Understanding California’s AB 692 and Its Impact on Employee Mobility

California’s Assembly Bill 692 introduces significant changes to how employers can use repayment agreements related to employee training and mobility. If signed into law, AB 692 will take effect on January 1, 2026, limiting the use of these agreements and other penalties that restrict employee movement. This post explains what AB 692 means for employers, mobility managers, and employees, and offers guidance on how to prepare for the upcoming changes.

Repayment agreements

What AB 692 Changes About Repayment Agreements

AB 692 amends the California Business and Professions Code (§16608) to prohibit certain repayment agreements that require employees to reimburse employers for training or other costs if they leave early. These agreements, often called “pay or stay” contracts, have been common tools for employers to protect investments in employee development.

Under the new law, repayment agreements that:

• Require employees to repay training costs or other fees when leaving

  
  

• Limit employee mobility by enforcing repayment through third parties

  
  

• Include charges for replacement hires, visa or immigration-related costs, relocation expenses, or lost profits

  
  

will be considered void and unenforceable.

Some repayment agreements may still be valid but only if they meet strict conditions:

• The agreement must be separate from the employment contract.

  
  

• Employees must have at least five business days to review the agreement and seek legal advice before signing.

  
  

• Repayment obligations must be interest-free and prorated over a maximum of two years.

  
  

• Benefits tied to the agreement can be deferred until the employee completes the qualifying period, with no repayment required if the employee stays.

  
  

• Repayment is triggered only if the employee leaves voluntarily or is terminated for cause.

  
  

These rules aim to protect employee mobility while allowing employers to recover reasonable costs under fair conditions.

How AB 692 Affects Corporate Mobility Programs

Employee mobility programs often include relocation packages, visa sponsorship, and training investments. AB 692 restricts employers’ ability to recoup these costs through repayment agreements, which will impact how mobility programs are structured.

Employers will no longer be able to:

• Require repayment of relocation expenses or visa-related costs if an employee leaves early.

  
  

• Enforce repayment through third parties or charge fees for lost goodwill or profits.

  
  

• Use repayment agreements that are bundled with employment contracts without a clear, separate agreement.

  
  

Mobility managers should review existing policies and contracts to ensure compliance. For example, if a company currently requires employees to repay relocation costs if they leave within a year, this practice will need to be adjusted or replaced with compliant retention incentives.

Retention bonuses or similar payments may still be offered, but they must comply with the law’s strict requirements and cannot be used to bypass the repayment agreement restrictions.

Preparing for AB 692: Practical Steps for Employers and Mobility Teams

To prepare for AB 692, employers and mobility managers should take the following actions:

• Audit current repayment agreements: Identify all contracts that require employees to repay training, relocation, or visa costs.

  
  

• Separate repayment agreements from employment contracts: Draft standalone agreements that comply with the five-business-day review period and other requirements.

  
  

• Adjust repayment terms: Ensure repayment is interest-free, prorated, and limited to two years.

  
  

• Review mobility policies: Update relocation and visa reimbursement policies to remove unenforceable repayment clauses.

  
  

• Train HR and mobility staff: Educate teams on the new rules and how to communicate changes to employees.

  
  

• Consider alternative retention strategies: Use retention bonuses or deferred benefits that comply with AB 692 to encourage employee commitment.

  
  

By acting early, companies can avoid legal risks and maintain effective mobility programs that respect employee rights.

Repayment agreements will require careful review and adjustment under AB 692.

What AB 692 Means for Employees on Assignments or Relocating

For employees, AB 692 offers greater protection against unexpected repayment demands when leaving a job. Employees who relocate or receive training can expect:

• No surprise repayment obligations for relocation or visa costs if they leave early.

  
  

• Clear, separate agreements if repayment is required, with time to review and seek advice.

  
  

• Repayment terms that are fair, prorated, and limited in duration.

  
  

This change supports employee mobility and career flexibility, reducing financial penalties that previously restricted movement.

Employees should review any repayment aent document on deskgreements carefully and ask questions if terms seem unclear or unfair. Knowing their rights under AB 692 can help employees make informed decisions about assignments and relocations.

Final Thoughts on AB 692 and Repayment Agreements

California’s AB 692 will reshape how employers handle repayment agreements related to training and mobility. The law prioritizes employee freedom to move while allowing employers to recover reasonable costs under clear, fair conditions.

Employers and mobility managers should start reviewing and updating policies now to ensure compliance by January 2026. Employees benefit from greater transparency and protection, making mobility decisions less risky.