The Details

New York enacted legislation (Senate Bill S4070B), which banned promissory notes that require an employee to repay their employer for certain training expenses.

New York then enacted legislation (Assembly Bill 9452), which amends and clarifies the Trapped At Work Act and delays the effective date to Feb. 13, 2027.

Assembly Bill 9452
Covered Employers

The law covers any individual, corporation, limited liability company, or association employing any individual in any occupation, industry, trade, business or service.

Covered Workers

The law also covers any individual employed for hire by an employer in all employment.

Promissory Notes Prohibition

The law defines a promissory note as an instrument, agreement, or contract provision that requires a worker to pay their employer (or the employer's agent or assignee) money if they leave their employment before a stated period of time has passed.

Under the law, requiring a promissory note as a condition of employment will be unenforceable and null and void under the law for the following employer-specific or non-transferable training:

·      Instruction on the employer's proprietary processes, proprietary systems, internal policies, proprietary software, or proprietary equipment unique to the employer;

·      Instruction that does not qualify the employee for a new occupational title, classification, or industry-recognized credential and instead consists of skillful variations of general processes known to the relevant trade or industry; or

·     Mandated safety and compliance training required by federal, state, or local law to maintain workplace safety, which includes but is not limited to OSHA certifications, sexual harassment prevention, or diversity training.

Note: If a promissory note is part of a larger agreement, the invalidity of the note does not affect the other provisions of the agreement.

Enforceable Repayment Agreements

Transferable Training

An employer may continue to enforce agreements that require an employee to reimburse the employer for the cost of tuition, fees, and required educational materials for a transferable credential when the agreement meets specific conditions. See the text of the law for further details.

The law defines a transferable credential as a 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;
  
  
• Is independent of the employer's specific business practices; or
  
  
• Provides skills or qualifications that demonstrably enhance the employee's employability with other employers in the relevant industry.
  
  

Other Unaffected Agreements

Employers may also continue repayment agreements that require educational personnel to comply with terms or conditions of sabbatical leaves or relate to programs agreed to under a collective bargaining agreement. 

Penalties

Any employer found to have violated the law may face penalties of $1,000 to $5,000 per violation. See the text of the law for further details.

Next Steps

• Review training and termination policies and procedures.
  
• Train supervisors on the changes under the law.