Amended IN Assembly March 10, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 692Introduced by Assembly Member KalraFebruary 14, 2025 An act to amend Section 6 of the Labor Code, relating to employment. add Section 16608 to the Business and Professions Code, and to add Section 926 to the Labor Code, relating to employment. LEGISLATIVE COUNSEL'S DIGESTAB 692, as amended, Kalra. Employment. Employment: contracts in restraint of trade.(1) Existing law declares every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind to be void, except as expressly provided. Existing law provides for a system of labor standards enforcement administered by the Labor Commissioner.This bill would authorize the Labor Commissioner to enforce the above-described provisions related to a contract restraining a lawful profession, trade, or business, according to specified existing law. The bill would authorize a person, including a local government or a worker representative, to bring a civil action on behalf of the person or other persons similarly situated to establish liability against an employer, and provide that a person who violates these provisions is liable for specified civil penalties and relief.(2) This bill would, for contracts entered into on or after January 1, 2026, make it unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, specified contract terms, including a term that requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates. The bill would declare these contracts as contracts that restrain a person from engaging in a lawful profession, trade, or business, and as void and contrary to public policy, except as provided. The bill would also require the Labor Commissioner to coordinate with the Attorney General on the enforcement of a violation of these provisions.(3) Existing law makes it unlawful for a person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law, the Unfair Competition Law, makes various practices unlawful and provides that a person who engages, has engaged, or proposes to engage in unfair competition is liable for a civil penalty, as specified.This bill would make a violation of the above-described unlawful contract provisions an act of unfair competition.Existing law establishes specific rules of construction and defines various terms for purposes of interpreting provisions of the Labor Code.This bill would make nonsubstantive changes to those provisions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO Bill TextThe people of the State of California do enact as follows:SECTION 1. Section 16608 is added to the Business and Professions Code, immediately following Section 16607, to read:16608. (a) For purposes of this section, the following definitions apply:(1) Business entity includes a corporation, partnership, or other association.(2) Contract includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.(3) Consumer financial product or service has the same meaning as defined in subdivision (e) of Section 90005 of the Financial Code.(4) Debt means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.(5) Debt collector has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.(6) Education-related cost means a cost associated with enrollment or attendance at an educational program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program, and related expenses, including, but not limited to, tuition, fees, books, supplies, student loans, examinations, and equipment required for enrollment or attendance in an educational, training, or residency program.(7) Employer means any person or entity that employs workers. Employer includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.(8) Employment-related cost means a necessary expenditure or loss incurred by a person in direct consequence of the discharge of their duties at work or of their obedience to a direction of their employer, including, but not limited to, a training, residency, orientation, licensure, or competency validation required either by an employer or to practice in a specific employee classification.(9) Freelance worker has the same meaning as defined in subdivision (a) of Section 18101.(10) Hiring party has the same meaning as defined in subdivision (b) of Section 18101.(11) Penalty, fee, or cost includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit.(12) Person means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.(13) Training provider means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.(14) Worker means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. Worker includes, but is not limited to, an employee, prospective employee, independent contractor, freelance worker, extern, intern, apprentice, or sole proprietor.(b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates.(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the workers employment or work relationship with a specific employer terminates.(C) Imposes any penalty, fee, or cost on a worker if the workers employment or work relationship with a specific employer terminates.(2) This section does not apply to a contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency.(c) A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600.(d) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).(e) The rights, remedies, and penalties established by this section are cumulative and shall not be construed to supersede the rights, remedies, or penalties established under other laws, including but not limited to:(1) Obligations of employers under Section 2802 of the Labor Code.(2) Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.SEC. 2. Section 926 is added to the Labor Code, to read:926. (a) A contract or contract term that violates Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code is void as contrary to public policy.(b) The Labor Commissioner may enforce this section, including receiving and investigating complaints of an alleged violation and ordering appropriate temporary relief to mitigate the violation or to maintain the status quo pending the completion of a full investigation or hearing through the procedures set forth in Section 98, 98.3, or 1197.1, including by issuance of a citation against an employer who violates this article and by filing a civil action. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the Labor Commissioner shall be the same as those set out in Section 1197.1, as appropriate.(c) A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.(d) This section does not limit the remedies available to a worker or other natural person specified in Section 16608 of the Business and Professions Code.(e) In carrying out their duties under this section, the Labor Commissioner shall coordinate with the Attorney General on the enforcement of a violation of Section 16608 of the Business and Professions Code.SECTION 1.Section 6 of the Labor Code is amended to read:6.Division, part, chapter, article, and section headings contained in this code shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning, or intent of the provisions of any division, part, chapter, article, or section of this code.
