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Committee advances bill to ban employer "stay-or-pay" debt contracts for job training
Summary
AB 692 would prohibit employers from requiring workers to repay training or onboarding costs if they leave, are laid off or fired; proponents said the practice traps workers, opponents warned the bill might bar legitimate voluntary programs.
Assemblymember Lehi presented AB 692, legislation aimed at ending "stay-or-pay" or "debt trap" contracts that require workers to repay an employer for training, equipment or other onboarding costs if they leave before completing a specified time period. The author said such provisions are common in sectors from health care to retail and can require repayments of thousands of dollars, chilling workers from leaving abusive or unsafe jobs.
Carmen Comstee of the California Nurses Association, a cosponsor, said about 40% of new nurses have been presented with these debt-trap contracts and cited examples where nurses were promised training but were assigned unsafe shifts and then threatened with steep repayment obligations. Beth Mora, an employment attorney and cosponsor, described clients who faced sexual assault, harassment and discrimination but stayed because the threatened repayment would have meant financial ruin.
The California Chamber of Commerce and a coalition of employer groups opposed the bill, saying it could unintentionally undermine beneficial programs such as voluntary tuition assistance or signing bonuses. They urged narrowly tailored language or exemptions for bona fide voluntary training programs. Health care providers asked for exemptions to protect workforce pipelines and employer-sponsored upskilling that helps address worker shortages.
Committee members discussed balance between preventing exploitative contracts and preserving voluntary training programs; supporters said the bill would not prohibit loan-forgiveness or voluntary programs. The committee passed AB 692 to appropriations as amended.
