In 2025, Governor Newsom signed Assembly Bill (AB) 692, which made it unlawful to include in any employment contract or requirement that a worker execute, as a condition of employment, a contract that includes terms that require the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates, unless it fell under one of five exceptions. The bill applied to contracts entered into on or after January 1, 2026.
On September 30, 2026, the Governor signed AB 1697 which delays the effective date of AB 692 to January 1, 2027.
The amendments also add additional exceptions to the law, including the following:
- Retention bonuses if certain requirements are met
- Repayment obligation arising from voluntary separation related to advanced paid time off
- Sign-on or retention bonuses within some regulated professions if certain requirements are met
The amendments under AB 1697 take effect immediately pursuant to an urgency clause in the bill.
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