"Seyfarth Synopsis: As swashbuckling trick or treaters are donning their swords, and fearing getting trapped in a Halloween haunted house or corn maze, employers operating in California are navigating the mental maze of deciphering a path to compliance with AB 692. Read on for our summary of the tricks and treats (exceptions) to this new "stay-or-pay" prohibition law, which goes into effect January 1, 2026."
"On Halloween, it's not ghosts or witches that are concerning employers operating in California, but rather California's AB 692, which goes into effect January 1, 2026. This is one of many legislative efforts nationwide purporting to protect employees from employers "trapping" (TRAP an acronym for Training Repayment Assistance Programs) them into continued employment by paying for training programs in exchange for the employee remaining employed for a certain period of time."
AB 692 takes effect January 1, 2026 and voids contracts that require employees, upon separation, to repay any debt or benefits provided during employment. Covered repayments include training program costs, immigration expenses, signing or retention bonuses, relocation costs, and similar employer-provided benefits. Narrow carveouts exist for certain stay-or-pay agreements, but most 'stay-or-pay' provisions will be unenforceable. The law targets programs that effectively 'trap' employees into continued employment in exchange for employer-funded benefits. Employers doing business in California must review and revise employment agreements and benefit programs to achieve compliance before the effective date.
Read at California Peculiarities Employment Law Blog
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