At the end of August, the California legislature passed three bills that would regulate the use of AI in the employment context. These bills are now on Governor Newsom’s desk, and he has until September 30 to sign or veto. Below is a summary of the three bills.

SB 947 (The “No Robo Bosses Act”)

SB 947 would place certain restrictions on employers’ use of automated decision systems (“ADS”), which is defined in the legislation to include technologies that issue simplified outputs, including a score, classification, or recommendation, that is used to assist or replace human decision making and materially impacts natural persons. For example, the bill would prohibit an employer from using ADS to infer an employee’s protected status or to predict and take adverse action against a worker for exercising their legal rights. The bill would also prohibit using ADS to make disciplinary or termination decisions, unless the employer directs a human to corroborate the ADS output with supporting information such as employee work product, manager evaluations, or personnel files. Additionally, an employer that primarily relies on ADS to make a disciplinary or termination decision must provide the employee with a post-use notice at the time the employer informs the employee of the decision. The post-use notice would need to, among other things, describe the employee’s right to access a description of the employee’s own data used by the ADS and include contact information for a human whom the employee may contact for more information about the employment decision. Employers would be prohibited from retaliating against an employee for exercising their rights under the law. Violations of the law would carry a civil penalty of $500, and the employer could be subject to a civil action or administrative enforcement by the Labor Commissioner. If enacted, SB 947 would become operative on July 1, 2027.

Notably, last year Governor Newsom vetoed SB 7, a prior version of the “No Robo Bosses Act” on grounds that it would have placed overly broad restrictions on employers’ use of ADS tools and because forthcoming California Privacy Protection Agency regulations will cover ADS.

SB 951 (Amendments to Cal/WARN)

SB 951 would amend the California Worker Adjustment and Retraining Act (“Cal/WARN”) to impose additional notice requirements when a mass layoff, relocation, or termination is caused in whole or substantial part by an AI system or other automated technology that replaces or automates jobs. In addition to the information already required in Cal/WARN layoff notices, the bill would require the layoff notice to state “This notice is for a technology displacement” at the top and identify: (1) the number, classification, or occupation, and work location of layoffs substantially due to the technology displacement; (2) the job functions performed by the replaced workers that will be automated; and (3) the specific category or type of AI system or other automated technology that substantially resulted in the displacement. The bill would also require the Employment Development Department to publish summaries of these notices and quarterly statewide summaries of reported technological displacement. If enacted, SB 951 would become operative on January 1, 2027.

AB 1883 (Workplace Surveillance Tools)

AB 1883 would restrict how employers use workplace surveillance tools, defined to include any system “that collects or facilitates the collection of employee data, activities, communications, actions, biometrics, or behaviors by means other than direct observation by a person, including, but not limited to, video or audio surveillance, continuous incremental time-tracking tools, geolocation, electromagnetic tracking, photoelectronic tracking, or that utilizes a photo-optical system or other means.” The bill would prohibit an employer from using a workplace surveillance tool to (1) recognize or make inferences or predictions about an individual’s emotional state or (2) collect neural data. The bill provides an exemption for use of a workplace surveillance tool for safety purposes, provided the tool does not use AI to perform the prohibited functions, and exempts certain uses reasonably necessary to comply with federal law or binding federal contracts relating to development of products or services for certain national security, military, space, or defense purposes. Violations would carry a civil penalty of up to $500, and the employer could be subject to a civil action or administrative enforcement by the Labor Commissioner. If enacted, AB 1883 would become operative on January 1, 2027.

We will keep you posted on the status of these bills and other AI developments.