A stay-or-pay term is a promise that a worker will give money back to the employer — a bonus, training cost, or signing payment — if the worker leaves before a set date. New York has no statute aimed at these terms the way California does. Instead the limit comes from wage law: the line between pay a worker has already earned, which the employer cannot recover, and a bonus the worker has not yet earned, which the employer can condition on staying. This note explains that earned-versus-forfeitable line and how Labor Law Section 193 constrains taking money out of pay. For the cross-state framework and the AI-pressure framing, see the stay-or-pay practice guide and the note on retention bonuses under competitor and AI pressure.
Are repayment terms enforceable?
Only in limited form. New York has no stay-or-pay statute, so a repayment or continued-service condition can be valid, but it cannot reach compensation the worker has already earned. New York courts draw the line between a bonus that is vested and mandatory and one that is discretionary and forfeitable, and only the latter can be conditioned on staying.
The controlling idea is that some compensation hardens into wages the worker owns, while other compensation stays contingent until a condition is met. In Matter of William Mattar, P.C. v. Riley, the court framed the distinction that decides which repayment terms hold.
“vested and mandatory as opposed to discretionary and forfeitable”
Once a bonus is vested and mandatory, it is the worker's wages and a stay-or-pay condition cannot take it back; while it remains discretionary and forfeitable, a continued-service condition can apply. Commentary frames the same line in operational terms: a bonus tied to objective, formula-based criteria and calculable with reasonable certainty reads as mandatory rather than discretionary .
Sources for this answer
Matter of William Mattar, P.C. v. Riley states that whether compensation counts as wages protected by New York Labor Law § 193 turns on whether it is vested and mandatory rather than discretionary and forfeitable, not on how the compensation plan labels it.
The dispositive factor in determining whether compensation constitutes wages is not the labeling used in a compensation plan but whether the compensation is vested and mandatory as opposed to discretionary and forfeitable ( see Caruso v Allnet Communication Servs ., 242 AD2d 484, 484-485 [1st Dept 1997]).
See Matter of William Mattar, P.C. v. Riley, 2025 NY Slip Op 02680.
Under New York law, bonuses that are objectively calculable and nondiscretionary may be considered vested wages that must be paid to an employee upon termination, regardless of contractual provisions requiring continued employment through the payout date.
A bonus tied to objective, formula-based criteria and calculable with reasonable certainty constitutes mandatory rather than discretionary compensation.
See Cohen & Buckmann, P.C., Bonus Season Strategies: Getting Ready for Year-End Payouts.
Can the employer claw back pay already earned?
No. Once compensation has vested as wages, a stay-or-pay or clawback term cannot recover it. The dividing line is whether the bonus is vested and mandatory rather than discretionary and forfeitable; vested, mandatory compensation belongs to the worker even if a contract clause purports to require repayment on early departure. On a touch screen, a tap shows all 2 sources in this group.
The practical risk for employers is timing. Commentary using William Mattar warns that once a bonus is objective, formulaic, and calculable, continued-employment-through-payment language may not save the employer if the employer ends the relationship first, because the compensation has already become mandatory wages .
Do not count on a clawback clause to recover compensation that has already vested under New York law. If the bonus is calculable and nondiscretionary, it is wages once earned, and a repayment or stay-or-pay term cannot reach it; the lever only works while the bonus is still genuinely forfeitable. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
Matter of William Mattar, P.C. v. Riley states that whether compensation counts as wages protected by New York Labor Law § 193 turns on whether it is vested and mandatory rather than discretionary and forfeitable, not on how the compensation plan labels it.
The dispositive factor in determining whether compensation constitutes wages is not the labeling used in a compensation plan but whether the compensation is vested and mandatory as opposed to discretionary and forfeitable ( see Caruso v Allnet Communication Servs ., 242 AD2d 484, 484-485 [1st Dept 1997]).
See Matter of William Mattar, P.C. v. Riley, 2025 NY Slip Op 02680.
Under New York law, bonuses that are objectively calculable and nondiscretionary may be considered vested wages that must be paid to an employee upon termination, regardless of contractual provisions requiring continued employment through the payout date.
A bonus tied to objective, formula-based criteria and calculable with reasonable certainty constitutes mandatory rather than discretionary compensation.
See Cohen & Buckmann, P.C., Bonus Season Strategies: Getting Ready for Year-End Payouts.
Can repayment come out of the final paycheck?
A New York employer generally cannot net a claimed stay-or-pay repayment out of the final paycheck, because Labor Law Section 193 bars any deduction from wages outside narrow categories and a stay-or-pay repayment is not one of the authorized deductions .
Section 193 is the wage-deduction gatekeeper. A deduction is permitted only when it falls within a defined category — chiefly deductions required by law or court order, and a closed list of voluntary deductions the employee expressly authorizes in writing for the employee's own benefit.
A stay-or-pay clawback does not fit that list: it runs for the employer's benefit, not the employee's, so it cannot be taken from wages under the voluntary-deduction path, and recovering it requires a separate contract claim rather than self-help against the paycheck .
Sources for this answer
New York Labor Law Section 193 bars an employer from making any deduction from an employee's wages unless the deduction is made under a law or government regulation, is voluntarily authorized in writing by the employee for the employee's own benefit, or falls in one of the section's other narrow categories.
1. No employer shall make any deduction from the wages of an employee, except deductions which: a. are made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency including regulations promulgated under paragraph c and paragraph d of this subdivision; or b. are expressly authorized in writing by the employee and are for the benefit of the employee, provided that such authorization is voluntary and only given following receipt by the employee of written notice of all terms and conditions of the payment and/or its benefits and the details of the manner in which deductions will be made.
