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Navigating AB 692: How California’s New Law Impacts Repayment Policies
11 November 2025
Situation Summary
Effective January 1, 2026, California’s Assembly Bill 692 (AB 692) bans most “stay-or-pay” agreements, which require employees to repay relocation, sign-on, or tuition benefits if they leave within one to two years.
Part of a broader push to limit employment restrictions and enhance worker mobility, AB 692 applies broadly to anyone working in California — including those who reside in the state, have California contract provisions, or work for companies with significant California operations.
The law bars employers from conditioning employment or benefits on repayment obligations, eliminating financial penalties designed to retain staff. Employers may not require repayment to the company, a training provider, or a debt collector upon termination, except when the employee leaves voluntarily or is terminated for misconduct.
Note:
- These impacts are wide ranging: repayment agreements for relocation benefits, immigration/visa fees, and retention/sign-on bonuses with payback provisions.
- Existing agreements signed before January 1, 2026, remain valid.
Who’s Covered
AB 692 applies to anyone working in California--regardless of employer location or where the agreement was signed:
- Agreements signed while in California apply even if the employee later moves out of state.
- Agreements signed before moving to California may apply once work begins in the state.
- Multi-state programs that include California (e.g., rotational programs including time in California) are included.
Bottom line: The law is determined by where the work is performed, not where the employer is located.
Exceptions, if Strict Conditions are Met
Certain educational or discretionary bonuses may still allow repayment if strict conditions are met:
- Exception for Discretionary Monetary Payments/Bonuses: Contracts for discretionary or unearned payments at the start of employment, such as a sign-on bonuses not tied to specific job performance, are permitted if all required conditions are met.
- Agreement signed at outset of employment only
- Must be separate contract from employment contract
- Employees get 5 business days for legal review
- Repayment must be prorated with no interest
- Maximum 2-year retention period
- Employees can defer repayment until end of period
- No repayment required if company terminates employee (except for misconduct)
- Agreement signed at outset of employment only
- Exception for Transferable-Credential Tuition Programs -- such as degrees or professional certifications -- if strict criteria are met (same as above) and that the credential is not a requirement of the position and can be transferred to another job
Note: The burden is on employers to ensure new agreements comply with the statute if they intend to rely on any of these possible exceptions.
Again, existing agreements remain valid if signed before January 1, 2026.
NEI Recommended Client Actions
Companies should engage legal counsel immediately to audit and restructure all repayment agreements before the law’s January 1, 2026 implementation and actively assess which employees or policies could be affected. It is recommended that Legal, HR and Global Mobility teams work closely together on this issue to be fully prepared.
Reviewing and updating repayment policies now will help companies maintain compliance and signal a commitment to employee-focused practices in a changing regulatory landscape.
Keep in mind:
- Non-compliant agreements are void and unenforceable.
- The bill provides workers the ability to seek civil action against employers that violate in Labor Code, minimum $5,000 per worker.
While not certain at this time, some sources note that this could be a growing trend in other states and may be enacted elsewhere in the future. NEI Global will help clients stay informed on this issue and will continue to provide updates on changing legislation trends as they occur.
If you would like to discuss this in greater detail, please reach out to your NEI Global Client Relations Manager or NEI Global Client Development contact at 800.533.7353 any time.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.
Navigating AB 692: How California’s New Law Impacts Repayment Policies
11 November 2025
Situation Summary
Effective January 1, 2026, California’s Assembly Bill 692 (AB 692) bans most “stay-or-pay” agreements, which require employees to repay relocation, sign-on, or tuition benefits if they leave within one to two years.
Part of a broader push to limit employment restrictions and enhance worker mobility, AB 692 applies broadly to anyone working in California — including those who reside in the state, have California contract provisions, or work for companies with significant California operations.
The law bars employers from conditioning employment or benefits on repayment obligations, eliminating financial penalties designed to retain staff. Employers may not require repayment to the company, a training provider, or a debt collector upon termination, except when the employee leaves voluntarily or is terminated for misconduct.
Note:
- These impacts are wide ranging: repayment agreements for relocation benefits, immigration/visa fees, and retention/sign-on bonuses with payback provisions.
- Existing agreements signed before January 1, 2026, remain valid.
Who’s Covered
AB 692 applies to anyone working in California--regardless of employer location or where the agreement was signed:
- Agreements signed while in California apply even if the employee later moves out of state.
- Agreements signed before moving to California may apply once work begins in the state.
- Multi-state programs that include California (e.g., rotational programs including time in California) are included.
Bottom line: The law is determined by where the work is performed, not where the employer is located.
Exceptions, if Strict Conditions are Met
Certain educational or discretionary bonuses may still allow repayment if strict conditions are met:
- Exception for Discretionary Monetary Payments/Bonuses: Contracts for discretionary or unearned payments at the start of employment, such as a sign-on bonuses not tied to specific job performance, are permitted if all required conditions are met.
