New York “Trapped at Work” Act: Impact on Employee Relocation Programs

The New York "Trapped at Work" Act broadly prohibits agreements that require workers to repay an employer if they leave employment before a stated period. Such provisions are deemed unenforceable and against public policy under New York law.

The law applies broadly; as currently drafted, the term "workers" extends beyond employees and includes certain non employee populations. Legal commentary has further indicated that the statute may impact relocation related repayment or "clawback" provisions, depending on how those obligations are structured and the purpose they are intended to serve.

Although the Act does not expressly reference relocation benefits, relocation agreements that require repayment of employer-funded relocation expenses if an employee leaves employment within a defined period may be unenforceable, particularly where the repayment:

• is triggered solely by early departure;
• functions as a retention mechanism; or
• is not clearly structured as a permissible wage or cash advance made to the employee.
  

In such circumstances, repayment obligations tied to continued employment risk being characterized as prohibited "stay or pay" arrangements under the Act.

The New York "Trapped at Work" Act permits repayment obligations only in limited circumstances, including where an employer requires repayment of sums advanced directly to the worker, provided that such sums are not advanced for training purposes.

Given these constraints, careful characterization and documentation of relocation benefits-particularly distinguishing third party payments and reimbursements from advances, bonuses, or other incentives-is increasingly critical to mitigating compliance risk.

Governor Hochul stated that her approval of the Act was conditioned on an agreement with the Legislature to address concerns regarding statutory ambiguity in a subsequent legislative session. Consistent with that commitment, on January 6, 2026, New York Assemblymember Phil Steck introduced Bill A09452, proposing Chapter Amendments to the Act. If enacted, the amendments would:

• Delay the Act's effective date until December 19, 2026
• Limit the Act's application to "employees," rather than the broader category of "workers"
• Clarify that certain repayment agreements are permissible, including those requiring repayment of a financial bonus, relocation assistance, or other non educational incentives or benefits not tied to specific job performance, provided that the employee is not terminated for reasons other than misconduct and that the job's requirements or duties were not misrepresented
  

Employers with New York-based employees or transferees (including new hires) are encouraged to:

• Review relocation agreements and policies for repayment or "clawback" provisions tied to length of service, in consultation with internal counsel
• Evaluate whether relocation benefits are structured as reimbursements, advances, bonuses, or third-party direct payments (e.g., household goods), and whether repayment triggers remain compliant
• Suspend enforcement of potentially non-compliant repayment provisions for New York workers pending review
• Consider policy updates or alternative retention mechanisms that do not rely on repayment obligations

Altair Global is actively monitoring legislative developments and regulatory guidance that may further clarify the scope and application of the Act. Contact us if you would like to discuss policy modifications consistent with the "Trapped at Work" Act.