Amended IN Assembly March 10, 2025 CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION Assembly Bill No. 692Introduced by Assembly Member KalraFebruary 14, 2025 An act to amend Section 6 of the Labor Code, relating to employment. add Section 16608 to the Business and Professions Code, and to add Section 926 to the Labor Code, relating to employment. LEGISLATIVE COUNSEL'S DIGESTAB 692, as amended, Kalra. Employment. Employment: contracts in restraint of trade.(1) Existing law declares every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind to be void, except as expressly provided. Existing law provides for a system of labor standards enforcement administered by the Labor Commissioner.This bill would authorize the Labor Commissioner to enforce the above-described provisions related to a contract restraining a lawful profession, trade, or business, according to specified existing law. The bill would authorize a person, including a local government or a worker representative, to bring a civil action on behalf of the person or other persons similarly situated to establish liability against an employer, and provide that a person who violates these provisions is liable for specified civil penalties and relief.(2) This bill would, for contracts entered into on or after January 1, 2026, make it unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, specified contract terms, including a term that requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates. The bill would declare these contracts as contracts that restrain a person from engaging in a lawful profession, trade, or business, and as void and contrary to public policy, except as provided. The bill would also require the Labor Commissioner to coordinate with the Attorney General on the enforcement of a violation of these provisions.(3) Existing law makes it unlawful for a person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law, the Unfair Competition Law, makes various practices unlawful and provides that a person who engages, has engaged, or proposes to engage in unfair competition is liable for a civil penalty, as specified.This bill would make a violation of the above-described unlawful contract provisions an act of unfair competition.Existing law establishes specific rules of construction and defines various terms for purposes of interpreting provisions of the Labor Code.This bill would make nonsubstantive changes to those provisions.Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NOYES Local Program: NO
Amended IN Assembly March 10, 2025
Amended IN Assembly March 10, 2025
CALIFORNIA LEGISLATURE 20252026 REGULAR SESSION
Assembly Bill
No. 692
Introduced by Assembly Member KalraFebruary 14, 2025
Introduced by Assembly Member Kalra
February 14, 2025
An act to amend Section 6 of the Labor Code, relating to employment. add Section 16608 to the Business and Professions Code, and to add Section 926 to the Labor Code, relating to employment.
LEGISLATIVE COUNSEL'S DIGEST
## LEGISLATIVE COUNSEL'S DIGEST
AB 692, as amended, Kalra. Employment. Employment: contracts in restraint of trade.
(1) Existing law declares every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind to be void, except as expressly provided. Existing law provides for a system of labor standards enforcement administered by the Labor Commissioner.This bill would authorize the Labor Commissioner to enforce the above-described provisions related to a contract restraining a lawful profession, trade, or business, according to specified existing law. The bill would authorize a person, including a local government or a worker representative, to bring a civil action on behalf of the person or other persons similarly situated to establish liability against an employer, and provide that a person who violates these provisions is liable for specified civil penalties and relief.(2) This bill would, for contracts entered into on or after January 1, 2026, make it unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, specified contract terms, including a term that requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates. The bill would declare these contracts as contracts that restrain a person from engaging in a lawful profession, trade, or business, and as void and contrary to public policy, except as provided. The bill would also require the Labor Commissioner to coordinate with the Attorney General on the enforcement of a violation of these provisions.(3) Existing law makes it unlawful for a person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law, the Unfair Competition Law, makes various practices unlawful and provides that a person who engages, has engaged, or proposes to engage in unfair competition is liable for a civil penalty, as specified.This bill would make a violation of the above-described unlawful contract provisions an act of unfair competition.Existing law establishes specific rules of construction and defines various terms for purposes of interpreting provisions of the Labor Code.This bill would make nonsubstantive changes to those provisions.
(1) Existing law declares every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind to be void, except as expressly provided. Existing law provides for a system of labor standards enforcement administered by the Labor Commissioner.
This bill would authorize the Labor Commissioner to enforce the above-described provisions related to a contract restraining a lawful profession, trade, or business, according to specified existing law. The bill would authorize a person, including a local government or a worker representative, to bring a civil action on behalf of the person or other persons similarly situated to establish liability against an employer, and provide that a person who violates these provisions is liable for specified civil penalties and relief.
