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Bill Summary · HF 2567

Summary of HF 2567 (2025-2026) – Stay-or-Pay Provisions Prohibited, Unenforceable, and Against Public Policy

Purpose and Intent

HF 2567 seeks to prohibit, render unenforceable, and declare against public policy any stay-or-pay provisions in employment contracts or agreements. The bill aims to prevent employers from requiring or coercing employees or prospective employees to agree to repayment of training, recruitment costs, lost revenue, liquidated damages, or similar payments if the employee leaves employment within a specified period. It also creates enforcement mechanisms, penalties, and civil remedies to protect employees from such provisions.

Key policy direction:
- Stay-or-pay provisions are deemed unconscionable and against public policy.
- Prohibits presenting, requiring, enforcing, or threatening to enforce stay-or-pay clauses as a condition of employment.
- Provides remedies for affected individuals and potential contractors.

Effective Date

  • The stay-or-pay prohibition is effective July 1, 2025.
  • Applies to contracts and agreements entered into on or after July 1, 2025.

Definitions (Section [181.989])

  • Establishes new statutory section 181.989 to govern stay-or-pay provisions.
  • Definitions include:
    • Commissioner: Commissioner of Labor and Industry.
    • Department: Minnesota Department of Labor and Industry.
    • Employee: As defined in section 181.988, subdivision 1, paragraph (c).
    • Employer: As defined in section 181.988, subdivision 1, paragraph (b).
    • Independent contractor: As defined in section 181.988, subdivision 1, paragraph (d).
    • Stay-or-pay provision: A written agreement or contract provision requiring an employee to pay the employer or its agent/assignee if the employee leaves within a stated period. Includes reimbursement for training, recruitment costs, lost revenue, or liquidated damages.

Substantive Provisions

Subdivision 2. Prohibiting Use of Stay-or-Pay Provisions

  • A stay-or-pay provision is prohibited, unconscionable, and against public policy.
  • Employers may not present, require, or have employees or prospective employees execute stay-or-pay provisions as a condition of employment.
  • If a stay-or-pay provision is part of a larger agreement, the invalidity of the stay-or-pay portion does not invalidate the rest of the agreement.
  • Employers may not enforce or threaten to enforce such provisions.

Subdivision 3. Enforcement

  • Violations trigger civil penalties:
    • Fine of not less than $1,000 and not more than $5,000 per violation.
  • Each occurrence (presentation, execution, enforcement, or threat to enforce) constitutes a separate violation.

Subdivision 4. Civil Action

  • Employees or prospective employees may file a civil action in district court on their own or on behalf of similarly situated individuals.
  • Remedies in successful actions include:
    • Injunctive relief as appropriate.
    • Actual damages.
    • Additional $5,000 for each violation.
    • Reasonable costs and attorney fees.

Subdivision 5. Scope

  • The section supersedes common law only to the extent it applies to stay-or-pay provisions.
  • The rights and remedies are in addition to other statutory or common-law rights and remedies.
  • Does not otherwise change relevant principles of law and equity.

Who Would Be Affected

  • Employees and prospective employees in Minnesota.
  • Employers, including contractors that have assumed liabilities of subcontractors, and those who might employ in-house or third-party workers.
  • The prohibition covers stay-or-pay provisions in all employment-related contracts or agreements entered into after July 1, 2025.

Procedural and Timeline Aspects

  • Effective date: July 1, 2025.
  • New section codified as 181.989 governs stay-or-pay provisions.
  • Enforcement typically through:
    • Administrative enforcement by the Commissioner of Labor and Industry (civil fines).
    • Private civil actions in district court with potential injunctive relief, damages, and attorney fees.
  • Each stay-or-pay presentation, execution, enforcement, or threat constitutes a separate violation, increasing potential penalties.

Practical Implications

  • Employers should review and remove any stay-or-pay language from current and future employment contracts.
  • The bill creates a clear stance that such provisions are unenforceable and subject to penalties.
  • Prospective employees gain stronger protections against negotiated repayment requirements tied to early departure.
  • The legislation supplements existing labor standards by explicitly restricting a specific type of post-employment repayment clause.

If you’d like, I can compare HF 2567 to current Minnesota statutes or provide a one-page briefing for a non-legal audience with a quick Q&A.

Compiled from official sources — confirm details with the bill’s official record.

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