California Takes Aim at Workplace AI: What Employers Should Know About Hiring, Surveillance, and Layoffs
AI is rapidly becoming part of everyday workforce management—from screening candidates and evaluating performance to monitoring productivity and informing termination decisions.
In California, however, employers may soon face clearer limits on how far AI can go. Several bills addressing AI, automated decision-making, and workplace surveillance advanced through the California Legislature at the close of the 2026 legislative session. These measures have not yet become law, but if enacted, they could significantly affect how California employers use AI and automated technologies in the workplace.
If you have questions about workplace AI, automated decision-making, employee monitoring, AI-driven workforce reductions, or other labor and employment compliance matters, please contact the ILS team at contact@consultils.com.
SB 947: Human Review for AI-Driven Discipline and Termination
SB 947 targets the use of automated decision systems (“ADS”) in consequential employment decisions. Under the current version of the bill, beginning July 1, 2027, employers could not rely solely on an ADS to discipline or terminate an employee.
Where an employer relies primarily on an ADS, the bill would generally require:
Human review of the system’s output using other relevant information, such as supervisor evaluations, personnel records, work product, peer feedback, or witness interviews;
Independent judgment rather than reliance on an output that is inaccurate, incomplete, misleading, or unsupported by the human review;
Written notice explaining the ADS’s role in the employment decision and confirming that human review occurred; and
Access to information allowing employees to request the primary categories of their personal data used by the ADS.
Employer Takeaway: AI can assist with employment decisions, but it should not become the final decision-maker. Employers using automated performance scoring, productivity monitoring, algorithmic scheduling, or other AI workforce-management systems should establish clear human-review procedures and document how final decisions are made.
AB 1883: Limits on AI-Powered Employee Monitoring
AB 1883 would prohibit employers from using AI-enabled workplace surveillance tools to:
identify, infer, or predict an employee’s emotional state; or
collect an employee’s neural data.
This could affect certain AI productivity and employee engagement tools that claim to assess stress, fatigue, anger, attentiveness, or engagement through facial expressions, voice, behavior, or other employee data.
The bill would not prohibit workplace surveillance altogether. Rather, it targets specific AI-enabled functions that analyze particularly sensitive employee information.
Employer Takeaway: Do not assume a third-party product is compliant simply because it is marketed as a “productivity” or “employee engagement” tool. Employers should understand what employee data the technology actually collects, what it analyzes, and what conclusions it generates.
AB 1331: Workplace Surveillance Has Location Limits
AB 1331 would generally prohibit employers from using workplace surveillance tools to monitor employees inside workplace restrooms.
The bill broadly covers technologies that collect information about employees’ activities, communications, behavior, biometric characteristics, or location. Employees generally would also be permitted to leave employer-provided surveillance devices outside the restroom before entering.
Limited exceptions may apply to certain identification badges and personal alarm systems used for identity verification, safety, or access control, provided they do not record audio or video and do not incorporate AI functionality. Violations could result in civil penalties of up to $500 per violation.
Employer Takeaway: The issue is not only what a monitoring device collects, but also where it continues collecting data. Employers using GPS-enabled badges, wearables, location tracking, time-tracking devices, or similar technologies should review when and where those systems remain active.
SB 951: When AI Eliminates Jobs, WARN Notices May Need to Say So
SB 951 addresses a different consequence of workplace AI: job displacement.
California’s WARN Act generally requires covered employers to provide 60 days’ advance notice for certain mass layoffs, relocations, and terminations. SB 951 would impose additional disclosure requirements when such an employment action results entirely or primarily from AI or other automated technologies replacing employees’ work.
The notice would need to identify:
the number, job classifications, and locations of affected employees;
the job functions that will instead be performed by AI or automated technology; and
the type of technology responsible for the displacement.
The notice would also need to state prominently: “This notice is for a technology displacement.”
The California Employment Development Department (“EDD”) would publish summaries of these notices and periodically report statewide data regarding technology-driven workforce displacement.
Employer Takeaway: If an AI transformation, automation initiative, or restructuring results in significant workforce reductions, how the company characterizes the reduction may carry legal consequences. HR, management, and employment counsel should be involved early in workforce planning to evaluate potential California WARN Act obligations and ensure the business reasons for the employment action are accurately documented.
The Bigger Picture: It Is Not Just Whether You Use AI—It Is What AI Is Allowed to Do
Taken together, these bills point in the same direction: California is not simply regulating the use of AI itself. The focus is increasingly on what AI does with employee data and how much influence it has over decisions affecting employees.
For employers, four areas deserve particular attention:
Employment decisions: Is AI influencing who gets disciplined or terminated?
Sensitive data: Is AI analyzing employees’ emotions, behavior, or other sensitive information?
Employee monitoring: Where and how are employees being tracked?
Workforce reductions: Is automation eliminating jobs previously performed by employees?
The compliance question is therefore shifting from “Does our company use AI?” to “What decisions are we allowing AI to make?”
What Employers Can Do Now
These bills remain subject to further legislative action and should not yet be treated as existing legal requirements. Employers that already use AI or automated workforce technologies, however, can start preparing now:
Inventory workplace AI. Identify where AI or automated decision-making appears in recruiting, performance management, scheduling, timekeeping, employee monitoring, discipline, and workforce reductions.
Preserve meaningful human review. Particularly for discipline and termination, managers should not simply adopt an AI-generated score, conclusion, or recommendation without independent judgment.
Review third-party vendors. Understand what employee data HR software, productivity platforms, and surveillance vendors collect, how the data is analyzed, and how their outputs are used in employment decisions.
California’s regulation of workplace AI continues to evolve. Employers deploying AI workforce-management tools, considering automation initiatives, or using employee-monitoring technologies should continue tracking these bills and evaluate potential employment and privacy implications before implementing new systems.
If you have questions about workplace AI, automated decision-making, employee monitoring, AI-driven workforce reductions, or other labor and employment compliance matters, please contact the ILS team at contact@consultils.com.
Disclaimer: The information provided on this website is for general informational purposes only and does not constitute, and is not intended to constitute, legal advice. Readers should consult qualified legal counsel regarding their specific circumstances.
As Partner and Head of Transactions at ILS, Fiona delivers professional legal and strategic support to tech companies—with a focus on AI, medical devices, and fintech. Beyond full-spectrum technology law, she specializes in export control and compliance: supporting tech firms at all growth stages, aiding startups in scaling operations, and helping mature enterprises address regulatory challenges.
Previously, Fiona gained hands-on experience building legal frameworks from scratch. She advised unicorn companies on global expansion and regulatory hurdles, developing deep insight into clients’ growth challenges. Combining legal expertise with commercial judgment, she helps clients establish sustainable legal processes and provides clear guidance to advance their business.
Email: fiona.xu@consultils.com | Phone: 626-344-8949
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