Calif. Legislators OK Requiring Oversight Of Workplace AI

The California Senate has approved a bill that would restrict how employers can use tools powered by artificial intelligence to make employment decisions, sending the legislation to Gov. Gavin Newsom's desk despite opposition from business groups.

The bill — S.B. 7, the No Robo Bosses Act — would require employers to notify workers if employers use automated systems to make discipline, termination, promotion and hiring decisions. The bill would also prevent them from using the technology to circumvent other labor or civil rights laws.

The legislation, introduced by state Sen. Jerry McNerney, D-Stockton, passed the Senate 28-9 late Friday, a day after the bill cleared the Assembly 45-17, according to the state Legislature's website.

McNerney said in a news release that his bill doesn't prohibit automated decision-making systems but instead "establishes commonsense guardrails."

"Businesses are increasingly using AI to boost efficiency and productivity in the workplace," the state senator said. "But there are currently no safeguards to prevent machines from unjustly or illegally impacting workers' livelihoods."

Under S.B. 7, an employer would be prohibited from "solely" using an automated system to make a disciplinary or termination decision, and any decision primarily made by the technology would have to be reviewed by a human using performance evaluations, personnel files, peer reviews and work products. Workers would also have the right to request the most recent 12 months of data used by an automated system to make decisions, and employers would be barred from retaliating against employees who assert these rights, according to the legislation.

The bill requires employers to tell workers at least 30 days before employers start using an automated system to make decisions, or no later than April 1, 2026, if they are currently using the technology.

A coalition led by the California Chamber of Commerce that includes the California Retailers Association, the California Grocers Association and various local chambers of commerce have opposed S.B. 7. In a letter sent early last week, the coalition warned that the bill treats independent contractors the same as employees, making it more difficult and expensive for smaller businesses to use contractors.

"Treating independent contractors as employees is contradictory to existing law, adds unnecessary burdens and expenses, and is a troubling precedent," CalChamber wrote.

In late August, the California Chamber of Commerce also launched a campaign urging lawmakers to avoid overregulating the AI industry in ways it says could hinder the state's competitiveness in the arena. A spokesperson for the California chamber declined to say whether the group planned to file a lawsuit opposing S.B. 7.

Lorena Gonzalez, president of the California Federation of Labor Unions, also said in the news release that S.B. 7 can put the state at the forefront of protecting workers against "unregulated robo-bosses."

"We cannot allow robo-bosses to go unchecked, while workers are treated like collateral damage of new technologies in the workplace," Gonzalez said.

A similar bill introduced by Democratic state Assemblymember Rebecca Bauer-Kahan, A.B. 1018, was put on hold shortly after S.B. 7 passed on Friday night. A.B. 1018 would set parameters around the development and deployment of automated systems used to make "consequential decisions" in employment and other contexts, such as legal services, family planning or healthcare.

The California governor's office did not immediately respond to a request for comment Monday.

--Additional reporting by Vin Gurrieri. Editing by Nick Petruncio.

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