Tag Archives: #TRAPAgreementsNY

Written for New York workers who want the straight story on written job contracts—what they promise, what they limit, and when the law takes your side.

The baseline in New York: at‑will employment (and what a written contract can change)

New York presumes most jobs are at‑will—either party can end the relationship at any time, for any (lawful) reason, unless a statute or an agreement says otherwise. New York courts have rejected a broad “wrongful discharge” tort and emphasized that only express limits change the at‑will default. Written contracts that specify a fixed term, “just cause” standards, or progressive discipline can meaningfully alter job security; handbooks or oral assurances rarely do unless very specific and not disclaimed. But written contracts come with their own pitfalls, which can literally trap (and we do mean “literally” in its literal sense) the unwary employee.

Pros and cons of written employment contracts

• Good things about employment contracts can include…

• • Defined term or just‑cause protection: increases job security compared to at‑will.
  • Compensation clarity: duties, pay, bonuses, equity, severance—ambiguity drops, enforceability rises.
  • Dispute forums: venue and governing law provisions can reduce uncertainty, but watch out for anti-worker arbitration clauses and provisions that set the venue in a far-away state.

• Potential downsides

• • Mobility restraints: non‑competes, non‑solicits, and TRAPs (training‑repayment provisions) can limit future moves or add exit costs. See below for New York’s latest rules.
  • Liquidated damages / penalties: New York courts scrutinize them and may refuse enforcement if disproportionate to harm (penalties are not favored).
  • Forum and law selection: New York generally honors sophisticated choice‑of‑law clauses, but some employment statutes override contract language.
  • One–sided termination provisions: Does the contract allow the employer to end the contract but not you? Does the employer get a longer notice period than the employee?
  • One-sided fee-shifting provisions: Watch out for the attorneys’ fee provisions. They are often written so that the employee pays the employer’s attorneys’ fees, but not vice versa. A more fair option is “loser pays,” which can make both sides think twice before engaging in frivolous litigation.

 

Common contract terms—and how they affect job security and mobility

1) Non‑compete clauses:

New York courts enforce employee non‑competes if they are reasonable in time and geography, necessary to protect legitimate business interests (trade secrets, confidential customer relationships, or truly unique services), not harmful to the public, and not unduly burdensome.

• Current New York legislative status: In December 2023, Governor Hochul vetoed a near‑total non‑compete ban (S3100A/A1278B). Non‑competes therefore remain governed by New York case law, not a categorical statute.
• Federal overlay (2024–2025): The FTC’s nationwide non‑compete final rule (issued in 2024) did not take effect; it was enjoined in litigation and, in September 2025, the FTC dismissed its appeals. The agency now states the Noncompete Rule “is not in effect and is not enforceable,” though it pursues case‑by‑case Section 5 actions.
• What it means: If your contract has a non‑compete, the employer must show it protects legitimate interests and is narrowly tailored. Overbroad covenants—especially those that bar work for a competitor without tying the restriction to sensitive information or unique services—face skepticism.

 

2) Confidentiality Clauses:

1. B) Workplace confidentiality: Confidentiality clauses can be enforced to protect trade secrets or confidential business information if reasonable in scope and duration under New York’s restrictive‑covenant framework

• Exception: NDAs that broadly muzzle lawful reporting or whistleblowing face invalidation.
• Not to be confused with: New York has heavy restrictions on NDAs in severance or settlement agreements taking place in the context of potential or actual litigation involving alleged discrimination or harassment. Beyond the scope of this article, if you are looking at an NDA after reporting discrimination or harassment, take that ish to a lawyer asap.
• What it means: Routine workplace confidentiality are supposed to be targeted and not suppress lawful rights, but ridiculously broad confidentiality provisions are still pretty common.

 

3) Training Repayment Agreement Provisions (TRAPs) / “Stay‑or‑Pay”: 

As of December 19, 2025, New York enacted the Trapped at Work Act (A584C/S4070B), adding Article 37 to the Labor Law (§§ 1050–1055). The Act declares “employment promissory notes” that require a worker to pay money if they leave before a stated period—including provisions characterizing repayment as training reimbursement—unconscionable, against public policy, and unenforceable.

• Limited exceptions exist (e.g., repayment of advances not used for training, payment for property sold or leased to the worker, certain sabbatical terms, and collective bargaining programs). The NYSDOL may seek civil penalties of $1,000–$5,000 per violation; workers sued to enforce such notes may recover attorneys’ fees upon a successful defense.
• What it means: “Stay‑or‑pay” schemes that deter quitting by attaching debt for employer‑provided training are broadly prohibited in New York, but genuine sign‑on bonuses or wage advances not tied to training may remain recoverable under the Act’s exceptions.

