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California’s Assembly Bill (“AB”) 692 took effect on January 1, 2026, significantly limiting the use of commonplace “stay-or-pay” clauses in offer letters and agreements, which require employees or prospective employees to repay certain costs if their employment ends.

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AB 692 underscores California’s commitment to limit the use of contractual provisions restricting or disincentivizing workforce mobility. Although the new law does not apply retroactively (essentially grandfathering in “stay-or-pay” clauses entered into before January 1, 2026), employers must audit agreements and practices, and plan for compliance to avoid significant potential liability going forward.

To read the full post, please visit our <a href="https://blankromeworkplace.com/2026/01/20/californias-ab-692-reins-in-stay-or-pay-provisions-in-california-employment-agreements/" target="_blank" rel="noreferrer noopener">Blank Rome Workplace</a> blog.

Taylor C. Morosco

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California’s AB 692 Reins in “Stay or Pay” Provisions in California Employment Agreements

California’s AB 692 Reins in “Stay or Pay” Provisions in California Employment Agreements

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California’s AB 692 Reins in “Stay or Pay” Provisions in California Employment Agreements

Offices

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