Employment contracts: stay-or-pay provisions: contract date

Workers generally cannot be charged debts, fees, or penalties for leaving a job under contracts made from January 1, 2027. The law gives employers an additional transition year and specifies when repayment arrangements remain allowed.

What the law does ​

• Delays the stay-or-pay contract prohibition, void-contract rule, and related worker lawsuits from January 1, 2026, to January 1, 2027.
• Makes claims for alleged violations occurring from January 1, 2026, through the law’s effective date moot.
• Permits qualifying repayment agreements for government-funded recruitment or retention bonuses, transferable-credential tuition, approved apprenticeships, and certain discretionary bonuses.
• Permits qualifying affiliation-payment repayment agreements between licensed or registered securities, insurance, or investment businesses and their agents or representatives.
• Permits interest-free repayment of up to 40 hours of advanced paid time off when a worker voluntarily leaves, if separately disclosed.
• Preserves damages of at least $5,000 per affected worker, or actual damages if greater, plus injunctions and attorney’s fees for prohibited terms in contracts made from 2027.

Who it affects ​

• Employers, training providers, debt collectors, and workers, including prospective employees and freelance workers.
• Workers offered retention or recruitment bonuses, employer-paid education, apprenticeships, advanced paid time off, or certain financial-services affiliation payments.
• Securities broker-dealers, insurance producers, investment advisers, and their qualifying agents or representatives.

Context ​

The urgency law took effect immediately, while the general prohibition remains inoperative through December 31, 2026.