California continues to strengthen worker protections with Assembly Bill 692 (AB 692), a new law that bans most so-called “stay-or-pay” contract provisions. These clauses typically require employees to repay training costs, bonuses, or other expenses if they leave a job before a set period of time. Under AB 692, many of these provisions are now unlawful.
For employees, this is a significant shift. Stay-or-pay clauses have often been used to discourage workers from leaving a job—even when conditions are unfair—by threatening them with large repayment demands. AB 692 recognizes that this practice can limit worker mobility and place improper financial pressure on employees who simply want to move on to better opportunities.
Under the new law, employers are generally prohibited from requiring repayment of expenses tied to continued employment, especially when the “training” primarily benefits the employer or is required for the job. If a contract forces you to stay in a position or pay money to leave, it may now be unenforceable under California law. Importantly, AB 692 applies regardless of how the provision is labeled—whether it’s called a training agreement, reimbursement clause, or retention bonus.
Employees who signed agreements with stay-or-pay language may still have rights, even if the contract was signed before the law took effect. Attempting to enforce an illegal provision could expose an employer to legal consequences.
If you are being asked to repay money after leaving a job—or feel trapped by a contract that penalizes you for resigning—it’s critical to understand your rights. Lavi & Ebrahimian is a California labor and employment law firm dedicated to protecting employees from unlawful workplace practices.
Call 866-470-2189 today to speak with an experienced employment attorney and find out whether your stay-or-pay agreement violates California law.