New York Bans Training Repayment Agreements Effective Immediately

Governor Hochul signed the Trapped at Work Act on December 19, 2025, immediately voiding all employment agreements that require workers to repay training costs if they leave before a specified time period. This sweeping prohibition applies to every business operating in Nassau and Suffolk Counties, from solo practices with one employee to multi-location companies with hundreds of workers, creating immediate compliance obligations for employers who have used training repayment agreement provisions in their employment contracts.

What the Trapped at Work Act Prohibits

New York's new law specifically targets "employment promissory notes"—contractual provisions that require workers to repay employers for training, education, or certification costs if they leave their job before completing a predetermined service period. According to analysis from Morgan Lewis, these training repayment agreement provisions (TRAPs) became void and unenforceable the moment Governor Hochul signed the legislation.

The prohibition extends beyond traditional employees to cover independent contractors, interns, and volunteers. This comprehensive scope means that any working relationship involving training repayment obligations falls under the new restrictions, regardless of the worker's classification or compensation structure.

Common examples of now-prohibited agreements include requiring nurses to repay certification training costs if they leave within two years, demanding that sales representatives reimburse software training expenses if they quit within 18 months, or requiring administrative staff to repay conference attendance costs if they don't remain employed for a specified period. All such provisions became immediately unenforceable on December 19, 2025.

The law does preserve several important exceptions that employers can still use to protect their investments. Relocation expense reimbursement agreements remain valid, as do requirements for workers to return company property upon termination. Academic sabbatical repayment provisions and collectively bargained agreements also fall outside the prohibition, maintaining flexibility for specialized employment arrangements.

What Employers Can Still Require

While training repayment agreements are now prohibited, New York employers retain several tools for protecting their investment in new hires. Sign-on bonuses and retention bonuses can still include repayment provisions if employees leave before specified dates. These arrangements differ from training costs because they represent direct cash payments to employees rather than investments in skills or certifications.

Employers can also continue requiring workers to return company property, including laptops, phones, tools, and equipment. The key distinction lies in whether the employer is seeking reimbursement for training expenses versus recovery of actual company assets or cash payments made directly to the employee.

Professional service firms that pay for employee bar exam preparation, medical practices that fund certification courses, and technology companies that sponsor software training programs must now absorb these costs as business expenses rather than seeking reimbursement from departing employees. However, these same employers can still offer retention bonuses tied to completing training programs, creating alternative incentive structures that comply with the new law.

For businesses developing comprehensive employment policies that address both retention strategies and compliance requirements, understanding these distinctions becomes critical for maintaining legal protection while supporting workforce development.

Immediate Compliance Requirements

Long Island employers must immediately review all employment-related documents for prohibited training repayment provisions. This includes offer letters, employment contracts, training agreements, employee handbooks, and any standalone documents that address education or certification reimbursement. Every document containing training repayment language must be updated or replaced to remove the prohibited provisions.

The review extends beyond current employees to pending offers and recent hires. Any employment agreement signed after December 19, 2025, that includes prohibited training repayment provisions is void and unenforceable from the start. This means employers cannot rely on existing contract language to protect training investments, even if the training hasn't yet begun.

For employers with existing training repayment agreements, the law creates immediate exposure if they attempt to enforce these provisions. According to legal analysis from Davis Wright Tremaine, attempting to collect on now-void training repayment agreements could result in legal challenges and potential liability for the employer.

The compliance timeline is particularly challenging because the law took effect immediately upon signing, without the typical 30-90 day implementation period that allows employers to update their documentation systematically. This creates urgency for businesses that haven't yet begun their contract review process.

Industry-Specific Implications

Healthcare practices across Nassau and Suffolk Counties face significant implications from the Trapped at Work Act. Medical and dental offices commonly invest substantial amounts in employee certification training, continuing education, and specialized skill development. Nursing homes, hospitals, and specialty practices that previously required employees to repay training costs if they left within 1-2 years must now absorb these expenses as standard business costs.

Professional services firms—including law firms, accounting practices, and consulting companies—also relied heavily on training repayment agreements. These businesses often sponsor expensive professional development programs, industry certifications, and continuing education requirements. The prohibition forces a fundamental shift in how these firms approach employee development investments.

Technology companies and manufacturing facilities that provide specialized equipment training, safety certifications, or technical skill development must also revise their approach. The substantial costs associated with these programs cannot be recovered through employee repayment agreements, requiring businesses to factor training expenses into their standard operational budgets.

Sales organizations face particular challenges because they often invest heavily in product training, sales methodology programs, and customer relationship management system training. These investments, which can reach thousands of dollars per employee, must now be treated as non-recoverable business expenses rather than employee obligations.

Strategic Workforce Planning Adjustments

The prohibition on training repayment agreements forces Long Island employers to reconsider their employee development strategies and retention approaches. Without the ability to recover training investments from departing employees, businesses must evaluate which training programs provide sufficient value to justify the unrecoverable expense.

Some employers may reduce their training investments, focusing only on essential skills and certifications required for job performance. Others may shift toward retention bonuses and performance incentives that encourage employees to remain with the company without creating repayment obligations tied to training costs.

The change also affects recruitment strategies. Employers who previously used extensive training programs as recruitment tools while protecting their investment through repayment agreements must now either absorb higher training costs or find alternative ways to attract and retain qualified candidates.

For businesses with high turnover rates, the financial impact can be substantial. A company that previously recovered 30-40% of training costs through repayment agreements from departing employees must now budget for 100% of these expenses as non-recoverable business costs.

Action Steps for Nassau and Suffolk County Employers

Take these immediate steps to ensure compliance with the Trapped at Work Act and protect your business from potential liability:

• Conduct a comprehensive document review – Examine all employment agreements, offer letters, training policies, and employee handbook provisions for prohibited training repayment language. Create a checklist of every document type that might contain these provisions to ensure nothing is overlooked.
• Update or replace non-compliant agreements – Remove or revise any training repayment provisions in existing contracts. For active employees with existing agreements, consider issuing updated contracts or amendments that eliminate the prohibited provisions while preserving other terms.
• Revise your recruitment materials – Update job postings, recruitment presentations, and new hire materials to remove references to training repayment obligations. Ensure your hiring team understands they cannot include these provisions in new offers.
• Train your HR and management teams – Educate everyone involved in hiring, training, and employee relations about the new restrictions. Ensure they understand what provisions are prohibited and what alternatives remain available.
• Develop alternative retention strategies – Consider sign-on bonuses, retention bonuses, performance incentives, and other tools that comply with the new law while encouraging employee loyalty and reducing turnover.
• Review your training budget and strategy – Assess which training programs provide sufficient value to justify as non-recoverable business expenses. Consider whether some training should be restructured as retention bonuses tied to program completion.
• Document your compliance efforts – Keep records of your document review, updates made, and training provided to staff. This documentation demonstrates good faith compliance efforts if questions arise about your implementation of the new requirements.

For Long Island employers managing complex employment law compliance requirements, working with experienced HR consulting professionals ensures your employment agreements and policies comply with the Trapped at Work Act while maintaining effective workforce development and retention strategies.

This content is for informational purposes only and does not constitute legal, tax, or benefits advice. Requirements vary based on employer size, location, and plan structure. Information is current as of 2026-02-06. Employers should consult qualified advisors for guidance on their specific circumstances.