California Business and Professions Code § 16608

(a) For purposes of this section, the following definitions apply: (1) “Contract” includes a promise, undertaking, contract, or agreement, whether written or oral, express or implied. (2) “Debt” means money, personal property, or their equivalent that is due or owing or alleged to be due or owing from a natural person to another person, including, but not limited to, for employment-related costs, education-related costs, or a consumer financial product or service, regardless of whether the debt is certain, contingent, or incurred voluntarily. (3) “Debt collector” has the same meaning as defined in subdivision (c) of Section 1788.2 of the Civil Code. (4) “Employer” means any person or entity that employs workers. “Employer” includes any parent company, subsidiary, division, affiliate, contractor, hiring party, or third-party agent of an employer. (5) “Freelance worker” has the same meaning as defined in subdivision (a) of Section 18101. (6) “Misconduct” has the same meaning as in Section 1256 of the Unemployment Insurance Code. (7) “Penalty, fee, or cost” includes, but is not limited to, a replacement hire fee, retraining fee, replacement fee, quit fee, reimbursement for immigration or visa-related costs, liquidated damages, lost goodwill, and lost profit. (8) “Person” means a natural person or an entity, including, but not limited to, a corporation, partnership, association, trust, limited liability company, cooperative, or other organization. (9) “Training provider” means an entity, whether or not affiliated with an employer, that provides an education program, as defined in Section 94837 of the Education Code, a job training program, or a skills training program. (10) “Transferable credential” means a degree that is offered by a third-party institution that is accredited and authorized to operate in the state, is not required for a worker’s current employment, and is transferable and useful for employment beyond the worker’s current employer. (11) “Worker” means a natural person who is permitted to work for or on behalf of an employer or business entity, or who is permitted to participate in any other work relationship, job training program, or skills training program. “Worker” includes, but is not limited to, an employee or prospective employee. (b) (1) Except as provided in paragraph (2), for contracts entered into on or after January 1, 2026, it shall be unlawful to include in any employment contract, or to require a worker to execute as a condition of employment or a work relationship a contract that includes, a contract term that does any of the following: (A) Requires the worker to pay an employer, training provider, or debt collector for a debt if the worker’s employment or work relationship with a specific employer terminates. (B) Authorizes the employer, training provider, or debt collector to resume or initiate collection of or end forbearance on a debt if the worker’s employment or work relationship with a specific employer terminates. (C) Imposes any penalty, fee, or cost on a worker if the worker’s employment or work relationship with a specific employer terminates. (2) This section does not apply to any of the following: (A) A contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency. (B) A contract related to the repayment of the cost of tuition for a transferable credential that meets all of the following requirements: (i) The contract is offered separately from any contract for employment. (ii) The contract does not require obtaining the transferable credential as a condition of employment. (iii) The contract specifies the repayment amount before the worker agrees to the contract, and the repayment amount does not exceed the cost to the employer of the transferable credential received by the worker. (iv) The contract provides for a prorated repayment amo

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