Employment: contracts in restraint of trade.

Assembly Member Kalra's employment contract reform legislation prohibits employers from requiring workers to pay debts, fees, or penalties if their employment terminates. The measure, which applies to contracts entered after January 1, 2026, voids provisions that mandate worker payments to employers, training providers, or debt collectors upon job separation.

The bill creates exceptions for government loan forgiveness programs and certain tuition repayment agreements for transferable credentials. To qualify for the tuition exception, contracts must be separate from employment agreements, specify repayment terms upfront, provide prorated payment schedules, and limit repayment to actual credential costs. The measure also exempts approved apprenticeship programs and discretionary signing bonuses, provided workers receive independent legal counsel and retain the option to defer payment.

Workers subjected to prohibited contract terms may pursue civil actions individually or on behalf of similarly situated individuals. Courts can award actual damages or $5,000 per affected worker, whichever is greater, plus injunctive relief and attorney fees. The remedies supplement existing protections under California's labor and business competition laws.