(2) This bill would, for contracts entered into on or after January 1, 2026, make it unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, specified contract terms, including a term that requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates. The bill would declare these contracts as contracts that restrain a person from engaging in a lawful profession, trade, or business, and as void and contrary to public policy, except as provided. The bill would also require the Labor Commissioner to coordinate with the Attorney General on the enforcement of a violation of these provisions.
(3) Existing law makes it unlawful for a person doing business in California and advertising to consumers in California to make any false or misleading advertising claim. Existing law, the Unfair Competition Law, makes various practices unlawful and provides that a person who engages, has engaged, or proposes to engage in unfair competition is liable for a civil penalty, as specified.
This bill would make a violation of the above-described unlawful contract provisions an act of unfair competition.
Existing law establishes specific rules of construction and defines various terms for purposes of interpreting provisions of the Labor Code.
This bill would make nonsubstantive changes to those provisions.
## Digest Key
## Bill Text
The people of the State of California do enact as follows:SECTION 1. Section 16608 is added to the Business and Professions Code, immediately following Section 16607, to read:16608. (a) For purposes of this section, the following definitions apply:(1) Business entity includes a corporation, partnership, or other association.(2) Contract includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.(3) Consumer financial product or service has the same meaning as defined in subdivision (e) of Section 90005 of the Financial Code.(4) Debt means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.(5) Debt collector has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.(6) Education-related cost means a cost associated with enrollment or attendance at an educational program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program, and related expenses, including, but not limited to, tuition, fees, books, supplies, student loans, examinations, and equipment required for enrollment or attendance in an educational, training, or residency program.(7) Employer means any person or entity that employs workers. Employer includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.(8) Employment-related cost means a necessary expenditure or loss incurred by a person in direct consequence of the discharge of their duties at work or of their obedience to a direction of their employer, including, but not limited to, a training, residency, orientation, licensure, or competency validation required either by an employer or to practice in a specific employee classification.(9) Freelance worker has the same meaning as defined in subdivision (a) of Section 18101.(10) Hiring party has the same meaning as defined in subdivision (b) of Section 18101.(11) Penalty, fee, or cost includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit.(12) Person means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.(13) Training provider means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.(14) Worker means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. Worker includes, but is not limited to, an employee, prospective employee, independent contractor, freelance worker, extern, intern, apprentice, or sole proprietor.(b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates.(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the workers employment or work relationship with a specific employer terminates.(C) Imposes any penalty, fee, or cost on a worker if the workers employment or work relationship with a specific employer terminates.(2) This section does not apply to a contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency.(c) A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600.(d) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).(e) The rights, remedies, and penalties established by this section are cumulative and shall not be construed to supersede the rights, remedies, or penalties established under other laws, including but not limited to:(1) Obligations of employers under Section 2802 of the Labor Code.(2) Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.SEC. 2. Section 926 is added to the Labor Code, to read:926. (a) A contract or contract term that violates Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code is void as contrary to public policy.(b) The Labor Commissioner may enforce this section, including receiving and investigating complaints of an alleged violation and ordering appropriate temporary relief to mitigate the violation or to maintain the status quo pending the completion of a full investigation or hearing through the procedures set forth in Section 98, 98.3, or 1197.1, including by issuance of a citation against an employer who violates this article and by filing a civil action. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the Labor Commissioner shall be the same as those set out in Section 1197.1, as appropriate.(c) A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.(d) This section does not limit the remedies available to a worker or other natural person specified in Section 16608 of the Business and Professions Code.(e) In carrying out their duties under this section, the Labor Commissioner shall coordinate with the Attorney General on the enforcement of a violation of Section 16608 of the Business and Professions Code.SECTION 1.Section 6 of the Labor Code is amended to read:6.Division, part, chapter, article, and section headings contained in this code shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning, or intent of the provisions of any division, part, chapter, article, or section of this code.
