AB 1697: Employment contracts: stay-or-pay provisions: contract date.

Existing law generally prohibits an employment contract from requiring a worker to pay certain penalties, fees, costs, or debts related to employment or education if the workers employment or work relationship terminates, as provided. Existing law provides that a contract that is unlawful under that prohibition is void and contrary to public policy as a restraint of engaging in a lawful profession, trade, or business. Existing law authorizes a worker, among other persons, to bring a civil action for specified civil penalties and relief for a violation of these provisions. Existing law applies these prohibitions provisions to contracts entered into on or after January 1, 2026.

This bill would instead apply those provisions to contracts entered into on or after January 1, 2027. The bill would establish exceptions to the above-described prohibition for contracts. Among these exceptions, the bill would except contracts for bonuses relating to specified recruitment and retention programs, and repayment obligations arising from advanced paid time off upon voluntary separation, as prescribed. The bill would further except certain affiliation contracts between a securities broker-dealer, insurance producer, or investment adviser and its agents or representatives that are registered and licensed, as specified, and their affiliates if the contract satisfies certain conditions. The bill would make related findings and declarations.

This bill would declare that it is to take effect immediately as an urgency statute.