 

4) Liquidated damages and penalty clauses: 

• Liquidated Damages Clauses are designed to hold the other party “in terrorem” (literally, “in terror”) of doing anything to breach the contract. They are a dirty trick in employment contracts, and they’re a real problem when an employer has discretion to determine what constitutes a breach.
• Anything that says that actual damages “would be difficult to ascertain,” names an amount that does not correspond with any actual loss on the employer’s part (for example, an amount based on the employee’s annual salary), or claims that the amount is “agreed upon” is suspect.
• Not to be confused with: like NDAs in settlement or severance agreements involving discrimination claims, liquidated damages in those types of agreements are statutorily prohibited.
• What it means: There’s no reason for these to be in most employment contracts. If your prospective employer is pushing you to accept this kind of term, you’re being threatened with punishment before you’ve ever set foot in the workplace. It’s worth re-evaluating whether you really want to work for these people.

 

5) Arbitration, venue, and governing law: 

Mandatory arbitration clauses in employment contracts can significantly disadvantage workers because they shift disputes out of the public court system and into a private forum controlled by rules that often favor employers. Key concerns include:

• Low win rates for employees: Studies show that employees prevail in only about 21–34 % of employment arbitration cases—significantly lower than success rates in court litigation, which range from roughly 11 % to 38 %, depending on the data set.
• Smaller financial awards: Among employees who do win, median arbitration awards are commonly around $36,500, substantially lower than typical court verdicts—which can far exceed six figures.
• “Repeat-player” advantage: Employers often repeatedly participate in arbitration, leading to repeat-employer–arbitrator pairings. Analyses indicate employees in such repeat settings receive lower win rates and smaller awards, reinforcing systemic bias.

• Is it legal? New York permits arbitration of many employment disputes, but specific state and federal statutes impose carve‑outs or procedures (e.g., GOL § 5‑336 and CPLR § 5003‑B constraints on settlement terms in discrimination matters). Choice‑of‑law and forum clauses may be honored, but cannot contract around nonwaivable worker protections.
• What does it mean? The employer is looking for an easy win.

 

6) Jury‑Trial Waiver Provisions

These provisions require employees to relinquish their right to have a jury decide any legal claims (for example, discrimination or retaliation). These provisions can disadvantage employees in several ways:

• Loss of jury protections: Employees give up the benefits of a jury’s perspective—such as community standards, empathy, and collective decision-making—in favor of a sole judge, who may interpret law and facts more technically. Jurors tend to be pretty favorable to employees (after all, most jurors are employees themselves), so the loss of a jury trial can be a punch in the gut to a legal claim.
• Enforceability in New York: Courts will uphold jury waivers if they are knowing, voluntary, and explicit. Spoiler alert: if you sign the agreement, that jury-trial waiver is knowing, voluntary, and explicit.
• What does it mean? Like the arbitration clause, a jury-trial waiver means the employer is looking for an easy win.

 

How the rules play out in real life: security vs. mobility

A fixed‑term contract with a just‑cause clause can improve job security. But that security may come at the cost of post‑employment restrictions (such as non-competes, non-solicitations, and other restrictions), liquidated damages clauses, arbitration clauses, jury-trial waivers, and other nasty items.

Practical Steps Before Signing or Leaving a Job

• Scrutinize Restrictive Covenants
  Review any non-compete or confidentiality clauses. Ask: Is this tied to specific clients or trade secrets? If it’s overly broad (e.g., bans working in your entire industry), try to negotiate narrower terms—shorter duration, smaller geographic scope, and clear definitions of “confidential information.”
• Negotiate Limitations on Post-Employment Restrictions
  Push for language that allows you to use general skills and experience in future jobs. If the contract restricts solicitation, ensure it applies only to customers you personally serviced, not the employer’s entire client base.
• Eliminate “Stay-or-Pay” Clauses
  If you see a training repayment provision or any clause requiring you to pay money if you leave early, request removal. Under New York’s Trapped at Work Act (Labor Law §§1050–1055), these provisions are generally unenforceable. You can point that out during negotiations. If they won’t remove it, get a lawyer asap.
• Have a Lawyer Review Before You Sign
  Even if the contract looks straightforward, employment agreements often contain hidden risks. A qualified employment attorney can spot problematic clauses—such as non-competes, arbitration requirements, or liquidated damages—and advise you on negotiating better terms.

 

Don’t let overreaching contracts box you in. Employers count on workers signing without question—but you have every right to push back. If a clause looks like a trap, challenge it. If the terms feel one-sided, negotiate. And if the contract threatens your future, get legal advice before you sign. Your career isn’t a bargaining chip—make sure the fine print works for you, not against you.

 

Need help? Contact an experienced employment lawyer in your area to review your contract, explain your rights, and fight back against unfair terms. Protect your future—start with a legal consultation today.