The people of the State of California do enact as follows:
## The people of the State of California do enact as follows:
SECTION 1. Section 16608 is added to the Business and Professions Code, immediately following Section 16607, to read:16608. (a) For purposes of this section, the following definitions apply:(1) Business entity includes a corporation, partnership, or other association.(2) Contract includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.(3) Consumer financial product or service has the same meaning as defined in subdivision (e) of Section 90005 of the Financial Code.(4) Debt means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.(5) Debt collector has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.(6) Education-related cost means a cost associated with enrollment or attendance at an educational program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program, and related expenses, including, but not limited to, tuition, fees, books, supplies, student loans, examinations, and equipment required for enrollment or attendance in an educational, training, or residency program.(7) Employer means any person or entity that employs workers. Employer includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.(8) Employment-related cost means a necessary expenditure or loss incurred by a person in direct consequence of the discharge of their duties at work or of their obedience to a direction of their employer, including, but not limited to, a training, residency, orientation, licensure, or competency validation required either by an employer or to practice in a specific employee classification.(9) Freelance worker has the same meaning as defined in subdivision (a) of Section 18101.(10) Hiring party has the same meaning as defined in subdivision (b) of Section 18101.(11) Penalty, fee, or cost includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit.(12) Person means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.(13) Training provider means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.(14) Worker means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. Worker includes, but is not limited to, an employee, prospective employee, independent contractor, freelance worker, extern, intern, apprentice, or sole proprietor.(b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates.(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the workers employment or work relationship with a specific employer terminates.(C) Imposes any penalty, fee, or cost on a worker if the workers employment or work relationship with a specific employer terminates.(2) This section does not apply to a contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency.(c) A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600.(d) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).(e) The rights, remedies, and penalties established by this section are cumulative and shall not be construed to supersede the rights, remedies, or penalties established under other laws, including but not limited to:(1) Obligations of employers under Section 2802 of the Labor Code.(2) Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.
SECTION 1. Section 16608 is added to the Business and Professions Code, immediately following Section 16607, to read:
### SECTION 1.
16608. (a) For purposes of this section, the following definitions apply:(1) Business entity includes a corporation, partnership, or other association.(2) Contract includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.(3) Consumer financial product or service has the same meaning as defined in subdivision (e) of Section 90005 of the Financial Code.(4) Debt means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.(5) Debt collector has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.(6) Education-related cost means a cost associated with enrollment or attendance at an educational program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program, and related expenses, including, but not limited to, tuition, fees, books, supplies, student loans, examinations, and equipment required for enrollment or attendance in an educational, training, or residency program.(7) Employer means any person or entity that employs workers. Employer includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.(8) Employment-related cost means a necessary expenditure or loss incurred by a person in direct consequence of the discharge of their duties at work or of their obedience to a direction of their employer, including, but not limited to, a training, residency, orientation, licensure, or competency validation required either by an employer or to practice in a specific employee classification.(9) Freelance worker has the same meaning as defined in subdivision (a) of Section 18101.(10) Hiring party has the same meaning as defined in subdivision (b) of Section 18101.(11) Penalty, fee, or cost includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit.(12) Person means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.(13) Training provider means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.(14) Worker means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. Worker includes, but is not limited to, an employee, prospective employee, independent contractor, freelance worker, extern, intern, apprentice, or sole proprietor.(b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates.(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the workers employment or work relationship with a specific employer terminates.(C) Imposes any penalty, fee, or cost on a worker if the workers employment or work relationship with a specific employer terminates.(2) This section does not apply to a contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency.(c) A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600.(d) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).(e) The rights, remedies, and penalties established by this section are cumulative and shall not be construed to supersede the rights, remedies, or penalties established under other laws, including but not limited to:(1) Obligations of employers under Section 2802 of the Labor Code.(2) Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.
16608. (a) For purposes of this section, the following definitions apply:(1) Business entity includes a corporation, partnership, or other association.(2) Contract includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.(3) Consumer financial product or service has the same meaning as defined in subdivision (e) of Section 90005 of the Financial Code.(4) Debt means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.(5) Debt collector has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.(6) Education-related cost means a cost associated with enrollment or attendance at an educational program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program, and related expenses, including, but not limited to, tuition, fees, books, supplies, student loans, examinations, and equipment required for enrollment or attendance in an educational, training, or residency program.(7) Employer means any person or entity that employs workers. Employer includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.(8) Employment-related cost means a necessary expenditure or loss incurred by a person in direct consequence of the discharge of their duties at work or of their obedience to a direction of their employer, including, but not limited to, a training, residency, orientation, licensure, or competency validation required either by an employer or to practice in a specific employee classification.(9) Freelance worker has the same meaning as defined in subdivision (a) of Section 18101.(10) Hiring party has the same meaning as defined in subdivision (b) of Section 18101.(11) Penalty, fee, or cost includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit.(12) Person means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.(13) Training provider means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.(14) Worker means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. Worker includes, but is not limited to, an employee, prospective employee, independent contractor, freelance worker, extern, intern, apprentice, or sole proprietor.(b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates.(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the workers employment or work relationship with a specific employer terminates.(C) Imposes any penalty, fee, or cost on a worker if the workers employment or work relationship with a specific employer terminates.(2) This section does not apply to a contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency.(c) A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600.(d) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).(e) The rights, remedies, and penalties established by this section are cumulative and shall not be construed to supersede the rights, remedies, or penalties established under other laws, including but not limited to:(1) Obligations of employers under Section 2802 of the Labor Code.(2) Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.
