New York's "Trapped at Work Act": What Mobility Professionals Need to Know

On February 13, 2026, Governor Kathy Hochul signed amendments to New York's "Trapped at Work Act," clarifying how this new law affects relocation repayment agreements. The good news for mobility programs: New York takes a more employer-friendly approach than California's AB 692, and relocation repayment agreements remain enforceable—with important conditions.

What the Law Does

Effective December 19, 2026, the Trapped at Work Act prohibits employers from requiring "employment promissory notes" as a condition of employment—broadly defined as agreements requiring employees to repay money if they leave before a specified period. The law's intent is to prevent employers from "trapping" employees in jobs through financial obligations.

However, the amendments explicitly carve out relocation assistance, sign-on bonuses, retention bonuses, and other non-educational incentives from the prohibition. This means traditional relocation repayment agreements can continue—provided they meet the new requirements.

Key Conditions for Enforcement

To remain enforceable under the amended law, relocation repayment agreements must limit collection to situations where the employee voluntarily resigns or is terminated for misconduct. Employers cannot pursue repayment if they terminate the employee for any other reason, including performance issues, restructuring, or layoffs.

Additionally, repayment cannot be enforced if the employee demonstrates that job duties or requirements were materially misrepresented at hire. This makes accurate job descriptions, offer letters, and onboarding materials critical to protecting your repayment rights.

What's Covered

The law applies to employees in both the private and public sectors—but not independent contractors, interns, or volunteers. New York jurisdiction can be triggered if the employee works primarily in New York, resides in New York, has an employment contract specifying New York law, or if the company has significant New York operations.

Importantly, the law applies to agreements in effect after December 19, 2026. Companies should review any repayment agreements anticipated to extend beyond that date, even if signed earlier.

How New York Differs from California

California's AB 692, effective January 1, 2026, imposes stricter requirements including mandatory proration of repayment amounts, a requirement that employees can defer receipt of benefits, a five-business-day legal review period before signing, and a two-year maximum retention period. New York's law does not include these specific requirements—it simply focuses on the termination and misrepresentation protections.

Multi-state employers should weigh the administrative ease of a universal approach meeting California's stricter standards against the flexibility of jurisdiction-specific agreements.

What Mobility Teams Should Do Now

First, engage your legal team to review existing repayment agreements and ensure they explicitly limit enforcement to voluntary resignations or terminations for misconduct. Second, audit job descriptions and offer letters to ensure they accurately reflect actual duties—this protects against material misrepresentation claims. Third, establish clear documentation standards for termination decisions, particularly distinguishing "misconduct" from other termination reasons. Finally, brief hiring managers and HR on these requirements, emphasizing the importance of accurate job representations.

Penalties for Non-Compliance

Violations may result in civil penalties of $1,000 to $5,000 per violation, assessed by the New York State Department of Labor. While there is no private right of action allowing employees to sue directly, employers may be liable for attorney's fees if an employee successfully defends against enforcement of a non-compliant agreement. More significantly, non-compliant agreements are simply unenforceable—meaning companies cannot recover costs regardless of what employees signed.

The Bigger Picture

New York joins a growing list of states restricting "stay-or-pay" provisions, including California, Colorado, Connecticut, Georgia, Illinois, Louisiana, Michigan, Montana, Oklahoma, and Wyoming. Employers should anticipate continued legislative activity in this area.

Plus Relocation is actively monitoring developments related to the Trapped at Work Act and similar legislation. For questions about how these changes affect your mobility program, please contact your Plus Representative.