AI Is Now Making Employment Decisions. California Is About to Make That Very Expensive.
Employers have been told for years that as long as a human makes the final call, AI tools used to get there are legally neutral. That assumption is about to collide with California law in a way that will be expensive for businesses that are not paying attention.
Senate Bill 947, commonly called the “No Robo Bosses Act,” is currently moving through the California Legislature after passing the Senate 29-9. It would impose a comprehensive regulatory framework on automated decision systems – defined broadly enough to cover productivity monitoring tools, scheduling platforms, performance analytics, and AI-assisted termination workflows. The bill defines “worker” to include not only employees but also independent contractors, which means gig-economy platforms are squarely in the crosshairs.
The bill does not just restrict how automated decision systems can be used. It would flatly prohibit certain uses regardless of whether a human is involved in the final decision. Under the bill as drafted, employers would be prohibited from using an automated decision system to conduct predictive behavior analysis, infer a worker’s protected characteristics, take adverse action against a worker for exercising their legal rights, or use individualized worker data to inform compensation unless the employer can clearly demonstrate that pay differences reflect legitimate cost differentials or task-related factors. That last item alone reaches deep into the AI-driven performance management and compensation tools many California employers already use.
The disclosure requirements are where the operational burden lands. When an employer primarily relies on an automated decision system in making a disciplinary, termination, or deactivation decision, it must provide the affected worker with a written, plain-language notice at the time the decision is communicated. That notice must be a separate, stand-alone document, delivered in the language in which the employer routinely communicates with the worker. It must identify the automated decision system vendor and product name, specify the worker data and system output used, describe the corroborating evidence gathered by the human reviewer, and provide contact information for a human point of contact. No template, no form letter, and no checkbox will satisfy this.
The penalty structure is not symbolic. The bill carries a civil penalty of $500 per violation, enforceable through administrative citation by the California Labor Commissioner, by individual workers or their exclusive bargaining representatives through private civil action, or by public prosecutors. In civil litigation, workers may seek punitive damages and attorney’s fees. In a multi-employee termination event, $500 per violation per worker adds up fast – and that is before attorney’s fees exposure in a private action.
If SB 947 is signed, it would likely take effect January 1, 2027. Governor Newsom vetoed its predecessor, SB 7, in 2025, expressing concerns about overlap with existing discrimination law and the scope of the proposal. SB 947 was revised to address those concerns, but passage is not guaranteed. What is certain is that the legislative direction is clear: California is moving toward regulating AI in employment decisions, and the question for employers is not whether regulation is coming but whether their systems and workflows will be defensible when it arrives.
The practical compliance inventory starts now. Employers using AI tools to evaluate employee performance, productivity, attendance, or workplace conduct should audit whether those tools qualify as automated decision systems under the bill, identify where human review is and is not built into the workflow, assess whether recordkeeping exists to reconstruct what data and outputs were used in any given employment decision, and review vendor contracts to understand what transparency and data-access obligations the vendor can support.
If you want to know where your business stands, contact Michael Trust Law, APC for a no-charge initial consultation. The facts determine what needs to be addressed – and how much of a conversation that takes.
This post shares general information based on common patterns I see in California workplaces. It is not legal advice, does not create an attorney-client relationship, and outcomes depend on specific facts – no lawyer can guarantee a result. Past results do not guarantee or predict future outcomes. AI may have been used to create this post. All content reviewed by a CA attorney before publication.