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Committee advances bill to prohibit employer ‘stay‑or‑pay’ debt agreements
Summary
AB 692 would void employer debt agreements that require workers to repay training or onboarding costs if they leave; nurses and worker‑rights groups described cases of coercive debt contracts, while business groups expressed concern about scope and enforcement; the measure passed to the Judiciary Committee.
An author identified in the hearing introduced AB 692 (presented in the transcript as AB 6 92), a bill to prohibit employer‑imposed debt agreements commonly called ‘‘stay‑or‑pay’’ or ‘‘debt traps.’’ The bill would void agreements that require a worker to repay an employer for training, onboarding, equipment, or other costs if the worker leaves employment, and would make such agreements unlawful.
Sandy Redding, president of the California Nurses Association and a long‑time operating room nurse, testified that debt agreements are widespread in some hospitals and health systems and that roughly 40 percent of new nurses have been required to sign such contracts in her experience; she described nurses who left or were forced out and then faced thousands of dollars in repayment obligations. Lee Hepner of the American Economic Liberties Project described similar examples across industries, including a pet‑grooming case involving $5,000 agreements, a tech recruiting case with $24,000 obligations, and a cargo airline pilot case with a $30,000 debt tied to a commercial license; he framed these agreements as a labor‑market restraint that chills mobility.
Supporters included the California Nurses Association, the California Employment Lawyers Association, the Center for Workers’ Rights, and other worker‑rights and labor groups. Opponents including the California Chamber of Commerce and the Society for Human Resource Management said existing law (Labor Code Section 2802 and related interpretations) already addresses employer reimbursement obligations and that the bill’s scope, multiple enforcement mechanisms and penalties could create unintended consequences for voluntary employer programs (signing bonuses, education benefits) and small employers. Employers in healthcare, staffing and other sectors sought carve‑outs for voluntary, employee‑initiated programs and voiced concern about private rights of action and duplicative enforcement.
The committee recorded a motion and second and passed AB 692 to the Judiciary Committee. The author said she would continue working with opponents to refine scope and address operational concerns.
