Stay-or-pay clauses and noncompetes
A noncompete stops you working for a rival. A stay-or-pay clause makes leaving cost money. The law treats them differently.
A noncompete says where you can't work after you leave. A stay-or-pay clause says what you owe for leaving at all. Both keep people in jobs, and as states restricted noncompetes, employers used repayment clauses more.
The FTC rule
The Federal Trade Commission's 2024 rule would have banned most noncompetes nationwide. A federal court in Texas set it aside on August 20, 2024, and on September 5, 2025 the FTC dropped its appeals (FTC). There is no federal ban on noncompetes or stay-or-pay clauses.
States that link them
Colorado and Wyoming put their training repayment rules inside their noncompete laws: a repayment term that breaks the rules is treated as a void noncompete. New York, California and Connecticut wrote separate laws aimed at repayment itself.
| State | Training costs | From |
|---|---|---|
| California | Void | January 1, 2027 |
| Colorado | Only with conditions | August 10, 2022 |
| Connecticut | Void | October 1, 2026 |
| Minnesota | Not settled | Any date |
| New York | Void | December 19, 2026 |
| Wyoming | Only with conditions | July 1, 2025 |
Every other state: no stay-or-pay law, so the contract decides.
Sources
- Federal Trade Commission files to accede to vacatur of non-compete clause rule, FTC, September 5, 2025.
- HB 22-1317, Restrictive Employment Agreements, Colorado General Assembly, read November 8, 2026.
- SF0107, enrolled act, Wyoming Legislature, read November 8, 2026.
- Trapped at Work Act, New York State Department of Labor, read November 8, 2026.
- AB 1697, chaptered text (Chapter 889, Statutes of 2026), California Legislative Information, read November 8, 2026.
- C.G.S. § 31-51r, employment promissory notes, Connecticut General Assembly, read November 8, 2026.