Assemblymember Kalra’s bill would prohibit “stay-or-pay” contracts that coerce workers into modern-day indentured servitude

California Nurses Association (CNA) applauds California State Assemblymember Ash Kalra’s (D-San Jose) introduction of A.B. 692, which would end exploitative “stay-or-pay” worker contracts that coerce workers to enter agreements requiring them to pay an alleged debt or other financial penalty to their employer if they leave their job before a certain time period.

One common type of stay-or-pay contract is one with “training repayment agreement provisions” (TRAPs), where a worker is forced to pay back a company for the costs of purported training if they leave their job before the end of the minimum work period. TRAPs are often targeted at newly licensed nurses who are first starting their careers as RNs, immigrant nurses, or at nurses in areas where one or a few health care corporations dominate the labor market.  

“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. A.B. 692 would stop employers from using debt to trap nurses and other workers in unsafe or exploitative working conditions.”

“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.”

Hospital employers promote these employer-mandated debt contracts as enhanced education and training programs, new graduate contracts, or so-called “residency” programs for RNs. Through TRAPs, employers shift to workers the costs of basic on-the-job training or orientation necessary to perform their work duties.

A 2024 study found that about 1 in 12 workers in the United States are subject to a TRAP. Through TRAPs and other stay-or-pay contracts, employers can use the threat of debt collection to silence whistleblowers, bust union activity, and lock workers into substandard jobs.

“It is shameful that health care employers are taking advantage of newly licensed nurses and other workers,” said Gutierrez Vo, RN. “TRAPs are a bait-and-switch for new nurse graduates, making them pay for their own orientation and on-the-job training. TRAPs also have a chilling effect on new nurses who want to advocate for their patients and to improve hospital conditions for their patients and their coworkers.”

California Nurses Association/National Nurses United is the largest and fastest-growing union and professional association of registered nurses in the nation with more than 100,000 members in more than 200 facilities throughout California and more than 225,000 RNs nationwide.