AB 1697: Employment contracts: stay-or-pay provisions: contract date.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

Existing law generally prohibits an employment contract from requiring a worker to pay certain penalties, fees, costs, or debts related to employment or education if the worker’s employment or work relationship terminates, as provided. Existing law provides that a contract that is unlawful under that prohibition is void and contrary to public policy as a restraint of engaging in a lawful profession, trade, or business. Existing law authorizes a worker, among other persons, to bring a civil action for specified civil penalties and relief for a violation of these provisions. Existing law applies these provisions to contracts entered into on or after January 1, 2026.

This bill would instead apply those provisions to contracts entered into on or after January 1, 2027. The bill would establish exceptions to the above-described prohibition for contracts. Among these exceptions, the bill would except contracts for bonuses relating to specified recruitment and retention programs, and repayment obligations arising from advanced paid time off upon voluntary separation, as prescribed. The bill would further except certain affiliation contracts between a securities broker-dealer, insurance producer, or investment adviser and its agents or representatives that are registered and licensed, as specified, and their affiliates if the contract satisfies certain conditions. The bill would make related findings and declarations.

This bill would declare that it is to take effect immediately as an urgency statute.

Sponsors

Sponsors by party (alphabetical): Democratic 1

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 30, 2026Chaptered by Secretary of State - Chapter 889, Statutes of 2026.
2. September 30, 2026Approved by the Governor.
3. September 3, 2026Enrolled and presented to the Governor at 4 p.m.
4. August 26, 2026Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 68. Noes 6. Page 6568.).
5. August 25, 2026In Assembly. Concurrence in Senate amendments pending.
6. August 25, 2026Read third time. Urgency clause adopted. Passed. Ordered to the Assembly. (Ayes 38. Noes 0.).
7. August 24, 2026Read second time. Ordered to third reading.
8. August 21, 2026Read third time and amended. Ordered to second reading.
9. August 4, 2026Read second time. Ordered to third reading.
10. August 3, 2026From committee: Be ordered to second reading pursuant to Senate Rule 28.8.
11. June 24, 2026From committee: Do pass and re-refer to Com. on APPR. (Ayes 13. Noes 0.) (June 23). Re-referred to Com. on APPR.
12. June 10, 2026From committee: Do pass and re-refer to Com. on JUD. (Ayes 5. Noes 0.) (June 10). Re-referred to Com. on JUD.