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Don't Charge Employees for Training
Editor's Note
Don't Charge Employees for Training
New York state just passed legislation (not signed by Governor yet) that prohibits agreements that make employees repay the employer for training if they leave before a certain time. These are common with education benefits where the employer pays or reimburses employees for tuition to obtain a degree or certification, especially when the employee chooses the course of study. But often employers use these types of agreements when they send employees to a specific course or program that the employer determines is important.
For employers, the thinking is that they don't want to train their competitors' new employees and that employees should stay a certain number of years so that the employer gets the benefit of its training investment.
But for employees, it means they are trapped in the job for the term of the contract unless they can afford to repay the amount. Sometimes there isn't a provision that relieves them of the repayment obligation if the employer terminates them. So, it's possible that they could lose their job and owe the employer that just fired them a big pile of money. Yes, they get to take the training with them, but it may or may not have value to the employee somewhere else.
Providing training is part of having employees, particularly if you want them to have certain skills or abilities with specific software, tools, or other processes. It's a cost of doing business.
We generally do not pass the cost of doing business onto the shoulders of employees. And if we do, then perhaps, we also need to share the profits. But that doesn't generally happen. So let's be fair and not require employees to pay for training, particularly training dictated by the employer.
Here's more from Littler on New York's new (almost) law, the "Trapped at Work Act."
- Heather Bussing
New York Legislature Passes “Trapped at Work Act” Proposing to Restrict Employment Promissory Notes
by Michael Paglialonga and Paul Piccigallo
at Littler
In a significant development for employers across the Empire State, the New York Legislature passed Assembly Bill A584B/S4070B in the final days of the 2025 session. This bill is known as the “Trapped at Work Act” and would prohibit the use of promissory notes that require workers to repay amounts to employers if they leave their jobs before a specified period. The bill, which has passed both the State Senate and Assembly, awaits delivery to Governor Hochul for action—which can happen at any time before the end of 2025.
The Trapped at Work Act would amend the New York Labor Law by adding a new Article 37, which would prohibit employers from requiring employees to sign an “employment promissory note”—agreements that require employees to repay to their employers a sum of money if they leave their employment within a specified period of time, with particular emphasis on a repayment framed as a reimbursement for training. The bill deems such agreements “unconscionable, against public policy, and unenforceable.”
The bill applies broadly to “workers,” including employees, independent contractors, interns, volunteers, apprentices, and sole proprietors providing services on behalf of an employer. It also applies to any entity associated with the employer that provides training. Importantly, the law does not prohibit all forms of repayment agreements. It expressly permits:
- Repayment of sums advanced to the worker, unless those sums were used to pay for training related to the worker’s employment.1
- Repayment for property sold or leased to the worker.
- Agreements tied to sabbatical leave for educational personnel.
- Agreements negotiated as part of a collective bargaining agreement.
No private right of action is expressly set forth in the bill, but workers would be able to recover attorney’s fees in cases in which they are sued by an employer to enforce a prohibited agreement. Additionally, the New York State Department of Labor would be authorized to assess civil penalties ranging from $1,000 to $5,000 per violation, with each affected worker constituting a separate violation. The New York State Department of Labor is also authorized to adopt rules and regulations, but none are expressly required.
If signed into law, the Trapped at Work Act would require employers to review closely any agreements that impose financial obligations on departing employees. While the proposed law would not prohibit all agreements for the repayment of amounts by employees, those that relate to training costs by the employer or third parties would be prohibited.
Where Does this Bill Stand?
The bill will be delivered to the governor by the end of 2025 and, if signed, would take effect immediately. While the governor has not made any public statement about her likelihood of signing it, the bill was passed with strong support in the state legislature. There is also the possibility that the governor could negotiate amendments to the bill as a condition of her approval as part of New York’s Chapter Amendment process.
Because the bill would take effect upon enactment, employers can begin preparing now by taking the following steps:
- Review and revise offer letters, training agreements, and onboarding documents to for repayment agreements.
- Avoid requiring repayment of training or related costs, and consider alternative approaches to retention, such as bonuses or voluntary development programs.
- Ensure that any repayment agreements fall within the law’s narrow exceptions, and seek the advice of counsel for situations that may be similar to training.
Littler will continue to monitor developments and provide updates as the bill progresses.
Footnotes
1 The New York Labor Law and its regulations set forth specific requirements for employer-provided advances of wages.
