By WorkRight Law
California is taking another major step to protect workers’ rights and freedom to change jobs. A new law, AB 692, targets unfair “stay-or-pay” contracts — agreements that force employees to repay training, relocation, or bonus money if they leave their job before a certain time.
If signed by Governor Newsom, this law will take effect on January 1, 2026, and apply to new agreements signed after that date.
What Are “Stay-or-Pay” Agreements?
Some employers use “stay-or-pay” clauses to keep workers from leaving. These clauses often require employees to repay thousands of dollars if they quit or get fired before a set period. The result? Many workers feel trapped in toxic or unfair jobs because leaving could mean going into debt.
AB 692 aims to stop this practice.
What AB 692 Does for Workers
Under the new law, employers cannot make you sign or enforce agreements that:
- Require repayment if you quit or are terminated
- Impose “training costs,” “replacement fees,” or other penalties
- Force you to repay immigration or visa-related expenses
- Make you cover a company’s “lost profits” or “goodwill” after leaving
Any such agreement will be void and unenforceable under California law.
Limited Exceptions
Employers can still require repayment for education, tuition, or sign-on bonuses — but only if strict conditions are met, such as:
- The training provides a transferable credential
- Repayment is prorated and interest-free
- The agreement is separate from your employment contract
- You get five business days to review and seek legal advice
If Your Employer Violates AB 692
If a company breaks this law, you may be entitled to:
- At least $5,000 or your actual damages (whichever is greater)
- Attorney’s fees and court costs
- Injunctive relief to stop the employer from enforcing illegal clauses
Workers can also file a complaint with the California Labor Commissioner, who can investigate and fine violators.
Why AB 692 Matters
This law protects worker mobility — your right to leave an unfair or unsafe job without being financially punished. Starting in 2026, California workers will have stronger protections against “stay-or-pay” tactics.
If your employer is trying to make you repay training or bonus costs, you have rights. Fight back at WorkRight Law.
(562) 328 2004
WorkRightLaw.com
