California Passes Bill Amending Prior Legislation Regarding Stay-or-Pay Contract Provisions
One year after Senate Bill 692 added legislation restricting stay-or-pay agreements, Assembly Bill 1697 further amends Business and Professions Code Section 16608 and Labor Code section 926 to extend the date upon which these prohibitions will apply and to expand the exceptions to the bills’ prohibitions.
“Stay or Pay” Employment Agreement Provisions Prohibited in the New Year
Effective January 1, 2026, subject to limited exceptions, California will prohibit contractual terms that require employees to repay an employer for a debt if their employment ends. Failure to abide by these prohibitions for contracts entered into in the new year may subject employers to civil liability.