New Year, new legislation — California and New York are leading the way in restricting certain “stay-or-pay” provisions in employment contracts. These types of provisions are relatively common. For example, an employer may offer a signing bonus with the proviso that the incentive would be clawed back if the employee leaves before a specified period or may provide training assistance structured as a loan that becomes repayable if the employee does not remain with the company long enough. Increasingly, however, some states view these arrangements as limiting employee mobility and have enacted employee-friendly legislation aimed at curbing contractual terms that arguably penalize workers for changing jobs.
On January 1, 2026, Assembly Bill 692 will become effective. With some narrow exceptions, employers will no longer be able to require employees who leave or applicants who do not join a company to repay certain monetary costs. For example, the new law prohibits employers from requiring departing employees to repay certain types of retention bonuses, tuition reimbursement payments, training fees, and repayment for immigration or relocation expenses.
On the other hand, the law does not apply to a contract entered into under a loan repayment assistance program, contracts providing for discretionary monetary payments that are not tied to specific job performance (provided certain statutory conditions are satisfied), or agreements relating to tuition repayment that...
Fairfield Township (Essex) By: Richard L. Smith A Delaware-based company with operations in Fairfield, New Jersey, has agreed to pay nearly $2.9 million to settle allegations that it improperly o...