The 2024–2025 California legislative session came to an official close at midnight on October 13, 2025, when Governor Newsom’s deadline to sign or veto bills passed by the Legislature expired. Of the approximately 917 bills passed by the Legislature, the Governor signed 794 bills into law and vetoed 123 bills. The bills signed into law include several new employment-related laws for California employers.
Below is a summary of some of the major employment-related legislation signed into law this year. Most of these bills become effective on January 1, 2026. However, a few became effective immediately or make changes the Legislature has identified as declaring “existing law.”
Given the volume of employment litigation in California, we encourage all employers to carefully review and update their policies and practices to make sure their policies and practices align with the latest legislation.
I. EMPLOYMENT CONTRACTS
AB 692: Prohibition of “Stay or Pay” Provisions in Employment Contracts
California is well known for its prohibition against noncompete agreements. AB 692 builds upon these restrictions by targeting employment contracts that contain so-called “stay or pay” provisions. A “stay or pay” provision is a contractual provision that requires a worker to pay their employer a penalty, fee, or acquired debt if they terminate their employment before completing a minimum term of employment. With very limited exceptions, AB 692 outlaws most “stay or pay” provisions in...
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