You accept a new job offer, go through weeks of company-provided training, and start building your career. Six months later, a better opportunity comes along. But when you give notice, your employer hands you a bill for thousands of dollars, claiming you owe them for the cost of your training. If you signed a training repayment agreement when you were hired, you may be wondering whether your employer can actually enforce it.
These agreements, commonly known as Training Repayment Agreement Provisions (TRAPs) or “stay or pay” clauses, have become increasingly common across industries ranging from healthcare and trucking to technology and finance. They require employees to repay their employer for training costs if they leave before a specified period, sometimes amounting to tens of thousands of dollars. For many workers, the financial penalty effectively traps them in jobs they want to leave. However, the legal landscape around these agreements is shifting rapidly, particularly in New York and New Jersey.
New York’s “Trapped at Work Act”: A Major Shift for Employees
On December 19, 2025, Governor Kathy Hochul signed the Trapped at Work Act, adding Article 37 to the New York Labor Law (§§ 1050–55). This law prohibits employers from requiring workers to sign “employment promissory notes” as a condition of employment. Under the Act, any agreement that requires an employee to repay a specified amount if they leave before a defined period is declared “unconscionable, against public policy, and unenforceable.” Such agreements are deemed null and void.
On February 13, 2026, Governor Hochul signed an amendment that clarified several provisions and delayed the enforcement date by one year. Under the amendment, the Act’s enforcement provisions take effect on February 13, 2027, giving employers a one-year compliance window. The amended law now applies specifically to employees (the original version broadly covered independent contractors, interns, and volunteers as well). The amendment also carved out certain permissible agreements, including:
- Repayment of payroll advances or loans (as long as the advances were not used to pay for employer-required training)
- Tuition reimbursement for transferable credentials (such as a degree or professional certification the employee can use at any employer)
- Non-educational financial incentives (such as sign-on bonuses or relocation assistance), unless the employee was terminated for reasons other than misconduct or the job duties were misrepresented
Employers who violate the Act may face civil penalties ranging from $1,000 to $5,000 per violation, enforced by the New York State Department of Labor. While the law does not create a standalone private right of action, employees who are sued by an employer to enforce a prohibited agreement may recover attorney fees.
What About New Jersey?
As of April 2026, New Jersey does not have a specific statute banning training repayment agreements. However, there are active legislative efforts to change this. Senate Bill S.2105, introduced in the current legislative session, would prohibit training repayment agreements in New Jersey. Additionally, Senate Bill S.4386 would broadly ban non-compete agreements and also prohibit employers from requiring repayment of training costs or immigration-related expenses when an employee leaves.
Even without a TRAP-specific law, New Jersey employees are not without protections. Existing New Jersey labor laws may provide grounds to challenge these agreements in certain circumstances. For example:
- Unconscionability: New Jersey courts may refuse to enforce a contract that is excessively one-sided or that the employee had no meaningful ability to negotiate.
- Wage and Hour Protections: Under the New Jersey Wage Payment Law (N.J.S.A. 34:11-4.4), employers generally cannot make deductions from wages unless authorized by law or the employee. Deductions that reduce pay below the minimum wage ($15.92 per hour as of January 1, 2026) are prohibited.
- Reasonableness Standard: Courts evaluating repayment agreements often consider whether the training provided genuine value to the employee, whether the repayment amount is proportional to the actual cost, and whether the required commitment period is reasonable.
New Jersey employees who believe they are subject to an unfair training repayment agreement may benefit from consulting with an employment attorney to evaluate the enforceability of the agreement under current law.
What Should You Do If You Signed a Training Repayment Agreement?
If you signed a training repayment agreement and are concerned about its impact on your ability to leave your job, there are several practical steps to consider:
- Review your agreement carefully: Examine the specific terms, including the repayment amount, the commitment period, and what triggers the repayment obligation. Note whether the agreement distinguishes between voluntary resignation and termination by the employer.
- Determine whether the training was truly beneficial to you: If the training was specific to your employer’s proprietary systems and provides no transferable value, this may weigh in your favor if the agreement is challenged.
- Document everything: Keep copies of the agreement, any communications about the training, pay stubs, and records of what the training entailed.
- Understand your state’s protections: If you work in New York, the Trapped at Work Act may render your agreement unenforceable once the law takes full effect. If you work in New Jersey, pending legislation and existing contract law principles may provide avenues to challenge the agreement.
- Consult an employment attorney: An experienced employment lawyer can evaluate your specific situation, advise you on the enforceability of your agreement, and help you understand your options before you make a decision about leaving your job.
Conclusion
Training repayment agreements can create significant financial barriers for employees who want to change jobs or advance their careers. While New York has taken decisive legislative action to restrict these agreements through the Trapped at Work Act, New Jersey employees should be aware that pending legislation and existing legal principles may also provide protections. Understanding your rights and the enforceability of any agreement you have signed is an important first step toward protecting your financial freedom and career mobility.
If you have signed a training repayment agreement and are unsure whether it is enforceable, or if your employer is threatening to collect on one, Song Law Firm can help. Our employment law team has experience advising employees in New Jersey and New York on workplace agreements, wage disputes, and employee rights.
For a consultation, call 201-461-0031 or email mail@songlawfirm.com. Taking the time to understand your legal options may make a meaningful difference in your career decisions.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a qualified attorney for advice specific to your circumstances.
