California Enacts Sweeping AI Workplace and Legal-Practice Bills

Companies with employees in California should review their employment policies and practices after Governor Newsom signed a package of bills that represent one of the nation's most comprehensive state-level efforts to regulate artificial intelligence (AI) in the workplace. The new laws touch nearly every phase of the employment relationship, from hiring and scheduling through discipline, termination, and mass layoffs. The package also regulates AI use by attorneys and arbitrators and the use of AI-generated likenesses.

Below is a summary of each bill, followed by practical compliance steps. Unless otherwise noted, the new laws take effect January 1, 2027, and employers, in-house legal teams, and outside counsel should begin preparing now.

SB 947—No Robo Bosses: Automated Decision Systems in Employment

SB 947 adds Labor Code sections 1520 et seq., with a compliance date of July 1, 2027. The bill targets "automated decision systems" (ADS), defined broadly as any computational process derived from machine learning, statistical modeling, data analytics, or AI that produces a simplified output (such as a score, classification, or recommendation) that is used to assist or replace human discretionary decision-making and that materially impacts natural persons. Spam filters, firewalls, antivirus software, calculators, and databases are excluded.

Critically, an employer may not rely solely on ADS output for disciplinary or termination decisions. If an employer primarily relies on ADS output for such a decision, a human must conduct an independent review and obtain corroborating or supporting information. If the output cannot be corroborated, or the reviewer determines it is inaccurate, incomplete, or misleading, the employer may not rely on it.

When informing an employee of a discipline or termination decision primarily based on ADS output, the employer must provide a written, stand-alone, plain-language post-use notice: (1) stating that the employer primarily relied on the ADS; (2) stating that a human reviewed and corroborated the output; (3) identifying a human contact; and (4) advising the employee of the right to a data description and anti-retaliation protections. In addition, employees may request (and the employer must provide) a meaningful, objective description of the employee's own data used by the ADS.

SB 947 also prohibits employers from using an ADS to violate, or prevent compliance with, labor, occupational safety and health, employment, or civil rights laws; to infer an employee's protected status under the Fair Employment and Housing Act (FEHA); or to predict or take adverse action against a worker's exercise of legal rights.

The Labor Commissioner and public prosecutors may enforce the law. Remedies include injunctive relief, punitive damages, attorneys' fees, and a $500 penalty per violation. Once an employee shows that an ADS was used, the burden shifts to the employer to prove compliance. SB 947 does not preempt more protective local ordinances, and employers covered by the California Consumer Privacy Act (CCPA) remain subject to the California Privacy Protection Agency's (CPPA) automated decision-making technology (ADMT) regulations. A collective bargaining agreement may waive certain provisions if the waiver is explicit and provides protection from algorithmic management. A federal aerospace and defense exemption applies. Finally, SB 947 covers only employees, not independent contractors.

SB 951—Cal/WARN Notice Requirement for Job Displacement Caused by AI

SB 951 amends the California WARN Act (Cal/WARN) to require enhanced disclosure when a mass layoff, relocation, or termination is caused in whole or in substantial part by an AI system or other automated technology that replaces or automates positions.

Existing Cal/WARN notice periods and coverage thresholds still apply; the bill adds disclosure requirements only when a mass layoff, relocation, or termination is related to AI or automation. Such a notice must include: (1) the number, classification or occupation, and work location of employees laid off substantially due to AI or automation; (2) the job functions that will be automated; (3) the specific category or type of AI system or technology involved; and (4) the words "This notice is for a technology displacement" at the top of the notice. The Employment Development Department (EDD) will publish summaries of these notices and a quarterly statewide summary of worker displacement from AI and automation. The EDD must also report to the Legislature by January 1, 2028, on AI's effects on hiring, including recommendations on a possible future notice requirement for "technological cessation in hiring" (the permanent ending of hiring for an occupation caused in whole or in part by AI). The reporting provision sunsets January 1, 2029.

