AB 1697: California's Stay-or-Pay Contract Ban Now Starts With Contracts Signed in 2027

What changed

AB 1697 (Chapter 889, Statutes of 2026), an urgency law that took effect when the Governor signed it on September 30, 2026, moves California's ban on stay-or-pay employment contracts to contracts entered into on or after January 1, 2027, instead of January 1, 2026. It also adds exceptions, including some recruitment and retention bonuses, repayment of advanced paid time off on voluntary separation, and certain broker-dealer, insurance producer and investment adviser affiliation contracts.

Who it applies to

California employers that use employment or training contracts requiring a worker to repay costs, fees or debts if they leave.

Key dates

Compliance deadline:

January 1, 2027

Effective date:

January 1, 2027

Stay-or-pay contract ban applies to contracts entered into on or after this date

What employers may need to do

• Review any contract that makes a worker pay if they leave; the ban applies to contracts entered into on or after January 1, 2027.
• Before relying on a new exception for a bonus, advanced paid time off or an affiliation agreement, check that the contract meets its conditions.

Official source

Detected by RegWatch monitoring on October 1, 2026. Always confirm details against the official source above — this page is a summary, not legal advice.

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