AB 692 would prohibit ‘stay-or-pay’ contracts that trap nurses and other workers in exploitative debt arrangements with employers

California Nurses Association (CNA), the largest union of registered nurses in the state of California, applauds Governor Gavin Newsom for taking action to protect workers from employers’ use of predatory debt contracts and signing Assembly Bill 692 (A.B. 692) into law on Monday, Oct. 13. A.B. 692 prohibits employers from requiring workers to pay a debt, fee, or penalty if the workers wants to leave their job, expressly making these kinds of exploitative workplace debt arrangements unlawful. 

“While Trump is busy dismantling pending federal protections for workers caught in debt traps, California is taking a proactive step forward to support the thousands of nurses and nearly one in 12 workers who are in exploitative stay-or-pay contracts,” said Sandy Reding, RN and CNA president. “We are grateful for Assemblymember Kalra championing this bill and to Governor Newsom for stepping up with the labor movement to stand up to Trump’s assaults on worker protections. California leads the rest of the country by signing this bill into law.”

A.B. 692 was authored by Assemblymember Ash Kalra (D-San Jose) and sponsored by CNA, as well as a broad coalition of co-sponsoring organizations, including the California Federation of Labor Unions, California Employment Lawyers Association, Protect Borrowers, and the American Economic Liberties Project. 

"It has been an honor to work with CNA in abolishing exploitative stay-or-pay contracts and stopping employers from creating debt to trap and intimidate workers," said Assemblymember Kalra. "I am grateful Governor Newsom signed A.B. 692, ensuring workers are not coerced into employment debt agreements and can be empowered to leave bad jobs."

"Today, Governor Newsom signed an important bill to ban employer debt traps and protect nurses, actors, athletes and so many other workers. Employers use training repayment schemes to trap workers in jobs with low wages, unsafe conditions, and abusive managers,” said California Labor Federation President Lorena Gonzalez. “It doesn’t matter if you work in a hospital or play professional sports, no worker should have to pay an employer back if they leave a job. We are proud of California's progress that will help workers level the playing field."

A.B. 692 addresses the growing number of employers that are using debt as an exploitative tool to trap workers in jobs, often with low wages and substandard working conditions, and to bust unions. Sometimes called “stay-or-pay” contracts, employers coerce workers into predatory arrangements that require the worker to pay an alleged debt or other financial penalty to their employer if the worker leaves their job before a prescribed period of time–whether the worker is fired, laid off, or quits. With the threat of having to pay back a debt or fee to their employer, “stay-or-pay” contracts indenture workers to remain at a job and chills workers from seeking better wages or working conditions. 

California Nurses Association/National Nurses United is the largest and fastest-growing union and professional association of registered nurses in the nation with more than 100,000 members in more than 200 facilities throughout California and more than 225,000 RNs nationwide.