On October 13, 2025, a pen stroke set off a ripple many of us in HR and talent mobility had been watching with unease. As of January 1, 2026, California’s AB 692—simply named, but far-reaching—reshapes how employers can ask employees to repay costs after leaving a job. In my years of guiding organizations through regulatory changes, I have rarely seen a law that demands such careful review of not just contracts, but overall talent management strategy.
If you employ, relocate, or manage workers in California, this law deserves your attention. In this article, I’ll break down what AB 692 means, who it covers, what it leaves out, where it leaves gray areas, and where action is needed—especially for organizations managing mobility and complex HR arrangements. With my experience at EWS Limited, I understand how these changes can impact not just human resources, but your expansion and operations.
AB 692 may look, at first sight, like a targeted fix for a narrow problem. But read closer and you’ll see how it affects employer mobility practices, repayment agreements, and even the structure of your compensation offers.
This law brings new limits on when and how a California employer can recover money or costs from employees following their separation from employment.
That includes, but is not limited to:
Given the central role of mobility and tailored incentive packages in hiring and retaining skilled employees, especially for startups, technology, and globally focused firms, AB 692 is a turning point. As international compliance grows more complex, laws like this force companies to revisit not just their legal terms, but their business practices, costing, and risk management.
When I first read the text of AB 692, what stood out immediately was its specificity—and its boldness. The law covers all new contracts or contractual terms entered into, modified, or extended after January 1, 2026. Here’s the heart of the matter:
California employers can no longer require workers to repay certain costs or debts related to their work after their employment ends, unless a specific exclusion applies.
Anyone violating these rules faces steep penalties: the greater of actual damages or $5,000 per affected worker, plus the possibility of court injunctions, attorney’s fees, and costs.
AB 692 does not apply retroactively to contracts before January 1, 2026, unless they are amended or renegotiated after that date. That said, I always tell clients: reviewing legacy agreements in light of new laws is simply wise risk management.
New worker protections and employer obligations have become a clear message from California regulators—review those contracts, hiring plans, and HR systems now.
The law targets any California employer and applies to anyone hired in California—or whose work or contract is governed by California law.
The practical impact depends on:
Be aware: service providers (such as payroll or contract management firms) who facilitate prohibited repayments for their employer clients also face the full penalty structure of AB 692. I always encourage organizations to review not just what they do, but what their vendors support on their behalf. EWS Limited regularly assists organizations in reviewing third-party contracts and international workforce processes to avoid gaps in compliance.
How penalties are enforcedOne thing I’ve heard again and again is, “Will they really pursue this?” The answer is simple: With these financial incentives and the strong policy push in favor of worker rights, enforcement is designed to be real and meaningful.
AB 692’s penalty structure:
Violating AB 692 is a costly mistake—with statutory damages designed to encourage compliance, not just remedy harm.
Not everything is swept up by the law. As I read through the exclusions, a picture emerged: California lawmakers wanted to block “unfair” repayment but allow arrangements often seen as investments in workers, like education that benefits future opportunities.
AB 692 excludes the following:
The exclusions, in California’s own summary of new laws, reinforce California’s larger push for equity and worker support (recent pay equity laws are another signpost).
This is where things get thorny. Most traditional relocation or mobility repayments—like those requiring workers to pay back moving expenses if they leave within 12 months—are not blanketed by an exclusion. Employee experience teams, HR leaders, and global mobility managers need to go deeper.
However, two legal carve-outs in AB 692 may apply, if certain strict criteria are met.
Based on my experience, these are the “lifelines” managers and counsel will reach for if they want to keep some repayment options alive, especially for hiring or relocating high-value talent.
AB 692 lets you require repayment on up-front, discretionary monetary payments if (and only if) you satisfy all five of these:
Miss just one of these? Your repayment clause is void under AB 692.
If your repayment condition is tied to a residential real estate purchase, sale, or lease transaction—and you meet state regulatory carve-outs—repayment may still be allowed. However, the law is unclear about exactly which property-related transactions are covered, leading to concern among mobility professionals.
