreements likely will need to be re-negotiated and re-executed every semester because of cost fluctuation. Moreover, costs of books and other materials may not be known at the time the agreement is entered into.
“provide for a prorated repayment amount during any required employment period and may not require an accelerated payment schedule if the employee separates from employment”
- This requirement prohibits agreements that demand full repayment when employment ends and instead mandates that any repayment amount be prorated over the required employment period.
“not require repayment if the employee is terminated, except if the employee is terminated for misconduct”
- This requirement prohibits repayment for termination, unless the employee is fired for misconduct. Reductions in force, restructuring, and performance‑based terminations likely do not constitute misconduct. Although not expressly stated, it is presumed that employers can require repayment after a voluntary separation or resignation.

(2) Non‑Educational Incentives and Payments

The amendment also allows repayment agreements related to financial bonuses, relocation assistance, or other non‑educational incentives or payments that are not tied to specific job performance (e.g., a “signing bonus”). However, repayment can only be required if the employee voluntarily separates, but not where the employee was terminated for any reason other than misconduct. Repayment also cannot be required if the duties or job requirements were “misrepresented to the employee.” Agreements must therefore be carefully drafted to ensure that repayment is triggered only by voluntary resignation or termination for misconduct.

(3) Property Sold or Leased to Employees

The amendment retains the exception for agreements requiring an employee to pay for property sold or leased to them by the employer, provided the underlying transaction was voluntary. This includes employer-owned equipment, tools, and technology sold or leased to the employee.

(4) Sabbatical‑Leave Terms for Educational Personnel

The amendment continues to allow agreements requiring educational personnel to follow sabbatical‑leave terms, including return‑to‑service or repayment obligations consistent with academic practice.

(5) Collective Bargaining Agreements

The Act still permits collective‑bargaining agreements, so union employees may be subject to negotiated repayment terms agreed to by the employer and the employee’s collective bargaining representative.

Enforcement and Penalties

One piece of good news for employers: there remains no private right of action under the statute. Employees or applicants may, however, file complaints with the State Department of Labor (“DOL”). Civil penalties continue to range from $1,000 to $5,000 per violation, and each affected employee or applicant constitutes a separate violation.

What’s new? The amendment now provides that, when assessing penalties, the DOL must consider the size of the employer’s business, the employer’s good‑faith belief in its compliance, the gravity of the violation, and the employer’s history of prior violations.

The Department of Labor “may promulgate rules and regulations” but is not required to do so. As of this writing, no regulations or guidance specific to this law have been published.

Remaining Ambiguities

The amendment does not clarify whether the new effective date applies to agreements executed before December 19, 2026, nor does it provide any grandfathering protection for existing repayment agreements. Employers should anticipate that agreements in effect on or after December 19, 2026 may be reviewed for compliance with the amended statute, even if signed earlier.

In the case of a signing bonus or relocation stipend, repayment cannot be required if the duties or job requirements were “misrepresented to the employee.” It is unclear how disputes over this prong will be adjudicated. Unanswered questions remain, including:

Will the Department of Labor decide these disputes when investigating a complaint?
If so, will it be done via an evidentiary hearing?
Which party bears the burden of proof? The employer or employee?
Is the evidentiary standard a “preponderance of the evidence,” “clear and convincing evidence,” or something else?
What qualifies as “misrepresentation of job duties or requirements”?
Must it be misrepresentation of all of the job duties or just one?

Practical Next Steps

Employers should audit all of their existing agreements that contain any repayment obligations, ensure tuition‑related arrangements are optional and separately documented, limit repayment to the employer’s actual cost, provide proration with no acceleration, and ensure non‑educational repayment obligations are conditioned only upon a voluntary resignation or termination for misconduct. Going forward, new agreements should be tailored to align with the amended Act.

Additional Assistance

Our Labor and Employment attorneys remain ready to provide advice and guidance on complying with these new laws or any other workplace issues. For further assistance, please contact any of the attorneys on our Labor and Employment Practice Team or the Phillips Lytle attorney with whom you have a relationship.