Can AI Fire Your Employees? California Says Not So Fast

California continues to push legislation that would significantly regulate employers’ use of artificial intelligence in workplace decision-making. Senate Bill 947 (“SB 947”), commonly known as the “No Robo Bosses Act,” seeks to impose new restrictions on the use of automated decision systems (“ADS”) in employment settings.

While SB 947 makes its way through the Legislature, employers should pay close attention as it provides valuable insight into where California lawmakers appear to be heading on workplace AI regulation.

What Does SB 947 Mean for Employers?

SB 947 would impose a comprehensive set of restrictions on how employers use ADS. To be clear, the bill would not just touch termination decisions, but impact a wide range of workforce management activities. The bill’s practical implications fall into several distinct categories.

1. Broad coverage of employees and contractors. The bill defines “worker” broadly to include not only employees but also independent contractors providing services to or through a business. This means that gig-economy platforms and other businesses relying on contractor workforces—along with traditional employers—would be subject to SB 947’s requirements.
2. Categorical prohibitions on automated decision making. Beyond restricting how ADS can be used, SB 947 would flatly prohibit certain uses of automated systems regardless of whether a human is involved in the final decision. Under the bill as drafted, employers would be prohibited from using an ADS to: (1) conduct predictive behavior analysis; (2) infer a worker’s protected characteristics; (3) take adverse action against a worker for exercising their legal rights; or (4) use individualized worker data to inform compensation, unless the employer can clearly demonstrate that any pay differences reflect legitimate cost differentials or task-related factors.
3. Detailed post-use disclosure requirements. When an employer primarily relies on an ADS 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. This notice must be a separate, stand-alone document, delivered in the language in which the employer routinely communicates with the worker. Among other things, this notice must identify the ADS vendor and product name, specify the worker data and ADS output used, describe the corroborating evidence gathered by the human reviewer, and provide contact information for a human point of contact.
4. Penalties and exposure. The bill carries a civil penalty of $500 per violation, enforceable by the California Labor Commissioner through administrative citation or civil action, by individual workers or their exclusive bargaining representatives through a private civil action, or by public prosecutors. In civil litigation, workers may seek punitive damages and attorney’s fees.

In short, human judgement is key to this legislation. Employers could not simply rely on an automated recommendation when making disciplinary, termination, or deactivation decisions. A human reviewer would need to independently evaluate the relevant information before action is taken.

When Could the Law Take Effect?

SB 947 has gained meaningful traction in Sacramento. The bill passed the California Senate by a 29-9 vote and is currently under consideration in the Assembly. That level of support, combined with the Legislature’s continued focus on artificial intelligence and workplace protections, suggests the proposal has a realistic path forward.

That said, passage is far from certain. Governor Newsom vetoed SB 947’s predecessor, SB 7, in 2025, expressing concerns about the proposal’s scope and potential overlap with existing employment and discrimination laws. While SB 947 was revised to address those concerns, it remains to be seen whether the changes will be sufficient to garner approval from the executive branch. As a result, the ultimate question may not be whether the Legislature can pass the bill, but whether lawmakers can craft a version that addresses the concerns that led to the prior veto.

If the Assembly approves the measure and it is signed by the Governor, SB 947 would likely become effective on January 1, 2027, absent a special effective-date provision.

Key Compliance Considerations for Employers

For many employers, the most significant impact of SB 947 would be in day-to-day workforce management. If enacted, the bill could require employers to:

• Increase human oversight of employment decisions. Employers using AI tools to evaluate employee performance, productivity, attendance, or workplace conduct would need to ensure disciplinary, termination, and deactivation decisions are independently reviewed by a human decision-maker.
• Review existing workplace technologies. Employers may need to assess whether productivity monitoring, scheduling, performance management, and workforce analytics tools qualify as automated decision systems under the bill.
• Provide employee notices and data access. The bill would require notice when an automated decision system plays a substantial role in certain employment decisions and may require employers to provide workers access to data used by those systems.
• Expand recordkeeping practices. Employers may need to maintain records regarding ADS inputs, outputs, and the human review process associated with covered employment decisions.
• Reevaluate vendor relationships. Employers relying on third-party AI vendors may need to conduct additional diligence regarding system functionality, transparency, data retention, and compliance obligations.
• Assess litigation and discrimination risks. Employers remain responsible for employment decisions made with the assistance of AI tools and may face increased scrutiny regarding the fairness and legality of those systems.

Looking Ahead

SB 947 reflects a broader regulatory trend toward increased oversight of AI-driven employment practices. Whether or not this particular bill is signed into law, California employers should expect continued legislative and regulatory attention in this space.

Employers that proactively evaluate their use of automated systems and establish robust compliance frameworks now will be better positioned to respond when new requirements take effect.