California employers face significant new requirements governing the use of artificial intelligence (AI) in the workplace. On September 30, 2026, Governor Gavin Newsom signed a package of laws regulating employer use of AI. Most of these laws take effect as soon as January 1, 2027, giving employers only a few months to review their AI tools, workplace surveillance practices, policies, and layoff procedures to prepare for the new requirements and potential civil penalties.
AB 1883: California Bans AI-Powered Brain and Emotion Monitoring
Employers will be prohibited from using an AI-powered “workplace surveillance tool” to:
- Recognize, infer, or predict an individual employee’s emotional state; or
- Collect “neural data.”
The prohibition applies even if the information is never used to make an employment decision.
The bill broadly defines “workplace surveillance tool” as a system that collects employee data, communications, biometrics, or behavioral information other than through direct human observation. Covered technology may include video or audio monitoring, time-tracking, geolocation, and software that analyzes emails, chats, or calls to recognize or predict an employee’s emotional state.
“Neural data” generally refers to information generated by measuring activity of an individual’s central or peripheral nervous system, including through certain neurotechnology devices.
The prohibition applies to private employers of all sizes and covers employees, but not applicants. The law includes an exception for tools used to ensure safety, although the scope of this exception is not yet clear. The bill provides for civil penalties of up to $500 per violation.
SB 951: New AI-Related California WARN Act Disclosures
When a covered mass layoff, relocation, or termination is caused “in whole or in substantial part” by AI or other automated technology, employers will be required to include new disclosures in their California WARN Act notices.
In addition to existing WARN Act requirements, the notice now must include:
- A statement at the top of the notice stating: “This notice is for a technology displacement.”
- The number, classification or occupation, and work location of affected positions.
- The job functions being automated.
- The category or type of technology responsible.
The new law does not provide guidance on when a layoff is caused “in substantial part” by automation. Because reductions in force may have multiple contributing factors, determining whether the new disclosure requirements apply may require a case-by-case assessment.
Employers should consider updating their WARN Act monitoring procedures to capture the potential impact of AI and other automated technologies on their workforce. Employers may also want to consult counsel when determining whether a technology displacement disclosure is required.
SB 947: Human Review Required for AI-Assisted Discipline and Terminations
Employers will not be able to rely solely on AI or algorithmic tools when disciplining or terminating an employee. If an employer primarily relies on an automated decision system, a human must review and corroborate the system’s output before making the employment decision.
The bill imposes several obligations on employers:
- A human must independently corroborate the AI output using relevant evidence, such as supervisory evaluations, personnel files, work product, or other relevant information.
- The employer must provide the affected employee with a standalone written notice when the decision is communicated. The notice must identify the use of the automated decision system, explain the human review, and provide information about the employee’s rights under the law.
- Employees may request a description of the data about themselves that the system used during the preceding 12 months.
Employers should review their disciplinary and termination procedures to ensure they include a human review requirement and a process for corroborating AI-generated or algorithmic output with independent evidence. Employers should also prepare the required written notice, develop a process for responding to employee data requests, and train managers on the new requirements.
What California Employers Should Do Now
With the first deadlines approaching, employers should review their AI and workplace surveillance tools, revise WARN Act and layoff procedures, and update related policies and training.
California is among the first states to expand regulations of AI in the workplace, and other states may look to California’s new laws as they consider their own AI regulations. Varnum will continue to monitor the changing legal landscape and keep employers informed of the latest developments and compliance requirements.
For questions about these new laws or assistance updating your policies, notices, and layoff procedures, contact your Varnum attorney or a member of Varnum’s Labor and Employment Practice Team.
