One of our clients, a Chinese multinational executive relocating to California under an L-1 visa, recently brought up concerns about his company’s stay-or-pay agreement linked to his relocation bonuses. This conversation prompted us to revisit the implications of California Assembly Bill 692 (AB 692), effective January 1, 2026, which imposes new restrictions on repayment and stay-or-pay arrangements tied to separation from employment.
AB 692 primarily aims to protect employees from unfair repayment demands when they leave a company. It limits employers’ ability to enforce repayment of training costs, bonuses, or tuition reimbursements if the employee quits or is terminated. For our clients—particularly corporate executives on L-1 or EB-1C visas—such agreements are often part of relocation or retention packages. From our perspective, failure to comply can lead to litigation risks and unexpected financial liabilities.
According to the text of AB 692 and guidance from the California Department of Industrial Relations, repayment provisions must be reasonable in scope and duration. For example, requiring repayment only for training costs directly related to the employee’s role and incurred within a defined timeframe is generally permissible. However, broad “stay-or-pay” clauses that impose full repayment upon any separation are now heavily restricted.
From our practical experience handling over 50 corporate immigration cases involving California employers last year, we noticed that many clients’ offer letters and bonus agreements contained clauses that may now be unenforceable. In one case, a fintech company’s L-1B visa holder was asked to repay a substantial signing bonus after resigning, which conflicted with AB 692. We assisted the client in negotiating a revised agreement that aligned with the new law while protecting the company’s interests.
- 1Review all employment agreements, offer letters, and bonus or relocation reimbursement clauses with your HR or legal counsel. Confirm that repayment obligations comply with AB 692’s limitations, especially if you are on or moving to an L-1 or EB-1C visa tied to a California employer.
- 1For clients planning a transfer or investment involving California entities, proactively update internal policies and employee contracts before they take effect. This not only mitigates legal risks but also ensures smoother visa petition processes, as USCIS increasingly scrutinizes employer-employee arrangements for compliance.
From a regulatory standpoint, this law intersects with 8 CFR 214.2(l)(4)(ii) concerning L-1 intracompany transferee petitions, which require bona fide employment relationships and legitimate compensation terms. Non-compliance with state labor laws like AB 692 can indirectly affect USCIS’s assessment of the employer’s credibility and the employee’s eligibility.
In summary, AB 692 changes the landscape for repayment and stay-or-pay agreements in California. For Chinese corporate executives and investors, understanding these nuances helps avoid contractual pitfalls and supports a compliant immigration strategy. We advise clients to work closely with their HR and legal teams to audit and revise relevant documents promptly.
What this means for you: If you or your company have agreements involving repayment or retention clauses linked to your California employment, start by requesting a full review of these documents this week. Early action will protect your financial interests and facilitate a smoother immigration process.