California’s AB 692, officially in effect as of Jan. 1, 2026, is bringing notable changes to how employers may use repayment or “stay‑or‑pay” provisions in employment agreements. While the law applies broadly to various repayment obligations, AB 692 has meaningful implications for organizations that have historically used reimbursement agreements when sponsoring foreign national employees for U.S. permanent residency (green cards).
Applying AB 692 to Green Card Reimbursement Agreements
AB 692 limits agreements that require employees to repay certain costs if they leave their job — largely prohibiting the use of these types of agreements in California for the repayment of costs associated with sponsoring immigrant and non-immigrant visas and permanent resident status. AB 692’s restrictions are triggered by separation and only apply to any new agreement entered into on or after Jan. 1, 2026. Agreements executed prior to Jan. 1, 2026 remain valid and subject to the existing legal requirements at the time the agreement became effective.
While AB 692 does require adjustments to sponsorship practices for California employers regarding the repayment of costs, it does not restrict an employer’s ability to sponsor workers for permanent residency. Instead, the law simply changes how related costs for sponsorship may be recouped.
A Measured, Forward‑Looking View
While AB 692 restricts the use of repayment agreements for immigration sponsorship costs upon separation, its practical...
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