AB 692 Stay-or-Pay

Many California employers still believe they can require an employee to repay training costs, sign-on bonuses, or visa sponsorship expenses if the employee leaves early. As of January 1, 2026, most of those agreements are unlawful.

California’s AB 692 — codified at Business and Professions Code section 16608 and Labor Code section 926 — broadly prohibits stay-or-pay provisions in agreements entered into on or after January 1, 2026.

The statute covers training repayment clauses, sign-on bonus clawbacks, and any penalty, fee, or cost imposed because the work relationship ended.

The definition of prohibited costs is explicit. It includes reimbursement for immigration and visa-related costs. H-1B sponsorship repayment agreements and green card cost-recovery provisions in new agreements are covered.

The law is not retroactive. Agreements signed before January 1, 2026 are governed by prior law. But using an old template for a new hire after that date is a compliance failure.

The exceptions are narrow. A sign-on bonus repayment can survive only if it is in a standalone agreement, the worker receives written notice of the right to consult an attorney, the worker has at least five business days before signing, and repayment is triggered only by voluntary resignation or termination for misconduct — not a layoff.

The only surviving training repayment exception is for a “transferable credential” — a degree from an accredited third-party institution that is not required for the worker’s current job.

Violations carry real consequences. Workers can sue individually or on a representative basis for the greater of actual damages or $5,000 per worker, plus attorneys’ fees. PAGA exposure applies.

Have your offer letters, onboarding documents, and immigration sponsorship agreements been reviewed for AB 692 compliance?

This post shares general information based on common patterns I see in California workplaces. It is not legal advice, does not create an attorney-client relationship, and outcomes depend on specific facts — no lawyer can guarantee a result. Past results do not guarantee or predict future outcomes. AI may have been used to create this post. All content reviewed by a CA attorney before publication. This post may be attorney advertising.

Michael Trust Law, APC, 703 Pier Avenue, Ste. B367, Hermosa Beach, CA 90254: michaeltrustlaw.com