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.