There Are Some Specified Exclusions.
Assembly Bill No. 692, adding Business and Professions Code section 16608 and Labor Code section 926 to the statutory law effective January 1, 2026, prohibits employers from entering into employment contract containing terms that require repayment, collection, or penalties triggered by termination of employment. Employees have the right to bring a civil action against employers who include such prohibited clauses in agreements signed on or after January 1, 2026. The remedies available include the greater of actual damages or $5,000 per employee, injunctive relief, and recovery of attorneys’ fees and costs. (See new Lab. Code, § 926.) This new statute expressly excludes the following situations from its coverage: (1) discretionary sign-on payments or retention bonuses; (2) tuition reimbursements; (3) apprenticeships; and (4) certain government programs.