- Agreement signed at outset of employment only
- Must be separate contract from employment contract
- Employees get 5 business days for legal review
- Repayment must be prorated with no interest
- Maximum 2-year retention period
- Employees can defer repayment until end of period
- No repayment required if company terminates employee (except for misconduct)
- Agreement signed at outset of employment only
- Exception for Transferable-Credential Tuition Programs -- such as degrees or professional certifications -- if strict criteria are met (same as above) and that the credential is not a requirement of the position and can be transferred to another job
Note: The burden is on employers to ensure new agreements comply with the statute if they intend to rely on any of these possible exceptions.
Again, existing agreements remain valid if signed before January 1, 2026.
NEI Recommended Client Actions
Companies should engage legal counsel immediately to audit and restructure all repayment agreements before the law’s January 1, 2026 implementation and actively assess which employees or policies could be affected. It is recommended that Legal, HR and Global Mobility teams work closely together on this issue to be fully prepared.
Reviewing and updating repayment policies now will help companies maintain compliance and signal a commitment to employee-focused practices in a changing regulatory landscape.
Keep in mind:
- Non-compliant agreements are void and unenforceable.
- The bill provides workers the ability to seek civil action against employers that violate in Labor Code, minimum $5,000 per worker.
While not certain at this time, some sources note that this could be a growing trend in other states and may be enacted elsewhere in the future. NEI Global will help clients stay informed on this issue and will continue to provide updates on changing legislation trends as they occur.
If you would like to discuss this in greater detail, please reach out to your NEI Global Client Relations Manager or NEI Global Client Development contact at 800.533.7353 any time.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.
Navigating AB 692: How California’s New Law Impacts Repayment Policies
11 November 2025
Situation Summary
Effective January 1, 2026, California’s Assembly Bill 692 (AB 692) bans most “stay-or-pay” agreements, which require employees to repay relocation, sign-on, or tuition benefits if they leave within one to two years.
Part of a broader push to limit employment restrictions and enhance worker mobility, AB 692 applies broadly to anyone working in California — including those who reside in the state, have California contract provisions, or work for companies with significant California operations.
The law bars employers from conditioning employment or benefits on repayment obligations, eliminating financial penalties designed to retain staff. Employers may not require repayment to the company, a training provider, or a debt collector upon termination, except when the employee leaves voluntarily or is terminated for misconduct.
Note:
- These impacts are wide ranging: repayment agreements for relocation benefits, immigration/visa fees, and retention/sign-on bonuses with payback provisions.
- Existing agreements signed before January 1, 2026, remain valid.
Who’s Covered
AB 692 applies to anyone working in California--regardless of employer location or where the agreement was signed:
- Agreements signed while in California apply even if the employee later moves out of state.
- Agreements signed before moving to California may apply once work begins in the state.
- Multi-state programs that include California (e.g., rotational programs including time in California) are included.
Bottom line: The law is determined by where the work is performed, not where the employer is located.
Exceptions, if Strict Conditions are Met
Certain educational or discretionary bonuses may still allow repayment if strict conditions are met:
- Exception for Discretionary Monetary Payments/Bonuses: Contracts for discretionary or unearned payments at the start of employment, such as a sign-on bonuses not tied to specific job performance, are permitted if all required conditions are met.
- Agreement signed at outset of employment only
- Must be separate contract from employment contract
- Employees get 5 business days for legal review
- Repayment must be prorated with no interest
- Maximum 2-year retention period
- Employees can defer repayment until end of period
- No repayment required if company terminates employee (except for misconduct)
- Agreement signed at outset of employment only
- Exception for Transferable-Credential Tuition Programs -- such as degrees or professional certifications -- if strict criteria are met (same as above) and that the credential is not a requirement of the position and can be transferred to another job
Note: The burden is on employers to ensure new agreements comply with the statute if they intend to rely on any of these possible exceptions.
Again, existing agreements remain valid if signed before January 1, 2026.
NEI Recommended Client Actions
Companies should engage legal counsel immediately to audit and restructure all repayment agreements before the law’s January 1, 2026 implementation and actively assess which employees or policies could be affected. It is recommended that Legal, HR and Global Mobility teams work closely together on this issue to be fully prepared.
Reviewing and updating repayment policies now will help companies maintain compliance and signal a commitment to employee-focused practices in a changing regulatory landscape.
Keep in mind:
- Non-compliant agreements are void and unenforceable.
- The bill provides workers the ability to seek civil action against employers that violate in Labor Code, minimum $5,000 per worker.
While not certain at this time, some sources note that this could be a growing trend in other states and may be enacted elsewhere in the future. NEI Global will help clients stay informed on this issue and will continue to provide updates on changing legislation trends as they occur.
If you would like to discuss this in greater detail, please reach out to your NEI Global Client Relations Manager or NEI Global Client Development contact at 800.533.7353 any time.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for tax, legal or accounting advice. Please consult your own tax, legal and accounting advisors before engaging in any transaction.