AB 1331—Prohibition on Workplace Bathroom and Off-Duty Private Space Surveillance

AB 1331 adds Part 5.8 to the Labor Code (beginning at section 1560) and sharply limits where and when employers may monitor workers. It bars the use of workplace surveillance tools in private and off-duty spaces (bathrooms, locker rooms, changing areas, breakrooms, cafeterias, smoking areas, lactation spaces, and lounges) and bars tracking how often employees use those spaces. Employers may monitor an employee's home, personal vehicle, or personal property only when "strictly necessary," and surveillance tools must be turned off during off-duty hours, including rest and meal breaks, wherever the employee is. Employers also may not require workers to have devices physically implanted to collect or transmit data.

"Workplace surveillance tool" is defined broadly as any system, application, instrument, or device that collects, or helps collect, employee data, activities, communications, actions, biometrics, or behaviors other than through direct human observation. This includes video and audio systems, GPS and other location tracking, time- and pace-tracking, electromagnetic and optical systems, and biometric tools. Smoke detectors, carbon monoxide detectors, and weapon-detection systems that automatically screen a person's body are excluded. The law provides narrow exceptions for: an employee's voluntary use of a tool; safety or identification badges, personal alarms, and similar devices that neither detect nor record audio or video and contain no embedded or attached AI; one-time bathroom entry or exit checks; and surveillance required by federal or state law. These carve-outs should be construed narrowly and do not automatically validate current practices.

Employers may not retaliate against workers for exercising their rights, filing complaints, cooperating with an investigation, or objecting to prohibited practices.

Before January 1, 2027, employers should inventory their surveillance technology; update monitoring policies; document any "strictly necessary" justification for monitoring personal spaces; confirm that tools deactivate during off-duty hours, including rest and meal periods; and train supervisors and HR on the new rules and anti-retaliation protections.

AB 1883—Restrictions on Emotion Recognition and Collecting Neural Data

AB 1883, which adds Labor Code sections 1580 et seq., further restricts employer use of surveillance tools, especially AI-powered tools. The law prohibits employers from deploying an AI-powered workplace surveillance tool capable of (1) recognizing, or making inferences or predictions about, an individual's emotional state, or (2) collecting neural data, meaning information generated by measuring activity of the central or peripheral nervous system. In practical terms, any software or device that purports to gauge whether a worker is concentrating, tired, or stressed will be off-limits in California workplaces beginning January 1, 2027. "Artificial intelligence" is defined sweepingly as an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments, language broad enough to capture many tools employers use. California is not alone in restricting this technology: Maine and Connecticut have recently enacted or updated electronic monitoring laws, and Delaware, New Jersey, and New York have longstanding ones.

"Employer" is defined to reach any person or governmental entity that directly or indirectly employs or exercises control over an employee's wages, hours, or working conditions, including farm labor contractors, foreign labor contractors, and entities that contract with labor contractors for services. The Labor Commissioner and "public prosecutors" (the attorney general, district attorneys, city and county counsel, and certain city or county prosecutors) may enforce the law in the superior court of any county where the violation occurred or where the employer transacts business. Successful petitioners may obtain injunctive relief, punitive damages, and reasonable attorneys' fees and costs, and violators face a $500 penalty per violation. Two narrow industry exceptions apply: AB 1883 does not reach employers developing aircraft used in the national airspace, or employers developing products or services for national security, military, space, or defense purposes, and then only to the extent the surveillance is "reasonably necessary" to comply with federal law, federal regulations, or a binding federal contract.

Before the law takes effect, employers should inventory monitoring devices, call center analytics, and video interviewing platforms for emotion-recognition, sentiment-analysis, or neurotech features; disable or replace any that implicate the law; confirm in writing with vendors that their tools do not infer emotional state or collect neural data; and document any reliance on the federal-contract exceptions.

