AB-1697 • 2026

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

Education Labor

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Kalra
Last action: 2026-04-23
Official status: Read second time. Ordered to third reading.
Effective date: Not listed

Plain English Breakdown

The official source material does not provide specific details on enforcement mechanisms beyond the date change, so claims about suing employers were removed as unsupported.

Employment Contracts: Stay-or-Pay Rules

AB-1697 changes the date when certain rules about employment contracts that require workers to pay penalties or fees if they leave their job will start applying, moving from January 1, 2026 to January 1, 2027.

What This Bill Does

Changes the rule so it applies to new employment contracts starting January 1, 2027 instead of January 1, 2026.

Who It Names or Affects

Workers who sign new employment contracts after January 1, 2027
Employers who create employment contracts

Terms To Know

Stay-or-pay provisions: Rules in a contract that say workers must pay money if they leave their job before the end of their agreement.
Void: A contract or agreement that is not legal and cannot be enforced.

Limits and Unknowns

Does not affect contracts signed before January 1, 2027.
The bill will take effect immediately if passed as an urgency statute.

Bill History

2026-04-23 California Legislative Information
Read second time. Ordered to third reading.
2026-04-22 California Legislative Information
From committee: Do pass. (Ayes 9. Noes 2.) (April 22).
2026-04-14 California Legislative Information
Re-referred to Com. on APPR.
2026-04-13 California Legislative Information
Read second time and amended.
2026-04-09 California Legislative Information
From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 6. Noes 1.) (April 8).
2026-03-17 California Legislative Information
Re-referred to Com. on L. & E.
2026-03-16 California Legislative Information
From committee chair, with author's amendments: Amend, and re-refer to Com. on L. & E. Read second time and amended.
2026-03-16 California Legislative Information
Referred to Com. on L. & E.
2026-02-04 California Legislative Information
From printer. May be heard in committee March 6.
2026-02-03 California Legislative Information
Read first time. To print.

Official Summary Text

AB 1697, as amended, Kalra.
Employment contracts: stay-or-pay provisions: contract date.
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 prohibitions 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.
This bill would declare that it is to take effect immediately as an urgency statute.

Current Bill Text

Read the full stored bill text

Download Bill PDF