Pay to Leave: Stay-or-Pay Contracts, the New Regulatory Wave, and How Leaders Can Retain Talent Through Investment Rather Than Restraint

Abstract: Stay-or-pay contracts require workers to repay training costs, bonuses, or other sums if they leave before a set date. Once a niche practice, they have spread into nursing, trucking, aviation, retail, and other sectors, and regulators have responded. Connecticut extended its ban on employment promissory notes to all employers on October 1, 2026; New York enacted its Trapped at Work Act; and California, after passing a broad ban in 2025, delayed it to January 2027 while adding exceptions. This article examines stay-or-pay provisions, including training repayment agreement provisions, alongside the related evidence on noncompete agreements. It reviews economic theory on who should pay for training, empirical research on mobility restraints and wages, and documented organizational examples, from state enforcement actions against hospital and retail employers to investment-based education benefits. It then outlines five evidence-based responses for leaders who want to protect training investments without trapping workers, and three long-term capabilities for retention built on development rather than restraint.