California has passed a handful of new laws related to the use of artificial intelligence (“AI”) in the workplace. These new laws span from disciplinary decisions to workplace monitoring to layoffs. California’s workplace-focused AI laws are the latest safeguards placed on AI and some of the first legal requirements we have seen placed on employers’ use of the technology.
Senate Bill No. 947 – Automated Decision Systems in the Workplace
S.B. 947 creates human oversight requirements when employers utilize AI software, or what the bill refers to as an “automated decision system,” to make or assist in decisions regarding employee discipline. The statute applies to any employers who employ at least one worker in the State of California.
The bill defines an “automated decision system” (“ADS”) as an AI system that provides a simplified output intended to assist or replace human discretionary decision-making. The definition of ADS explicitly does not include “a spam email filter, firewall, antivirus software, identity and access management tools, calculator, database, dataset, or other compilation of data.”
Under this bill, employers are prohibited from relying solely on an ADS output when making a disciplinary or termination decision. If an employer decides to use an ADS to assist in making a disciplinary or termination decision, the employer must include human oversight of the ADS output to corroborate the decision. Employers cannot use the ADS output if human oversight cannot be used or if the human reviewer determines the output is inaccurate, incomplete, or misleading.
Additionally, S.B. 947 requires employers to notify any employees of the use of the ADS at the same time the employee is notified of the disciplinary action or termination.
The requirements under S.B. 947 will go into effect on July 1, 2027.
Assembly Bill No. 1883 – Workplace Surveillance Tools
A.B. 1883 creates a new prohibition on the use of AI to monitor employees during the workday. Specifically, the use of AI in conjunction with any kind of surveillance tool (including video, audio, time-tracking tools, or geolocation) at the workplace is banned where the surveillance aims to either: (1) recognize or makes inferences about an employee’s emotional state; or (2) collects “neural data” – i.e. information generated by measuring the activity of an employee’s central or peripheral nervous system. Importantly, the bill does not prohibit the use of these tools to ensure workplace safety.
A.B. 1883 becomes effective on January 1, 2027.
Senate Bill No. 951 – Amendments to California’s Mini-WARN Act
Earlier this year, we discussed how several states, such as California, were taking steps to revise their state Worker Adjustment and Retraining Notification (“WARN”) Acts to provide early warning data on emerging industry trends. Currently, Californian employers with 75 or more employees in a preceding 12 month period must provide at least 60 days’ written notice before implementing a mass layoff, plant closure, or facility relocation.
S.B. 951 updates California’s mini-WARN Act statute to include the same mandatory notice requirements when an employer has a mass layoff, relocation, or termination due to the implementation of AI software. In addition to the content already required, the notice must include:
- The number of layoffs that are substantially due to the replacement or automation by AI;
- The job functions performed by the replaced workers that the AI will be performing;
- The category or type of AI systems that resulted in the technological displacement; and
- The statement “This notice is for a technology displacement” at the top of the notice.
Importantly, these notice requirements are required even where the displaced workers will continue employment in different job positions.
Like A.B. 1883, S.B. 951 takes effect on January 1, 2027.
Key Takeaways
Employers operating in California should begin prepping compliance with these new laws immediately. All three bills give both the California’s State Labor Commissioner as well as private individuals the ability to file civil lawsuits to enforce them.
Some key action items employers can begin taking right now:
- Audit and identify all workplace systems and software that may use AI to be considered ADS or workplace surveillance tools.
- Update or create AI policies requiring human oversight for all disciplinary decisions.
- Create new California WARN notice templates and letters to comply with the technological displacement standard.
- Institute training for managers and supervisors covering the legal updates.
AI systems continue to draw scrutiny from legislators as they try and handle this evolving technology. Implementing human safeguards will be essential to limit legal exposure and to maintain legal compliance. It is likely other states will begin following California’s steps with their own employment-based AI laws. Employers should ensure compliance with these new state laws prior to implementation of AI systems and continue monitoring changes as new laws are enacted.
If you have questions about how these new laws impact your organization, please contact a K|W|W attorney.
