New York Prohibits “Stay or Pay” Agreements: What Employers Need to Know

New York State has enacted a new law that prohibits employers from using so-called “stay or pay” agreements. These arrangements typically require employees to repay training or credential costs if they leave employment before a certain period of time.

These agreements have become more common in recent years, particularly in industries where employers invest in certifications, onboarding programs, or professional development.

The legislation was signed by the governor on December 19, 2025, and became effective immediately.

What Employers Should Know

Under the new law, New York employers may not require workers to reimburse the company for training-related expenses as a condition of terminating employment. This includes agreements or policies that require repayment if an employee resigns before completing a set service period.

The law applies broadly and may impact many types of workers, including employees, interns, independent contractors, and volunteers.

Action Item for Employers

Employers who currently use “stay or pay” agreements or similar reimbursement clauses should review their materials to ensure compliance, including:

• Offer letters or employment contracts

• Training repayment policies

• Credential reimbursement agreements

• Internal HR or onboarding documentation

Employers should work with legal counsel to update policies and documentation as needed to avoid potential compliance concerns.

For more information, click here, or reach out to a Bene-Care Specialist.