16608. (a) For purposes of this section, the following definitions apply:(1) Business entity includes a corporation, partnership, or other association.(2) Contract includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.(3) Consumer financial product or service has the same meaning as defined in subdivision (e) of Section 90005 of the Financial Code.(4) Debt means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.(5) Debt collector has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.(6) Education-related cost means a cost associated with enrollment or attendance at an educational program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program, and related expenses, including, but not limited to, tuition, fees, books, supplies, student loans, examinations, and equipment required for enrollment or attendance in an educational, training, or residency program.(7) Employer means any person or entity that employs workers. Employer includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.(8) Employment-related cost means a necessary expenditure or loss incurred by a person in direct consequence of the discharge of their duties at work or of their obedience to a direction of their employer, including, but not limited to, a training, residency, orientation, licensure, or competency validation required either by an employer or to practice in a specific employee classification.(9) Freelance worker has the same meaning as defined in subdivision (a) of Section 18101.(10) Hiring party has the same meaning as defined in subdivision (b) of Section 18101.(11) Penalty, fee, or cost includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit.(12) Person means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.(13) Training provider means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.(14) Worker means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. Worker includes, but is not limited to, an employee, prospective employee, independent contractor, freelance worker, extern, intern, apprentice, or sole proprietor.(b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates.(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the workers employment or work relationship with a specific employer terminates.(C) Imposes any penalty, fee, or cost on a worker if the workers employment or work relationship with a specific employer terminates.(2) This section does not apply to a contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency.(c) A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600.(d) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).(e) The rights, remedies, and penalties established by this section are cumulative and shall not be construed to supersede the rights, remedies, or penalties established under other laws, including but not limited to:(1) Obligations of employers under Section 2802 of the Labor Code.(2) Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.
16608. (a) For purposes of this section, the following definitions apply:
(1) Business entity includes a corporation, partnership, or other association.
(2) Contract includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied.
(3) Consumer financial product or service has the same meaning as defined in subdivision (e) of Section 90005 of the Financial Code.
(4) Debt means money, property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily.
(5) Debt collector has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code.
(6) Education-related cost means a cost associated with enrollment or attendance at an educational program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program, and related expenses, including, but not limited to, tuition, fees, books, supplies, student loans, examinations, and equipment required for enrollment or attendance in an educational, training, or residency program.
(7) Employer means any person or entity that employs workers. Employer includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer.
(8) Employment-related cost means a necessary expenditure or loss incurred by a person in direct consequence of the discharge of their duties at work or of their obedience to a direction of their employer, including, but not limited to, a training, residency, orientation, licensure, or competency validation required either by an employer or to practice in a specific employee classification.
(9) Freelance worker has the same meaning as defined in subdivision (a) of Section 18101.
(10) Hiring party has the same meaning as defined in subdivision (b) of Section 18101.
(11) Penalty, fee, or cost includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit.
(12) Person means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization.
(13) Training provider means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program.
(14) Worker means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. Worker includes, but is not limited to, an employee, prospective employee, independent contractor, freelance worker, extern, intern, apprentice, or sole proprietor.
(b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following:
(A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the workers employment or work relationship with a specific employer terminates.
(B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the workers employment or work relationship with a specific employer terminates.
(C) Imposes any penalty, fee, or cost on a worker if the workers employment or work relationship with a specific employer terminates.
(2) This section does not apply to a contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency.
(c) A contract that is unlawful under subdivision (b) is a contract restraining a person from engaging in a lawful profession, trade, or business, and is void under Section 16600.
(d) A violation of this section constitutes an act of unfair competition within the meaning of Chapter 5 (commencing with Section 17200).
(e) The rights, remedies, and penalties established by this section are cumulative and shall not be construed to supersede the rights, remedies, or penalties established under other laws, including but not limited to:
(1) Obligations of employers under Section 2802 of the Labor Code.
(2) Article 1.5 (commencing with Section 2775) of Chapter 2 of Division 3 of the Labor Code.
