Payback agreements in California will be impacted by AB 692

California's AB 692, effective January 1, 2026, fundamentally restricts how employers can use "stay-or-pay" repayment agreements for relocation benefits and immigration costs.

Core change: Traditional repayment agreements (where employees reimburse relocation costs if they leave within 12-24 months) must now meet six strict statutory conditions to be enforceable:

1. Agreement signed at outset of employment only
2. Employees get 5 business days for legal review
3. Repayment must be prorated with no interest
4. Maximum 2-year retention period
5. Employees can defer repayment until end of period
6. No repayment required if company terminates employee (except for misconduct)

What's affected:

• Relocation benefit repayment agreements (home sale, HHG, temp housing, etc.)
• Green card cost recovery agreements ($15K-$25K+)
• Retention and sign-on bonuses with payback provisions

Who it applies to: California employees broadly - including those who work in CA, reside in CA, have CA contract provisions, or work for companies with significant CA operations.

Critical action: Engage legal counsel immediately to audit and restructure all repayment agreements before January 1, 2026. Non-compliant agreements are unenforceable.

Not retroactive: Existing agreements signed before 1/1/26 remain valid, but any new agreements, amendments, or renewals must comply.

California's AB 692 reflects a broader movement toward limiting employment restrictions and enhancing worker mobility. Similar legislation has been proposed in other states, and employers should anticipate that other jurisdictions may follow California's lead.

Plus Relocation is actively monitoring developments related to AB 692 and will provide guidance as implementation details emerge. For questions about the impact to your mobility program or to discuss compliance strategies, please contact your Plus Representative.

Click here to request a more detailed Impact Alert.