Tag: California Business and Professions Code

California’s AB 692 Reins in “Stay or Pay” Provisions in California Employment Agreements

Taylor C. Morosco ●

Taylor C. Morosco's headshot photo

California’s Assembly Bill (“AB”) 692 took effect on January 1, 2026, significantly limiting the use of commonplace “stay-or-pay” clauses in offer letters and agreements, which require employees or prospective employees to repay certain costs if their employment ends.

AB 692 underscores California’s commitment to limit the use of contractual provisions restricting or disincentivizing workforce mobility. Although the new law does not apply retroactively (essentially grandfathering in “stay-or-pay” clauses entered into before January 1, 2026), employers must audit agreements and practices, and plan for compliance to avoid significant potential liability going forward.

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“In Term” Covenants Not to Compete Void or Valid?

California Employers May Restrict Their Employee’s Ability to Compete During the Term of Employment

Caitlin I. Sanders

Overview of California Noncompete Law

California employers know well that they cannot restrict their former employees from competing after the employment relationship ends. With limited exceptions, California law invalidates every contract under which a person is prevented from engaging in his or her profession, trade, or business.

California Business and Professions Code section 16600 codifies California’s longstanding public policy favoring open and uninhibited competition in the employment context. California’s public policy declaration can be summed up as follows: “The interests of the employee in his own mobility and betterment are deemed paramount to the competitive business interests of the employers….” Diodes, Inc. v. Franzen, 260 Cal. App. 2d 244, 255 (1968). Continue reading ““In Term” Covenants Not to Compete Void or Valid?”