Paying back a sign-on bonus

Most sign-on bonus clawbacks are still legal, but New York and California now set conditions, and some states may void them.

A sign-on bonus with a clawback is the most common stay-or-pay deal, and the one the new laws are gentlest on. Neither New York nor California bans them. Both set conditions, and a clawback that misses one is void.

State by state

StateA sign-on bonusFrom
CaliforniaOnly with conditionsJanuary 1, 2027
ColoradoNot settledAugust 10, 2022
ConnecticutNot settledOctober 1, 2026
MinnesotaNot coveredAny date
New YorkOnly with conditionsDecember 19, 2026
WyomingNot coveredJuly 1, 2025

Every other state: no stay-or-pay law, so the contract decides.

California's conditions, from January 1, 2027

A separate agreement; at least 5 business days to talk to a lawyer; no interest; the amount goes down over a retention period of no more than 2 years; you could have chosen to take the bonus at the end instead and owe nothing; and you only repay if you quit or are fired for misconduct (AB 1697).

New York's, from December 19, 2026

An employer can ask for a bonus back if you quit or are fired for misconduct, but not if you're let go for any other reason, or if the job's duties were misrepresented to you (New York State Department of Labor).

Connecticut

Connecticut voids notes requiring you to pay if you leave, but lets employers recover "sums advanced". Whether a sign-on bonus is a sum advanced hasn't been settled by a court.

Work out what a prorated clawback would ask for.

Check your bonus

Start with the date on your contract.

Only with conditions

In California, a clause asking you to repay a sign-on bonus for leaving only holds if it meets every condition below.

  • It is in a separate agreement from your employment contract.
  • You were told you could talk to a lawyer about it and given at least 5 business days to do so.
  • There is no interest, and what you owe goes down month by month over a retention period of no more than 2 years.
  • You could have chosen to take the payment at the end of the period instead, owing nothing.
  • You only repay if you quit, or are fired for misconduct.

Everything on California

This is general information, not legal advice. For your own contract, a lawyer or your state's labor department can tell you where you stand.

Questions

Do I have to pay back a sign-on bonus if I quit?

Usually, if your contract says so and your state allows it. New York (from December 19, 2026) and California (from January 1, 2027) allow a clawback only on conditions; in California the bonus must shrink month by month over no more than 2 years and you must have been offered the choice to take it at the end instead.

Do I have to pay back a sign-on bonus if I am fired?

In New York, not if you are let go for any reason other than misconduct. In California, a clawback is only allowed if you quit or are fired for misconduct. Elsewhere, read the clause: many only ask for repayment if you leave voluntarily.

What happens if I don't pay back a sign-on bonus?

The employer can ask again, send the debt to a collector or sue. If a law makes the clause void, you owe nothing and can say so in writing. Ask for the agreement and how the amount was worked out before you pay.

Sources

  1. AB 1697, chaptered text (Chapter 889, Statutes of 2026), California Legislative Information, read November 8, 2026.
  2. Trapped at Work Act, New York State Department of Labor, read November 8, 2026.
  3. C.G.S. § 31-51r, employment promissory notes, Connecticut General Assembly, read November 8, 2026.