Employment: contracts in restraint of trade.

Assembly Member Kalra's employment contract reform legislation prohibits California employers from requiring workers to pay debts or penalties when their employment ends. The measure, which takes effect January 1, 2026, voids contract provisions that mandate worker payments to employers, training providers, or debt collectors upon job termination.

The bill establishes comprehensive enforcement mechanisms through both the Labor Commissioner's office and private civil actions. Workers facing prohibited contract terms can seek actual damages or a minimum of $5,000, plus injunctive relief and attorney's fees. Local governments and worker representatives may also bring cases on behalf of affected individuals. The Labor Commissioner holds authority to investigate complaints, issue citations, and coordinate enforcement with the Attorney General's office.

Contract terms covered by the prohibition include requirements to repay training costs, resume debt payments, or pay penalties when employment ends. The measure exempts government loan repayment and forgiveness programs from these restrictions. It classifies violations as unfair competition under California law, adding another avenue for enforcement. The provisions apply broadly across employment relationships, covering traditional employees as well as independent contractors, freelancers, interns, and apprentices.