The TAWA, codified as Article 37 of the New York Labor Law, will generally prohibit employers from requiring employees or prospective employees, as a condition of employment, from using Training Repayment Agreement Provisions (TRAPS) and similar “stay-or-pay” arrangements requiring employees to repay their employer if the employment relationship ends before a specified date. Under the law, such agreements are declared unconscionable, against public policy, and unenforceable.
Background: What Changed and When
New York Gov. Kathy Hochul signed the TAWA into law on Dec. 19, 2025. On Feb. 13, 2026, Gov. Hochul signed an amendment to clarify the TAWA’s scope, expand the list of permissible exceptions, and delay implementation in response to employer and industry concerns about the original law’s breadth and immediate effective date. Recent NY DOL Guidance resolves several key questions:
- Effective date. The TAWA takes effect on Dec. 19, 2026.
- Prospective application. The TAWA will apply only to new agreements, and to new or amended terms in existing agreements, entered into on or after the effective date. An existing repayment obligation will not become subject to the TAWA simply because it continues beyond Dec. 19, 2026.
- Definition of “misconduct.” The NY DOL guidance defines “misconduct,” which is key to the exception permitting clawbacks of non-educational financial incentives. This definition appears to be less restrictive than the “misconduct” standard developed under New York’s unemployment insurance case law.