Proposed Amendments to NY “Trapped at Work Act” May Ease Burden on Employers

Seyfarth Synopsis: A proposed bill to amend the recently enacted Trapped at Work Act would soften the impact of the law by providing a one-year compliance runway, creating exceptions for certain non-educational incentive payments (such as bonuses and relocation assistance) under defined conditions, establishing a clear tuition-repayment exception, and outlining enforcement factors for the New York Department of Labor. Employers should continue to review existing agreements under the current law but prepare for these potential changes.

As previously discussed here, New York’s Trapped at Work Act (“Act”) went into effect on December 19, 2025.  The Act prohibits agreements, entered into as a condition of employment, that require workers to repay money if they leave employment before a stated period of time.  The law’s ambiguous language led to many questions and concerns regarding its application to sign-on bonuses, relocation allowances, and other common compensation structures. 

When signing the Act into law, Governor Kathy Hochul stated that she planned to work with the Legislature in the upcoming session to address and correct various concerns with the statute.  On January 6, 2026, a New York Assembly member introduced Bill A09452, a set of proposed chapter amendments that appear to be aimed at implementing the Governor’s stated plan.  The proposed amendments would clarify the Act’s scope and provide flexibility for certain agreements. 

Proposed Amendments

Here is a summary of the critical changes under the bill:

1.  Delayed Effective Date. The bill would postpone the effective date of the Act from December 19, 2025 to December 19, 2026, giving employers a nearly-one-year compliance runway.

2.  Exceptions for Common Compensation Arrangements. Although its language is ambiguous, the current version of the Act arguably permits agreements that provide for repayment of “any sums advanced to such worker by the employer” that were not training-related.  The bill would revise that language to create a wider and clearer exemption for repayment obligations that are related to “a financial bonus, relocation assistance, or other non-educational incentive or other payment or benefit that is not tied to specific job performance, unless the employee was terminated for any reason other than misconduct or the duties or requirements of the job were misrepresented to the employee.” 

3.  Tuition-Repayment Exception. Under the proposed bill, a new exception would allow voluntary tuition-repayment agreements that relate to “transferable” educational credentials, subject to strict conditions:

a. Enrollment in the program cannot be a condition of employment.

b. The repayment amount must be disclosed up front and capped at the employer’s actual cost.

c. The repayment obligation must be prorated over time and cannot be accelerated upon separation from employment.

d. No repayment may be owed if the employee is terminated involuntarily, except for misconduct.

The bill defines “transferable” credentials as industry-recognized degrees, diplomas, licenses, certificates, or documented skill completions that enhance employability beyond the current employer. Employer-specific or mandatory compliance training is excluded, meaning that agreements that require repayment of costs related to such training upon separation of employment would remain prohibited.

4.  Definition Changes. The bill would revise several key definitions under the Act.  The current law applies to agreements with “workers,” a term defined broadly to include independent contractors and other non-employees. The bill would narrow this to agreements with “employees,” which is defined to mean “any person employed for hire by an employer in any employment.”  In addition, the bill would narrow the definition of “employment promissory note” to delete the specific example of contract provisions seeking repayment of money for training.

5.  Enforcement and Penalties. The Act does not permit a private right of action by workers to enforce its provisions, and leaves enforcement entirely in the hands of the State Department of Labor (“DOL”). The new bill maintains the absence of a private right of action, but would explicitly permit affected employees to submit complaints to the DOL. The bill also outlines factors that the DOL may consider when assessing penalties, including employer size, good-faith compliance, and severity of violation. Each affected employee would constitute a separate violation. The bill would retain the current Act’s provision under which employers could be liable for attorneys’ fees incurred by employees in defending against a collection action arising from a prohibited agreement.

Next Steps for Employers

Because these amendments to the Act have just been proposed in the Assembly and have not yet been enacted, employers should continue to evaluate their bonus and repayment agreements under the current statutory language that went into effect on December 19, 2025. However, employers should remain aware of these potential revisions coming down the road when considering revisions to their current agreements and templates. 

Please reach out to the authors – or your Seyfarth attorney – with any questions.