Governor Gavin Newsom has signed Senate Bill (SB) 947, adding new requirements to the California Labor Code for employers that use automated decision systems in the workplace for disciplinary and termination decisions. The law takes effect July 1, 2027.
What is Covered?
SB 947 defines an automated decision system, or ADS, as any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, which is used to assist or replace human discretionary decision-making and materially impacts natural persons. The definition excludes certain common tools, including spam filters, firewalls, antivirus software, calculators, databases, and datasets.
What are the New Limitations for Employers?
- Limitations on Disciplinary and Termination Decisions: As a result of SB 947, an employer may not solely rely on an ADS to make a disciplinary or termination decision. When an employer primarily relies on ADS output to make a disciplinary or termination decision, a human must review and corroborate the decision using the information that produced the output or other relevant material. Potential corroborating information may include managerial evaluations, personnel records, work product, peer reviews, and witness interviews. If the output cannot be corroborated, or the human reviewer determines that it is inaccurate, incomplete, or misleading, the employer may not use it to discipline or terminate the employee.
An employer that primarily relies on an ADS for discipline or termination must also give the affected employee a separate written notice when communicating the decision. The notice must explain the employer’s reliance on the ADS, confirm human review and corroboration, provide contact information for a person who can provide more information, describe the employee’s right to request a meaningful and objective description of the employee data used by the ADS, and state that retaliation is prohibited. The notice must be written in plain language and provided through a simple method.
- Prohibition Against Ascertaining an Employee’s Protected Status: Employers may not use an ADS to infer an employee’s protected status under the Fair Employment and Housing Act (FEHA), or to predict and take adverse action against a worker for exercising legal rights.
- Prohibition Against Evading the Law: The law prohibits employers from using an ADS to prevent compliance with or violate employment, labor, workplace safety, or civil rights laws.
The Labor Commissioner and public prosecutors may enforce the law. A qualifying collective bargaining agreement may waive the law’s provisions if it satisfies specified requirements, including protections from algorithmic management.
Before July 2027, employers should identify workplace tools that may qualify as an ADS and evaluate how their outputs affect disciplinary and termination decisions. Employers should also consider documenting human review procedures, developing compliant notices and data-response processes, and coordinating implementation with vendors.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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