SEC. 2. Section 926 is added to the Labor Code, to read:926. (a) A contract or contract term that violates Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code is void as contrary to public policy.(b) The Labor Commissioner may enforce this section, including receiving and investigating complaints of an alleged violation and ordering appropriate temporary relief to mitigate the violation or to maintain the status quo pending the completion of a full investigation or hearing through the procedures set forth in Section 98, 98.3, or 1197.1, including by issuance of a citation against an employer who violates this article and by filing a civil action. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the Labor Commissioner shall be the same as those set out in Section 1197.1, as appropriate.(c) A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.(d) This section does not limit the remedies available to a worker or other natural person specified in Section 16608 of the Business and Professions Code.(e) In carrying out their duties under this section, the Labor Commissioner shall coordinate with the Attorney General on the enforcement of a violation of Section 16608 of the Business and Professions Code.
SEC. 2. Section 926 is added to the Labor Code, to read:
### SEC. 2.
926. (a) A contract or contract term that violates Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code is void as contrary to public policy.(b) The Labor Commissioner may enforce this section, including receiving and investigating complaints of an alleged violation and ordering appropriate temporary relief to mitigate the violation or to maintain the status quo pending the completion of a full investigation or hearing through the procedures set forth in Section 98, 98.3, or 1197.1, including by issuance of a citation against an employer who violates this article and by filing a civil action. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the Labor Commissioner shall be the same as those set out in Section 1197.1, as appropriate.(c) A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.(d) This section does not limit the remedies available to a worker or other natural person specified in Section 16608 of the Business and Professions Code.(e) In carrying out their duties under this section, the Labor Commissioner shall coordinate with the Attorney General on the enforcement of a violation of Section 16608 of the Business and Professions Code.
926. (a) A contract or contract term that violates Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code is void as contrary to public policy.(b) The Labor Commissioner may enforce this section, including receiving and investigating complaints of an alleged violation and ordering appropriate temporary relief to mitigate the violation or to maintain the status quo pending the completion of a full investigation or hearing through the procedures set forth in Section 98, 98.3, or 1197.1, including by issuance of a citation against an employer who violates this article and by filing a civil action. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the Labor Commissioner shall be the same as those set out in Section 1197.1, as appropriate.(c) A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.(d) This section does not limit the remedies available to a worker or other natural person specified in Section 16608 of the Business and Professions Code.(e) In carrying out their duties under this section, the Labor Commissioner shall coordinate with the Attorney General on the enforcement of a violation of Section 16608 of the Business and Professions Code.
926. (a) A contract or contract term that violates Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code is void as contrary to public policy.(b) The Labor Commissioner may enforce this section, including receiving and investigating complaints of an alleged violation and ordering appropriate temporary relief to mitigate the violation or to maintain the status quo pending the completion of a full investigation or hearing through the procedures set forth in Section 98, 98.3, or 1197.1, including by issuance of a citation against an employer who violates this article and by filing a civil action. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the Labor Commissioner shall be the same as those set out in Section 1197.1, as appropriate.(c) A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.(d) This section does not limit the remedies available to a worker or other natural person specified in Section 16608 of the Business and Professions Code.(e) In carrying out their duties under this section, the Labor Commissioner shall coordinate with the Attorney General on the enforcement of a violation of Section 16608 of the Business and Professions Code.
926. (a) A contract or contract term that violates Chapter 1 (commencing with Section 16600) of Part 2 of Division 7 of the Business and Professions Code is void as contrary to public policy.
(b) The Labor Commissioner may enforce this section, including receiving and investigating complaints of an alleged violation and ordering appropriate temporary relief to mitigate the violation or to maintain the status quo pending the completion of a full investigation or hearing through the procedures set forth in Section 98, 98.3, or 1197.1, including by issuance of a citation against an employer who violates this article and by filing a civil action. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued by the Labor Commissioner shall be the same as those set out in Section 1197.1, as appropriate.
(c) A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction. Any person found liable for a violation of this section shall be liable for actual damages sustained by the worker or five thousand dollars ($5,000), whichever is greater, in addition to injunctive relief, and reasonable attorney's fees and costs.
(d) This section does not limit the remedies available to a worker or other natural person specified in Section 16608 of the Business and Professions Code.
(e) In carrying out their duties under this section, the Labor Commissioner shall coordinate with the Attorney General on the enforcement of a violation of Section 16608 of the Business and Professions Code.
Division, part, chapter, article, and section headings contained in this code shall not be deemed to govern, limit, modify, or in any manner affect the scope, meaning, or intent of the provisions of any division, part, chapter, article, or section of this code.