With Governor Hochul’s Signature, New Law Will Ensure Hundreds of Thousands of Workers Are Free from Employer-Driven Debt

December 2025 | WASHINGTON, D.C. — In a major victory for New Yorkers, Governor Hochul signed the Trapped at Work Act (A584C) late Friday night, securing powerful protections for one of the nation’s largest workforces against predatory stay-or-pay contracts, such as Training Repayment Agreement Provisions (TRAPs), that use the threat of debt to lock workers into jobs. Introduced by Assemblymember Phil Steck and State Senator Rachel May, the legislation marks a pivotal alliance with California, establishing a coast-to-coast norm against predatory debt and protecting an estimated 2 million workers from these exploitative contracts. 

These protections are in direct response to employer abuses revealed after years of state and federal investigations—including by New York’s Department of Labor and Office of the Attorney General (AG) and in our 2022 report Trapped at Work that first defined these contracts as TRAPs. In addition to a host of new protections for workers, the new law empowers the state to fine any employer that includes unlawful stay-or-pay provisions in their employment contracts up to a $5,000 fine per violation.

“New York slammed the door on a predatory scheme that forces workers to choose between a bad job and staggering debt,” said Winston Berkman-Breen, Legal Director at Protect Borrowers. “While powerful forces in Washington are actively stripping protections from workers, New York and California—two of the largest workforces in the country—now stand together to protect workers from predatory employer TRAPs. This is a declaration that debt will not be used as a weapon against workers in our state and a model for the nation.”

“We commend Governor Hochul for signing the Trapped at Work Act into law. New York is helping lead the way in ending this predatory practice and ensuring that workers across the state no longer have to fear a crushing financial penalty just because they had the audacity to quit a job,” said Chris Hicks, Senior Policy Advisor at Protect Borrowers and a co-author of Trapped at Work. “It is critical for states across the country to follow New York’s lead and stand up for working people.”

The bill was supported by a coalition of labor, antitrust, and consumer advocates that fought for two years to advance changes to New York law to ban these predatory contracts—a coalition led by Protect Borrowers, American Economic Liberties Project, Asian American Legal Defense and Education Fund, Consumer Reports, National Center for Law and Economic Justice, National Employment Law Project, National Employment Lawyers Association/New York, New York State Nurses Association, New Yorkers for Responsible Lending (NYRL), Open Markets Institute, Towards Justice, and UAW Region 9A.

Background on TRAPs

In 2022, Protect Borrowers published Trapped At Work, the groundbreaking investigation that first defined these contracts as TRAPs and warned policymakers of the use of employer-driven debt to exploit workers. Research has found that nearly 1 in 12 workers are bound by restrictive employment agreements that require them to incur thousands of dollars of debt for routine on-the-job training, regardless of the quality or necessity. This research shows that the use of TRAPs has become increasingly prevalent in certain industries, including aviation, healthcare, long-haul truck driving, and retail. 

By signing this bill into law, Governor Hochul supports a movement of workers fighting to ban TRAPs across the country. She joins Governor Newsom, who signed a similar bill prohibiting stay-or-pay contracts in California earlier this year. Governors Mike Braun (Indiana) and Mark Gordon (Wyoming) also signed legislation curbing stay-or-pay contracts in their states (SEA 475 and SF0107, respectively). 

Background on TRAPs in New York

The growing use of TRAPs in the Empire State led Assemblymember Steck to first introduce the Trapped At Work Act in 2023, following a constituent reaching out to his office after being sued by her employer over a TRAP. In testimony before the New York State Senate, the Bureau Chief of the New York Attorney General’s Office Labor Bureau highlighted that their office has received complaints about TRAPs in recent years. These cases are not isolated incidents.

In 2022, New York AG James announced a settlement agreement with Albany Med Health System after finding that it required foreign-educated nurses, primarily from the Philippines, to pay up to $20,000 if they resigned or were fired within the first three years of employment at the hospital. If a nurse failed to pay the fee, the contract provision threatened legal action and reporting to immigration authorities, further violating the Trafficking Victims Protection Act, because of their threat of serious legal and financial harm to coerce these workers to continue working at the hospital. 

Earlier this year, AG James reached a settlement with Advance Care Staffing (ACS), a healthcare staffing company, to recover over $660,000 for foreign-recruited nurses who were subjected to exploitative stay-or-pay contracts. Her settlement comes after ACS was sued by a former nurse and the Biden Administration’s U.S. Department of Labor (U.S. DOL). These suits alleged that ACS recruited nurses from abroad, then required them to sign contracts that required them to work for the company for at least three years or pay tens of thousands of dollars—plus paying the company’s lost profits, attorneys’ fees, and arbitration costs. According to recent docket filings, ACS resolved all three matters for a total settlement of $1.19 million, plus significant policy changes (memorialized in part through a consent decree with the U.S. DOL). The proposed settlement is pending court approval.

Further Reading

Protect Borrowers report on TRAPs: Trapped at Work: How Big Business Uses Student Debt to Restrict Worker Mobility

Protect Borrowers press release on California banning stay-or-pay contracts: California Bans TRAPs and “Stay-or-Pay” Contracts Across the World’s Fourth Largest Economy

Protect Borrowers blog on TRAPs: As Trump Administration Rolls Back Federal Protections, State Lawmakers Must Protect Workers From Predatory Employer-Driven Debt

Protect Borrowers toolkit on how states can stop TRAPs: Training Repayment Agreement Provision (TRAP) State Legislative Toolkit

Protect Borrowers blog on how local regulators can protect workers: How Cities and States Can Unlock Workers Across the Country from TRAPs

Protect Borrowers statement on the U.S. DOL’s lawsuit against ACS: Advocates Commend U.S. Labor Department for Taking Action to Protect Workers from Predatory Employer-Driven Debt

Read the U.S. DOL’s press release about their lawsuit against ACS: Department of Labor Seeks Court Order to Stop Brooklyn Staffing Agency From Demanding Employees Stay 3 Years or Repay Wages

Read the U.S. DOL’s complaint against ACS filed in federal court in New York: https://towardsjustice.org/wp-content/uploads/2023/03/DOL-Complaint-Su-v.-Advanced-Care-Staffing-Sam-Klein.pdf

Read more about our work on TRAPs: Background on Training Repayment Agreement Provisions

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About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.

Learn more at protectborrowers.org or follow us on social @BorrowerJustice.