SACRAMENTO – Assemblymember Ash Kalra (D-San José) introduced Assembly Bill (AB) 692, which would prohibit any employer from coercing an employee to enter into a Debt Training Repayment Agreement Provision (TRAP) or “stay-or-pay” contract, where the worker would be required to pay an alleged debt to their employer or other financial penalty if the worker leaves their job before a period of time designated by the employer, whether the worker is fired, laid off, or quits.
“Placing a de-facto ‘exit fee’ on a worker who chooses to leave a job is deceitful and unethical,” said Assemblymember Kalra. “By ending these exploitative stay-or-pay contracts, AB 692 will empower workers to leave jobs where they may be facing poor working conditions, whether that means safety hazards, harassment, or otherwise toxic work environments.”
“TRAPs and other stay-or-pay contracts exploit nurses at the beginning of their careers,” said CNA President Michelle Gutierrez Vo, RN. “It is wrong to force new nurses to pay for orientation and basic on-the-job training, locking them into two- or three-year contracts that would force them to pay thousands of dollars if they leave before their term is up. AB 692 would stop employers from using debt to trap nurses and other workers in unsafe or exploitative working conditions.”
“Training repayment agreements are yet another tool employers have to exploit and exert control over workers wishing to exercise their workplace rights or move to better jobs,” said Mariko Yoshihara, Legislative Counsel and Policy Director for the California Employment Lawyers Association. “This bill takes a substantive step to evening the playing field stacked against the average California worker.”
“More than one-in-ten workers are bound by restrictive employment agreements that require them to incur thousands of dollars of debt for routine on-the-job training,” said Lee Hepner, Senior Legal Counsel at the American Economic Liberties Project. “The point of these debt traps is to prevent Californians from seeking better wages and working conditions, and there’s a compounding harm to small businesses who are routinely barred from hiring the talent they need to succeed.”
“We applaud Asm. Kalra for introducing AB 692, which would ban the use of stay-or-pay contracts like TRAPs,” said Aissa Canchola Bañez, Policy Director at the Student Borrower Protection Center. “TRAPs are used to retaliate against workers exercising a core economic freedom—the freedom to leave—effectively subjecting them to what lawmakers and regulators across the country have accurately described as ‘modern-day indentured servitude.’ This bill will establish much-needed protections for workers across California and we hope to see it passed quickly.”
“No worker should have to pay an exit fee, fall into debt, or suffer at a hostile working environment because their employer trapped them in a debt agreement," said Lorena Gonzalez, President of the California Federation of Labor Unions, AFL-CIO representing over 1,300 unions with 2.3 million union members.
AB 692 is co-sponsored by American Economic Liberties Project (AELP), California Employment Lawyers Association (CELA), California Federation of Labor Unions – AFL- CIO, California Nurses Association (CNA), and Student Borrower Protection Center.
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Assemblymember Ash Kalra represents California’s 25th Assembly District, which encompasses the majority of San José, including downtown and open space areas in southeast Santa Clara County. He was first elected in 2016, becoming the first Indian American to serve in the California Legislature in state history, and was re-elected to his fifth term in 2024. Assemblymember Kalra is the Chair of the Committee on Judiciary and also serves as a member on the Housing & Community Development, Labor & Employment, Natural Resources, and Utilities & Energy committees.