From JDSupra, Naomi Friedman, Katherine Heaney, Nancy Gunzenhauser Popper, and Gretel Zumwalt discuss recent bills enacted in New York including a bill that prevents employers from requirign workers (including independent contractors) from signing promissory notes as a condition of employment. Naomi, Katherine, Nancy, and Gretel write:
The “Trapped at Work” Act
Governor Hochul signed A584C, the “Trapped at Work Act” (TAWA), which prohibits all employers—including subsidiaries and contractors—from requiring current or prospective workers to sign employment-related promissory notes as a condition of employment. The law took immediate effect on December 19, 2025, and added a new Article 37 to the New York Labor Law (NYLL). It is similar to a new California law that likewise voids agreements that tie continued employment to an employee’s receipt of training.
Often called “TRAP” agreements or “stay or pay” provisions, employment-related promissory notes are defined under Article 37 as any instrument, agreement, or contract provision that requires a worker to repay a specified amount of money if the worker decides to leave employment before a defined period of time. Banned provisions include those that require reimbursement to an employer for the cost of any training provided.
While the statute explicitly mentions agreements or provisions characterizing repayments as reimbursements for training, TAWA’s broad language could apply to many other standard employee obligations, such as relocation incentives or forgivable loans. Notably, however, the law does not prohibit or render unenforceable any agreement requiring workers to repay wage advances that were not used for employment-related training. Signing or retention bonuses, therefore, would likely remain permissible if characterized as a wage advance and not tied to training expenses.
TAWA contains other exclusions. For example, it expressly excludes agreements regarding the cost of property sold or leased to employees. The law also excludes collective bargaining agreements. Agreements requiring educational personnel to comply with the terms and conditions of sabbatical leave are also excluded.
TAWA does not just apply to employees. It also covers independent contractors, interns, volunteers, and apprentices. The New York State Department of Labor may subject employers to civil fines of $1,000 to $5,000 for each violation. While workers do not have a private right of action under the law, TAWA makes reasonable attorneys’ fees available for a successful defense against an employer’s attempt to require or enforce an unlawful agreement.