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

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 |Add To My Favorites |Track Bill | Version: 04/13/26 - Amended Assembly
 03/16/26 - Amended Assembly
 02/03/26 - Introduced

 AB-1697 Employment contracts: stay-or-pay provisions: contract date.(2025-2026)

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 Date Published: 04/13/2026 02:00 PM

AB1697:v97#DOCUMENTBill Start

 Amended
 IN 
 Assembly
 April 13, 2026

 Amended
 IN 
 Assembly
 March 16, 2026

 CALIFORNIA LEGISLATURE—
 2025–2026 REGULAR SESSION

 Assembly Bill

No. 1697

Introduced by Assembly Member Kalra

February 03, 2026

An act to amend Section 16608 of the Business and Professions Code, and to amend Section 926 of the Labor Code, relating to employment. employment, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL'S DIGEST

AB 1697, as amended, Kalra.
 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 worker’s 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 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.

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

Digest Key

 Vote:
 MAJORITY2/3 
 Appropriation:
 NO 
 Fiscal Committee:
 YES 
 Local Program:
 NO 

Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 16608 of the Business and Professions Code is amended to read:

16608.

 (a) For purposes of this section, the following definitions apply:

(1) “Contract” includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.

(2) “Debt” means money, personal property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.

(3) “Debt collector” has
 the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.

(4) “Employer” means any person or entity that employs workers. “Employer” includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.

(5) “Freelance worker” has the same meaning as defined in subdivision (a) of Section 18101.

(6) “Misconduct” has the same meaning as in Section 1256 of the Unemployment Insurance Code.

(7) “Penalty, fee, or cost” includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages,
 lost goodwill, and lost profit.

(8) “Person” means a natural person or an entity, including, but
 not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.

(9) “Training provider” means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.

(10) “Transferable credential” means a degree that is offered by a third-party institution that is accredited and authorized to operate in the state, is not required for a worker’s current employment, and is transferable and useful for employment beyond the worker’s current employer.

(11) “Worker” means a natural person who is permitted to work for or on behalf
 of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. “Worker” includes, but is not limited to, an employee or prospective employee.

(b) (1) Except as provided in paragraph (2), for contracts entered into