Bristol would like to highlight critical new legislation that will require companies doing business in California to take action and comply. Starting January 1, 2026, “Stay-or-Pay” agreements requiring repayment of relocation costs if the employee leaves the job will no longer be enforceable in California.
Repayment agreements have traditionally been standard clauses in relocating employee contracts and assignment letters, aimed at protecting the company’s financial investment by requiring a minimum commitment of 12-24 months in the new role after relocation.
Summary
California Assembly Bill No. 692 (AB 692), signed into law by Governor Gavin Newsom on October 13, 2025, introduces significant restrictions on employment contracts that require workers to repay debts upon termination of employment. The new law prohibits employers from including or enforcing contract terms that obligate employees to reimburse costs such as training, relocation, or bonuses if employment ends prematurely — except under narrowly defined exceptions.
AB 692 marks a pivotal shift in California’s employment law landscape, strengthening worker protections against restrictive contract terms. This legislation follows a broader trend of states addressing training repayment agreement provisions (“TRAPs”) and stay-or-pay provisions through new laws. Such contracts are deemed void as they restrain individuals from engaging in lawful professions or trades.
The full text of the bill, including its exceptions and potential penalties for noncompliance, may be found here: Bill Text - AB-692 Employment: contracts in restraint of trade.
Implications for Mobility
Employers should act quickly to ensure compliance and reduce legal risks. Relocation Repayment Agreements must be audited, reviewed, revised, or eliminated for employees moving to, from, or within California before January 1. Contracts that do not comply after January 1, 2026, will be considered unlawful, and employees with such contracts can seek damages, a $5,000 penalty, injunctive relief, and attorney’s fees and costs.
Note: Current agreements signed before January 1, 2026, remain valid; the law will apply to future contracts.
Bristol is seeking clarification of the new law, including its full implications, potential exceptions, and available options. We will provide more updates as we learn additional information. In the meantime, Bristol advises our clients to:
- Audit existing contracts and assignment letters for repayment clauses
- Consult legal counsel to restructure agreements under permitted exceptions
- Advise HR and legal teams on the new requirements
- Communicate changes to employees and stakeholders
Bristol will keep monitoring developments and offer additional guidance as the rules and exceptions regarding AB 692 become clearer. You can reach out to your Bristol representative for more guidance and upcoming advice.
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