For years, some California employers used “stay-or-pay” provisions to discourage employees from leaving. These agreements often required workers to repay training costs, tuition, signing bonuses or relocation expenses if they resigned within a certain period. As of January 1, 2026, that landscape has changed significantly. California’s AB 692 places broad limits on these arrangements and strengthens worker mobility.
Under this new law, employers generally cannot require employees to repay employment-related debts simply because their job ends. This includes many of the so-called “quit fees” that previously appeared in offer letters or training agreements. If the obligation is tied to remaining employed for a set period, it is likely prohibited. The law recognizes that these provisions can trap workers in jobs they would otherwise leave and can function as a financial penalty for exercising the right to change employment.
The scope of the prohibition is broad. It can apply to repayment demands for on-the-job training, required certifications or relocation packages that primarily benefit the employer. Even if an agreement was signed at the start of employment, it may no longer be enforceable if it effectively penalizes a worker for leaving.
Exceptions and enforcement
There are narrow exceptions to this law. Certain government-backed loan programs or legally distinct educational financing arrangements may still fall outside the prohibition. For example, if a worker voluntarily enters into a true loan agreement that is not conditioned on continued employment, repayment may still be required. The key distinction is whether the obligation is genuinely independent of employment or functions as a penalty for leaving a job.
On the flip side, some employers may still attempt to enforce outdated agreements or send demand letters after a worker resigns. Others may frame repayment as a contractual obligation without acknowledging the impact of the new law. Workers should approach these situations carefully and avoid assuming that a demand is valid simply because it appears in a signed document.
Ultimately, if you are being asked to repay training costs, tuition or relocation expenses after leaving a job, it is worth taking a closer look. California’s changes reflect a broader shift toward protecting employee freedom and preventing financial barriers to job mobility. Do not rush to pay or agree to a settlement without understanding your rights.