Good Bye “Stay or Pay” Agreements

Effective January 1, 2026, Assembly Bill 692 bans most “stay-or-pay” agreements. These agreements require employees to repay training, relocation, or similar advanced costs after leaving a job before a designated time. The California legislature sees these clauses as unfair limits on job mobility.

Only true loans or legitimate retention bonuses are exempt. Employers should review offer letters, training and relocation agreements, and any repayment terms now.

If repayment depends on staying employed, it’s probably unlawful. Replace claw-backs with retention bonuses or tiered incentives that reward commitment instead of penalizing departures.