California and New York recently enacted statutory restrictions aimed at “stay-or-pay” arrangements: California AB 692 (Cal. Bus. & Prof. Code § 16608 & Cal. Lab. Code § 926) and the New York Trapped at Work Act (N.Y. Lab. Law art. 37, §§ 1050-1055), respectively. Such arrangements are contractual provisions that, while falling short of a non-competition agreement, make it costly for a worker to leave the company, often by requiring repayment of training costs, financial incentives, or other sums upon separation.
Together, these laws signal a shift in worker-mobility policy, with state legislatures now focusing on limitations that go beyond restrictive covenants.
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