While New York Labor Law Article 37—the Trapped at Work Act—only became effective on December 19, 2025, the Governor and the State Legislature are already working to revise it to address a number of ambiguities. Unfortunately, the timeline for doing so leaves employers, including those in the healthcare field, in limbo.

The Act prohibits the use of “employment promissory notes” which require workers to repay certain amounts to employers if they leave their jobs before a specific date. It prohibits employers from making such agreements a precondition to employment. The support memo posted by the State Assembly indicates that the intent is to protect workers who:

. . . desperate for a job, will sign these contractual agreements without the advice of counsel, unknowingly being trapped in a position under the threat of legal action should they not complete the terms of the contract. Minimum and low-wage workers subject to these agreements are required to “repay” the employer thousands of dollars should they leave the employment due to poor working conditions or anything unrelated to job performance for non-existent “on the job” training while also making money for the employer.

Governor Hochul, in her Approval Memorandum, indicated that her approval of the Act was conditioned on certain revisions being agreed to between herself and the Legislature:

The bill as drafted was ambiguous in important respects and would have prohibited certain voluntary tuition assistance programs that provide real benefits to their participants. I have reached an agreement with the Legislature to address these concerns in the upcoming legislative session. On the basis of this agreement, I am pleased to sign this bill into law.

Toward this end, the Assembly introduced a bill on January 6, 2026 (A. 9452) that would overhaul the Act in certain respects, revising the legal requirements imposed on employers and clarifying the ambiguities referenced in the Governor’s Approval Memorandum. However, because the Act became effective immediately, employers (and their lawyers) are left in the unenviable position of having to comply with it in its present form until the revisions are enacted. While, based on her Approval Memorandum, it at least appears the Governor does not intend the Department of Labor to aggressively enforce the Act until the revised version is enacted, employers are cautioned that it remains in effect in its present form.

The Proposed Revisions

Definitions.

The Act broadly defines “worker” to include not only individuals employed by or under contract with an employer, but also independent contractors, externs, interns, volunteers, apprentices, sole proprietors who provide services to an employer or to the client/customer of an employer, and individuals who provide “… services [to the employer] through a business or nonprofit entity or association.”

The Act defines “employer” as “… an individual, partnership, association, corporation, limited liability company, trust, government or government subdivision, or any organized group that hires or contracts with a worker to work for the employer.” That term also refers to “… any subsidiary of an employer and any individual, partnership, association, corporation, limited liability company, trust, government or government subdivision, or any organized group associated with an employer that provides training to workers.”

And, finally, the Act defines “employment promissory note” as any written agreement, contract provision or other instrument that requires a worker to pay the employer a sum of money if the worker leaves their position before a stated time period has passed. While the Assembly’s support memo identifies the Act’s main concern as the prohibition of a requirement for repayment of training expenses, the definition is notably not limited to that situation, potentially implicating other repayment obligations routinely inserted by employers in contracts, such as signing bonuses, relocation subsidies or liquidated damages provisions.

The proposed revisions contained in A. 9452 change these definitions and add an important new one.

A. 9452 would replace the term “worker” with “employee” and redefine that term to mean only a person employed for hire by an employer. It would broaden the definition of “employer” to include “… any person, corporation, limited liability company or association employing an individual in any occupation, industry, trade, business or service, including the state and its political subdivisions.” “Employment promissory note” would be redefined to confirm that the Act applies to an agreement that requires the repayment of any sum of money if an employee’s employment relationship with a specific employer terminates before the passage of a stated period of time.

Permitted Employee Repayment Obligations

A. 9452 would limit the types of repayment obligations that are permitted, to:

• Advances^[1] to workers, unless they were specifically for training;
• Repayments for property sold or leased to workers by the employer as long as the sale or lease was voluntary;
• Repayment of bonuses, relocation assistance, or other non-educational incentives or payments/benefits not tied to specific job performance, unless (a) the employee is terminated for any reason other than misconduct or (b) the employer misrepresented the duties or requirements of the job to the employee;
• Repayments applicable to a sabbatical leave granted to educational personnel; or
• Amounts paid as part of compliance with a program pursuant to collective bargaining agreements.

Importantly for many healthcare-related employers, A. 9452 would permit an employer to impose repayment obligations on an employee for expenses paid or reimbursed by the employer related to the employee receiving training or education referred to as a “transferrable credential.” A. 9542 defines a “transferrable 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, independent of the employer’s specific business practices, or that provides skills or qualifications that demonstrably enhance the employee’s employability with other employers in the relevant industry. notwithstanding the foregoing.

A transferable credential would not include employer-specific or non-transferable training; or instruction that does not qualify the employee for a new occupational title, classification, or industry-recognized credential; or mandated safety and compliance training or training required by federal, state, or local law to maintain workplace safety, such as OSHA certifications, sexual harassment prevention or diversity training.

To permit an employer to impose repayment obligations on an employee for transferable credential expenses, A. 9452 would require the obligation to be set forth in a written agreement offered to the employee separately from any contract for employment. In addition, the employer would be required to specify the repayment amount before the employee must agree to the repayment contract, and the amount to be repaid may not exceed the amounts paid or reimbursed by the employer for tuition, fees, and required educational materials for the transferable credential received by the employee. The repayment amount must also be prorated over the required employment period and cannot be accelerated if the employee separates from employment. Finally, the employer cannot require repayment if the employee is terminated for any reason other than misconduct.

Effective Date

If enacted, A. 9452 (which has passed both the Assembly and the Senate but has not yet been sent to the Governor) would not become effective for one year, giving employers time to modify policies, template agreements etc. The new definitions contained in A. 9452, however, would be effective as of December 19, 2025. This would provide some relief from the adverse consequences that would otherwise result from leaving the existing definitions in place for a year even though, as stated above, indications are that the Department of Labor will not actively enforce the new prohibition while A. 9452 is pending. Nonetheless, if an aggrieved employee reports a violation of the Act or seeks judicial intervention to stop an employer from enforcing a repayment obligation that runs afoul of it, the Department of Labor and the courts may have no option but other than to enforce the existing law.

Next Steps

While the Act has been in effect since December 19, 2025, no further detail—aside from the Governor’s reference to corrective legislation—has been provided, including whether it is intended to be enforced retroactively. This leaves some ambiguity on how employers should structure agreements moving forward and whether such provisions in existing contracts will be enforceable. It is likely that any attempt at retroactive enforcement would be challenged in court.

Until A. 9452 is enacted, employers should approach repayment obligations cautiously. The Act prohibits enforcement of provisions that run afoul of its provisions, requires an employer to shoulder the legal fees of employees forced to defend themselves in an action by the employer to enforce an improper repayment obligation, and allows the Commissioner of Labor to impose fines of between $1,000 and $5,000 for each confirmed violation of the law, including the simple insertion of a prohibited repayment provision in a contract as well as seeking to enforce such a provision against an employee.

Hancock will continue to monitor the status of A. 9452 and any other updates on the Act, as well as any proposed regulations.

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[1] While some commentators interpret the law to exclude non-training advances such as sign-on bonuses or non-compete liquidated damages, the proposed revisions do not reference such payments as falling within the definition of “advances” and the term itself is not defined in the Act.