I’ve seen companies stumble at this point: if your mobility program includes buying or selling homes as part of relocation, you need to review your contracts closely with legal counsel.
How each company will feel the impactIn my work with US employer-of-record solutions, I’ve observed that no two firms are affected in the same way by new laws. Your exposure to AB 692 will depend on:
For most, the law is a signal: it’s time to update contracts, rethink benefit designs, and train your managers in the new legal reality.
With AB 692 just months away, HR professionals and partner managers should take action. I always suggest a blend of legal, operational, and communication steps.
If your company manages international teams or is expanding into California, it’s time to check out resources on scalable global HR strategies and current mobility compliance standards.
Proactive review beats crisis management—every time.
As someone who follows talent mobility policy, I’ve seen how even well-meaning laws create ripple effects. The Worldwide ERC (WERC) has already engaged with California’s lawmakers, urging changes and clarifications to limit disruption for employers managing transfers, relocations, and multidisciplinary teams.
WERC’s main points to lawmakers have included:
Governor Newsom’s signing message explicitly asked the Legislature to return to this law in 2026 and consider improvements—especially regarding collective bargaining exclusions and clarifying the effect on talent mobility arrangements.
Lawmakers know fixes are needed, and WERC is pressing the case for changes that support both worker rights and functional global mobility.
In fact, several recent pay equity enforcement laws passed as part of a larger surge toward stronger worker protections and transparency, so continued engagement and feedback will be key.
If you are an employer or manager affected by AB 692, consider contacting WERC if you want to share your experiences, concerns, or ideas for advocacy. They are keeping up the pressure for improvements—and offer practical updates as the law evolves.
How this shapes your HR, mobility, and compliance strategyReflecting on my years with EWS Limited, I know HR and mobility leaders can’t afford to treat sweeping regulation like AB 692 as mere legal trivia.
The new law demands not just compliance, but a fresh look at how you support talent, build incentives, and manage cost. Organizations with good advice, updated documentation, and flexible benefit design will be best positioned to thrive.
For teams focused on inclusive recruitment or international hiring, understanding California’s policy trends is just as relevant. That’s especially true as states and countries observe, and perhaps follow, California’s lead.
AB 692 challenges companies to rethink how they structure incentives, reward loyalty, and recover investments without crossing regulatory lines.
I believe the best move is to respond now. Review your agreements, talk with your internal and external experts, and ensure compliance before January 2026. The cost of waiting—or being caught off-guard—is simply too high.
As global HR evolves, EWS Limited remains committed to helping clients connect the dots—between regulatory change, talent strategy, and business growth. If your team is looking for support on employer of record solutions, mobility compliance, or scalable international hiring frameworks, I invite you to reach out and learn how EWS Limited can help you move forward with confidence in a changing world.
California AB 692 prohibits employers from requiring employees or former employees to pay back certain debts, fees, or penalties simply because their employment has ended. The law restricts repayment requirements in employment agreements made or changed after January 1, 2026, unless an explicit legal exclusion applies.
The law applies to any California employer entering into new contracts or modifying existing agreements after January 1, 2026. It covers all workers and contracts under California law. Service providers who facilitate prohibited repayments can also face penalties.
AB 692 does not block participation in government-backed student loan repayment or forgiveness programs. However, most other types of loan repayment agreements linked solely to employment termination are restricted unless they fall under a legal exclusion, such as for portable educational credentials or registered apprenticeship programs.
AB 692 takes effect January 1, 2026, and covers all contracts or contractual terms entered into, modified, or extended on or after that date. Existing agreements made before that date are unaffected unless renegotiated.
Yes. Employers and service providers who violate AB 692 face penalties of at least $5,000 per affected worker, or actual damages if higher, along with possible injunctions and recovery of attorney’s fees and costs. The law is designed to drive compliance through strong financial consequences.
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