New York Bans Stay-or-Pay Agreements

On Dec. 19, 2025, New York passed the Trapped at Work Act, which bans employers from entering into stay-or-pay agreements with workers. The law went into effect immediately.  Employers are now prohibited from requiring any worker or prospective worker to enter into an agreement, as a condition of employment, that requires the worker to pay the employer a sum of money if the worker leaves employment before the passage of a stated period of time.  However, employers and workers may enter into agreements that:

• Require the worker to repay to the employer any sums advanced by the employer, unless such sums were used to pay for training related to the worker’s employment;
• Require the worker to pay the employer for any property it has sold or leased to the worker;
• Require educational personnel to comply with any terms or conditions of sabbatical leave granted by their employer; or
• Are entered into as part of a collective bargaining agreement.

A growing number of states are following this trend. California and Colorado have also recently enacted similar restrictions on these types of stay-or-pay agreements.