California employers that use artificial intelligence to monitor workers, evaluate performance or make employment decisions will face new restrictions under two measures recently signed into law by Gov. Gavin Newsom.

The laws establish requirements for employers using AI and automated technology in workforce reductions, employee surveillance, disciplinary actions and terminations. One takes effect Jan. 1, 2027, while the other takes effect July 1, 2027. Employers should begin reviewing their technology and employment practices now to prepare for compliance.

 

SB 951

Senate Bill 951 requires employers to provide additional information when AI or automated technology is responsible for all or a substantial part of a mass layoff, relocation or termination covered by California’s Worker Adjustment and Retraining Notification Act.

Cal-WARN generally requires employers with 75 or more employees at a covered establishment to provide 60 days’ advance notice of qualifying layoffs, relocations or closures.

Under the new law, notices involving technology-related displacement must include:

• A statement at the top reading, “This notice is for a technology displacement.”
• The number, job classifications and work locations of affected employees.
• The job functions that AI or automation will replace.
• The specific type or category of technology responsible for the displacement.

 

The law applies only when an event already triggers Cal-WARN requirements. It does not require a separate notice for every AI-related job elimination.

 

SB 947

Senate Bill 947 bars employers from relying solely on automated decision systems to discipline or terminate employees.

Under the new law, if an employer primarily relies on an automated system’s recommendation, a human reviewer must corroborate the decision using supporting information, such as performance evaluations, personnel records, work product or witness statements.

If the information cannot be corroborated or the reviewer determines it is inaccurate, incomplete or misleading, the employer cannot use that automated output to support the decision.

Employers must also provide affected employees with a separate written notice explaining that an automated system was primarily used, that a human reviewed the decision and how to request information about the data used.

Employees are protected against retaliation for exercising their rights under the law. Violations can result in civil penalties of $500 per violation and other remedies.

 

What employers can do

Employers that use AI tools in employment decisions need to keep up with California’s rapidly evolving laws and comply with the new requirements.

Be especially careful when laying off staff whose roles are being replaced by AI or other automated processes.

Those that use these systems to evaluate individual performance or recommend disciplinary actions should have procedures in place by mid-2027 for human review of AI decisions.

Employers should consult their employment law counsel to determine whether these laws affect their personnel procedures and what changes are necessary to comply before the effective dates.

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