Your employer faces new limits on stay-or-pay contracts starting Dec. 19

Some employers make new hires sign a “stay or pay” note. If you leave before a set date, you owe them money, often called payback for training. That can trap people in jobs they want to leave. Starting December 19, 2026, New York employers generally can’t require these notes as a condition of the job, and a banned note is void. An employer can’t use the transferable-credential exception for employer-specific training or safety and compliance training required by law.

Some agreements are still allowed. An employer can seek repayment of tuition for a credential you can use elsewhere, but only under strict rules: a separate contract, the credential itself can’t be required for the job, repayment can’t exceed the employer’s actual cost, and the amount must shrink as you keep working. Nothing is owed if the employer lets you go for a reason other than misconduct. Sign-on bonuses and relocation help can also carry repayment rules, but not if you’re let go for reasons other than misconduct or the job was misrepresented. Union-negotiated programs are exempt.

You don’t need to apply for the protection. If an employer breaks the law, you can complain to the state Department of Labor. It can fine the employer $1,000 to $5,000 for each employee or applicant affected. If your employer sues to collect on a banned note and you win, the employer pays your lawyer.

Assembly Member Phil Steck and Sen. Rachel May carried the bill, which passed in June 2025. Gov. Kathy Hochul signed it that December. In February 2026 she signed a follow-up bill that narrowed the law and delayed its start by a year.