Non-compete Verified

California stay-or-pay ban now applies to contracts from Jan 1, 2027 (AB 1697)

Jurisdiction
California
Effective date
2027-01-01
Who it covers
All employers
Status
Verified against an official source

The law, summarized

  • Approved September 30, 2026 (Chapter 889), urgency statute effective immediately.
  • Liability for acts between Jan 1, 2026 and the effective date is wiped out; pending claims for that period are moot.
  • New exceptions: government-grant recruitment/retention bonuses, separate retention bonus agreements (5 business days to consult a lawyer, prorated, max 2 years), advanced PTO repayment up to 40 hours, and certain broker-dealer/insurance arrangements.
StateHR Take · AI-generated analysis, not legal advice

Who should act: All employers with workers in California. Use the extra time to audit sign-on and retention bonus agreements, training repayment terms and PTO advance policies before 2027-01-01, and move any repayment terms into standalone agreements. Confirm the details in the official source before acting.

Generated 2026-11-01T12:00-06:00

Official sources

  • leginfo.legislature.ca.gov
    https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202520260AB1697
  • www.gov.ca.gov
    https://www.gov.ca.gov/2026/09/30/governor-newsom-issues-legislative-update-9-30-2026/