SB 574—AI Use by Attorneys and Arbitrators

SB 574 sets new rules for how attorneys and arbitrators may use generative AI. Under new Business and Professions Code section 6068.1, an attorney who uses AI tools must:

• not enter confidential, personal, or other nonpublic information into the tool unless access to that information is limited to the attorney and persons obligated to keep it confidential;
• take reasonable steps to verify AI output, including checking every case and statute citation and correcting any errors or "hallucinations" (i.e., fabricated or false content);
• disclose generative AI use in all documents submitted to the court; and
• consider whether to disclose AI use in content provided to the public.

Consistent with these obligations, court filings may not include any citation the responsible attorney has not personally checked.

Under new Code of Civil Procedure section 1282.1, an arbitrator may not delegate any part of their decision-making to generative AI. Arbitrators also may not rely on AI-generated information from outside the case record without first notifying the parties and, where practical, giving them an opportunity to comment.

SB 1111—Consent Required for Digital Replicas

California law already bars any person from knowingly using another person's name, voice, photograph, or likeness on products or in advertising without that person's prior consent. SB 1111 clarifies that "voice or likeness" includes an AI-generated "digital replica." It also removes a presumption that previously helped employers: when an employee's photo or likeness appeared only incidentally in the employer's ad or publication, the law presumed the employer's failure to obtain consent was not a "knowing" use.

Practical Tips for Employers

Companies with California employees should consider the following steps:

• Inventory all AI and ADS tools used in HR functions—hiring, scheduling, performance management, discipline, and termination—and map each.
• Build human-review and corroboration workflows and documentation well before the July 1, 2027, operative date of the "No Robo Bosses" bill, SB 947.
• Draft post-use notice templates, establish a process for responding to employee data-description requests under SB 947, and implement a system to locate and produce worker-specific ADS data.
• Review vendor contracts for transparency, data-access, and audit rights; ensure vendors can support compliance with the new disclosure requirements.
• Coordinate compliance with these new laws alongside CCPA compliance efforts to avoid duplicative work.
• For planned reductions in force, assess whether AI or automation is a substantial cause and, if so, update Cal/WARN notice templates to include the enhanced required disclosures.
• Audit workplace surveillance tools and practices in private and off-duty spaces, stop tracking how often employees use those spaces, and review badge, device, and wearable policies consistent with AB 1331.
• Confirm that surveillance tools deactivate during off-duty hours, including rest and meal periods, wherever the employee is located; document any "strictly necessary" justification for monitoring an employee's home, personal vehicle, or personal property; and eliminate any requirement that workers carry physically implanted data-collecting devices.
• Treat voluntary employee use, nonrecording badges and personal alarms without embedded AI, one-time bathroom entry or exit checks, and surveillance required by federal or state law as narrow exceptions to AB 1331, and confirm anti-retaliation protections are reflected in policies and supervisor training.
• Identify and disable any emotion-recognition, sentiment-analysis, or neurotech features (e.g., EEG wearables) in monitoring tools, call-center analytics platforms, and video interviewing software, bearing in mind AB 1883's sweeping definition of artificial intelligence; obtain written vendor confirmation that tools do not infer emotional state or collect neural data; and document any reliance on the narrow federal aircraft, national security, military, space, or defense exceptions.
• Train HR, managers, and in-house legal on the new requirements.
• Consider voluntary audits of AI tools once state standards are in place. If a claimant later alleges that the employer's use of AI caused harm, a documented audit may help in defending the claim, though it does not guarantee protection.
• Obtain an employee's prior consent before using the employee's name, voice, photo, or likeness on products or in advertising, including AI-generated or altered versions and incidental appearances.

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Jeff Bosley and Judith Droz Keyes are partners, and Alexa Graumlich is an associate in DWT's San Francisco office. Allyson Bach and Frances Choi are associates in the firm's Los Angeles office. If you have any questions about the California AI workplace and legal-practice bills discussed above and their potential impact on your company, please contact the authors, another member of DWT's employment services team, or a member of our artificial intelligence team. We will continue to monitor these developments and provide updates as they arise. To stay informed, sign up for our alerts.