Contracts signed before January 1, 2027, fall outside the new prohibition, even if the separation or repayment occurs after that date. Employers that rewrote agreements during 2026 are not required to revert them. Commentators note the amendment does not repeal the underlying restrictions, and it does not address the collective bargaining follow-up Newsom requested when he signed AB 692 in 2025.
For employers, the practical question is whether to reintroduce repayment terms for agreements signed now or keep the compliant structures adopted in 2026. Attorneys should check that any bonus exception covers only discretionary or unearned payments not tied to specific job performance, and that repayment terms appear in a separate agreement. That agreement must give notice of the right to consult an attorney and at least five business days to do so. Contracts signed on or after January 1, 2027, will face the restrictions as widened, so the one-year reprieve is largely a window for agreements signed in 2026.