California AB692 prohibits certain contract terms in employment agreements starting January 1, 2026.

California AB692 adds Section 16608 to the Business and Professions Code and Section 926 to the Labor Code, prohibiting specific terms in employment contracts. Effective January 1, 2026, it is unlawful to include terms that require workers to pay debts if employment ends, authorize debt collection if employment ends, or impose penalties if employment ends. Exceptions include loan repayment programs and certain tuition repayment agreements. Workers or representatives can sue for violations, seeking damages, injunctive relief, and attorney's fees.

California AB692 prohibits certain contract terms in employment agreements starting January 1, 2026.

California AB692 adds Section 16608 to the Business and Professions Code and Section 926 to the Labor Code, prohibiting specific terms in employment contracts. Effective January 1, 2026, it is unlawful to include terms that require workers to pay debts if employment ends, authorize debt collection if employment ends, or impose penalties if employment ends. Exceptions include loan repayment programs and certain tuition repayment agreements. Workers or representatives can sue for violations, seeking damages, injunctive relief, and attorney's fees.