See N.Y. Lab. Law § 193.
N.Y. Labor Law Section 193 permits a deduction from wages only when required by law or court order or when expressly authorized in writing by the employee, voluntary, and for the employee's benefit, which a stay-or-pay clawback for the employer's benefit does not satisfy.
expressly authorized in writing by the employee and are for the benefit of the employee, provided that such authorization is voluntary and only given following receipt by the employee of written notice of all terms and conditions of the payment
See N.Y. Lab. Law § 193(1)(b).
Are training or tuition repayments treated differently?
They are analyzed the same way as a bonus. A training-repayment agreement (a TRAP) turns on whether the worker is repaying a true, separate benefit or instead surrendering compensation already earned, and on whether any deduction satisfies Labor Law Section 193, so the earned-versus-forfeitable and deduction rules govern training repayment just as they govern bonus repayment. On a touch screen, a tap shows all 2 sources in this group.
A training-repayment-agreement provision, often shortened to TRAP, asks a worker to repay the cost of training if they leave early. New York does not give TRAPs a separate statutory track. The same questions apply: is the amount a genuine debt for a benefit the worker received, or a way of recovering earned wages, and does any paycheck deduction fall within Section 193's narrow categories. On a touch screen, a tap shows all 2 sources in this group. Whether proration or a cap is required is not settled by these authorities, so a training repayment that is steep, untethered to actual cost, or used to recover compensation already vested is the most exposed .
Sources for this answer
N.Y. Labor Law Section 193 permits a deduction from wages only when required by law or court order or when expressly authorized in writing by the employee, voluntary, and for the employee's benefit, which a stay-or-pay clawback for the employer's benefit does not satisfy.
expressly authorized in writing by the employee and are for the benefit of the employee, provided that such authorization is voluntary and only given following receipt by the employee of written notice of all terms and conditions of the payment
See N.Y. Lab. Law § 193(1)(b).
Matter of William Mattar, P.C. v. Riley states that whether compensation counts as wages protected by New York Labor Law § 193 turns on whether it is vested and mandatory rather than discretionary and forfeitable, not on how the compensation plan labels it.
The dispositive factor in determining whether compensation constitutes wages is not the labeling used in a compensation plan but whether the compensation is vested and mandatory as opposed to discretionary and forfeitable ( see Caruso v Allnet Communication Servs ., 242 AD2d 484, 484-485 [1st Dept 1997]).
See Matter of William Mattar, P.C. v. Riley, 2025 NY Slip Op 02680.
Under New York law, bonuses that are objectively calculable and nondiscretionary may be considered vested wages that must be paid to an employee upon termination, regardless of contractual provisions requiring continued employment through the payout date.
A bonus tied to objective, formula-based criteria and calculable with reasonable certainty constitutes mandatory rather than discretionary compensation.
See Cohen & Buckmann, P.C., Bonus Season Strategies: Getting Ready for Year-End Payouts.
What structure is safest?
Make the money unearned until the worker stays. The durable structure is a forfeitable bonus that the worker earns only by remaining through a defined date, so leaving early forfeits an unvested amount rather than triggering a clawback of pay already earned; never try to recover compensation that has already vested. On a touch screen, a tap shows all 2 sources in this group.
The earned-versus-forfeitable line points to a clear design choice. Frame the retention payment as contingent and unvested until the continued-service condition is satisfied, so an early departure means the worker never earned it — a forfeiture — rather than owing it back. Avoid the opposite posture, where the worker is paid first and then asked to repay, because once the compensation is vested and mandatory, Section 193 and the earned-wage rule block recovery. On a touch screen, a tap shows all 2 sources in this group.
Do not pay a retention or sign-on bonus up front and rely on a clawback to get it back if a New York worker leaves early. Structure it as a forfeitable, unvested award earned only on continued service, and do not deduct any claimed repayment from wages, since Section 193 does not authorize an employer-benefit deduction. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
Matter of William Mattar, P.C. v. Riley states that whether compensation counts as wages protected by New York Labor Law § 193 turns on whether it is vested and mandatory rather than discretionary and forfeitable, not on how the compensation plan labels it.
The dispositive factor in determining whether compensation constitutes wages is not the labeling used in a compensation plan but whether the compensation is vested and mandatory as opposed to discretionary and forfeitable ( see Caruso v Allnet Communication Servs ., 242 AD2d 484, 484-485 [1st Dept 1997]).
See Matter of William Mattar, P.C. v. Riley, 2025 NY Slip Op 02680.
Under New York law, bonuses that are objectively calculable and nondiscretionary may be considered vested wages that must be paid to an employee upon termination, regardless of contractual provisions requiring continued employment through the payout date.
A bonus tied to objective, formula-based criteria and calculable with reasonable certainty constitutes mandatory rather than discretionary compensation.
See Cohen & Buckmann, P.C., Bonus Season Strategies: Getting Ready for Year-End Payouts.
N.Y. Labor Law Section 193 permits a deduction from wages only when required by law or court order or when expressly authorized in writing by the employee, voluntary, and for the employee's benefit, which a stay-or-pay clawback for the employer's benefit does not satisfy.
expressly authorized in writing by the employee and are for the benefit of the employee, provided that such authorization is voluntary and only given following receipt by the employee of written notice of all terms and conditions of the payment
See N.Y. Lab. Law § 193(1)(b).