2026 California Employment Law Update: California Bans "Stay to Play" Clauses

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On January 1, 2026, California Bill 692 went in to effect, adding Business and Professions Code section 16608 and Labor Code section 926, which prohibits employers from requiring repayment of training expenses, relocation costs, or other hiring-related fees after employment ends.

The limited exceptions include: (1) government-sponsored loan forgiveness or tuition programs; (2) agreements for transferable education credentials, such as degrees or professional certifications, if specific criteria are met; and (3) state-approved apprenticeship programs. 

The law provides employees a private right of action against employers with a $5,000 minimum civil penalty per employee, plus attorneys’ fees, costs, and injunctive relief.

This bill strongly reinforces California’s continued effort to expand worker mobility and limit contractual provisions that discourage employees from changing jobs.  

Recommendations for employers

Employers should audit offer letters and training agreements for any repayment provisions, update their relocation and reimbursement policies to ensure they don’t condition repayment on continued employment, and train HR and management teams about the new restrictions. Best practice also includes consulting counsel before implementing tuition-assistance or credential-based programs to ensure compliance with exceptions.

If you have further questions about Assembly Bill 629, Maynard Nexsen's Labor & Employment law team stands ready to help.