New Rules for Employee Repayment Agreements in California
Are your California employee repayment agreements about to become non-compliant under the new 2026 rule?
California’s AB 692: New Rules for Employee Repayment Agreements
Effective January 1, 2026, California’s AB 692 sets strict new standards for any repayment agreements tied to relocation, immigration, or sign-on bonuses. If you employ or relocate anyone connected to California, here is what you need to know.
What is AB 692?
AB 692 is a California law designed to protect workers from contracts that require them to repay relocation or immigration costs if their job ends. The law restricts employers’ ability to include “payback” terms in employment agreements, making most of these contracts void unless strict conditions are met.
Why Was This Law Passed?
The law responds to public policy concerns that older forms of repayment contracts make it difficult and more expensive for employees to change jobs or move freely in their careers. California wants to encourage worker mobility and prevent unnecessary restrictions on employees.
Who Is Impacted?
· Employees who work, reside, or are relocated to/from California, including remote workers
· Employers with headquarters, significant operations, or contract provisions in California
· HR teams managing mobility, immigration, or bonus agreements for California employees
What Has Changed? 6 Key Requirements
AB 692 restricts traditional “stay-or-pay” agreements. Employers must meet all of the following for any repayment contract to be enforceable:
· Agreement at Start: Presented and signed when employment begins
· 5 Days for Review: Employees can review terms and seek legal advice
· Prorated, No Interest Repayment: Repayment proportional to time worked; no interest fees
· Maximum Two-Year Retention: No retention periods over two years
· Deferred Repayment Option: Employees can defer payment until the end of the retention period
· No Repayment If Terminated (Except for Misconduct): No payback required if employment ends due to the company’s decision, except for misconduct
How This Impacts Mobility and HR Programs
AB 692 means HR and mobility teams must rethink how they structure relocation support, green card sponsorships, and sign-on bonuses. Contracts must be updated, reviews scheduled, and communication with all stakeholders enhanced. Assign responsibilities for ongoing compliance reviews, clarify triggers for repayments, and rework templates to align with new regulations.
Advocacy and Industry Leadership
Signature Relocation closely monitors legislative developments and participates in discussions with lawmakers, policy groups, and advocacy organizations. We keep clients informed about any further adjustments, agency guidance, or regulatory changes impacting their mobility programs.
Proactive Playbook for Employers
· Map which team members or roles may be affected
· Review bonus and relocation contract language carefully
· Coordinate updates with internal legal counsel
· Educate managers and mobile employees about these new rule changes
· Institute periodic compliance checks to remain up-to-date
Is the Law Retroactive?
Repayment agreements signed before January 1, 2026, are valid under the previous law. All new, amended, or renewed agreements after this date must comply with AB 692.
What Comes Next?
California agencies may provide more guidance as the law rolls out, and further changes could arise as state implementation matures. Signature Relocation will update clients proactively, so you are always ahead of the curve.
Final Takeaway
California AB 692 creates new protections and considerations for employees, employers, and HR teams managing relocation, immigration, and bonus agreements. With active industry engagement and ongoing support, Signature Relocation ensures our clients navigate these changes confidently.
Contact Signature Relocation for expert consultation, compliance, and document reviews at 877.373.0691.
