AB 692: Employment: contracts in restraint of trade.

Official summary

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

Existing law declares every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind to be void, except as expressly provided. Existing law provides for a system of labor standards enforcement administered by the Labor Commissioner.

This bill would, for contracts entered into on or after January 1, 2026, make it unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, specified contract terms, including a term that requires the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates. The bill would declare these contracts as contracts that restrain a person from engaging in a lawful profession, trade, or business, and as void and contrary to public policy, except as provided.

This bill would authorize a worker who has been subjected to the above-described prohibited conduct regarding a contract or its terms or a work representative to bring an action on behalf of that worker, other persons similarly situated, or both, in any court of competent jurisdiction. The bill would make a person who violates these provisions liable for specified civil penalties and relief.

Sponsors

Sponsors by party (alphabetical): Democratic 6

“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. October 13, 2025Chaptered by Secretary of State - Chapter 703, Statutes of 2025.
2. October 13, 2025Approved by the Governor.
3. September 23, 2025Enrolled and presented to the Governor at 4 p.m.
4. September 11, 2025Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 46. Noes 20. Page 3340.).
5. September 10, 2025In Assembly. Concurrence in Senate amendments pending.
6. September 10, 2025Read third time. Passed. Ordered to the Assembly. (Ayes 25. Noes 11. Page 2815.).
7. September 8, 2025Read second time. Ordered to third reading.
8. September 5, 2025Read third time and amended. Ordered to second reading.
9. September 2, 2025Read second time. Ordered to third reading.
10. August 29, 2025Read second time and amended. Ordered returned to second reading.
11. August 29, 2025From committee: Amend, and do pass as amended. (Ayes 5. Noes 2.) (August 29).
12. August 18, 2025In committee: Referred to suspense file.