Governor Hochul Signs Amended Trapped at Work Act

With Governor Hochul signing amendments to New York's Trapped At Work Act (the "Act") into law, employers are now once again permitted to enter into agreements with employees concerning tuition reimbursement, repayment of signing bonuses and other financial bonuses not related to performance, and relocation assistance payments along with other noneducational incentive payments not tied to job performance. The Act's effective date has also been postponed to February 13, 2027.

The Specifics

Narrowed Definitions

Under the amendments, the Act's coverage has been narrowed from including "workers," such as independent contractors and volunteers, to "employees," which the Act defines as "any person employed for hire by an employer in any employment." Furthermore, the Act's formerly broad definition of "employer," encompassing individuals and entities (including subsidiaries and contractors) that hire or contract "with a worker to work for the employer," has been limited to "any person, corporation, limited liability company, or association employing any individual in any occupation industry, trade, business, or service including the state and its political subdivisions."

Exemption for Tuition Reimbursement Agreements and Signing Bonuses

Tuition reimbursement agreements for "transferable credits" are now permitted if: (i) set forth in a written agreement separate from the employment contract; (ii) participation in the program is not a condition of employment; (iii) the repayment amount is specified in the agreement before it is agreed to by the employee and does not exceed the cost to the employer; (iv) the agreement provides for a prorated payment amount proportional to the repayment amount and the length of the required employment period and does not accelerate the payment schedule if the employee leaves employment; and (v) the agreement does not require repayment if the employee is terminated unless the employee is fired for misconduct.

The Act defines "transferable credits" as "any degree, diploma, license, certificate, or documented evidence of skill proficiency or course of completion that is widely recognized by employers in the industry as a qualification for employment, independent of the employer's business practices, or that provides skills or qualifications that demonstrably enhance the employee's employability with other employers in the relevant industry." "Transferable credits" do not include employer specific training and mandated safety and compliance training.

Moreover, employers are now permitted to require the repayment of financial bonuses not tied to job performance (such as signing bonuses), relocation assistance payments, or other noneducational incentive payments not tied to job performance unless the employee was terminated for a reason other than misconduct or if the requirements of the job were misrepresented to the employee. Importantly, the Act does not prohibit repayment if an employee resigns.

Next Steps

The amendments affected immediate change in the Act but delayed the effective date of the Act until February 13, 2027. As we approach the new effective date, employers with operations in New York should begin to review and revise existing training programs, policies, and repayment agreements to comply with the obligations of the Act. Notably, agreements entered into prior to the effective date and not in compliance with the Act may still be deemed unlawful if an employer seeks to enforce their terms after the effective date.

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For more information, employers should consult legal counsel experienced in labor and employment law to ensure compliance with New York's Trapped At Work Act and similar legislation across the country.