California employers that use artificial intelligence or other automated tools to manage their workforce could soon face a significant new set of obligations that will be layered on top of the existing regulations. SB 947 will prohibit employers from relying solely on automated decision systems to discipline or terminate workers and create new human review requirements, worker notices, and data access requirements when employers primarily rely on those systems for disciplinary or termination decisions. The Legislature sent the bill to Governor Newsom and, if signed, the new requirements will be operative July 1, 2027.
New Employer Mandates
SB 947 governs employer use of “automated decision systems” (ADS). ADS is very broadly defined to include computational processes derived from machine learning, statistical modeling, data analytics, and other AI techniques that make decisions or facilitate human decision-making. The definition is not limited to tools marketed as “AI.” The bill would apply to both public and private employers without regard to the number of workers employed.
The bill bans employers from using ADS to make certain employment-related decisions such as violating labor, employment, or civil rights laws, or to predict and take adverse action against a worker for exercising rights under employment laws. And, employers will be prohibited from relying on ADS as the sole basis for making disciplinary or termination decisions.
The bill regulates the use of ADS in making disciplinary decisions. If an employer primarily relies on ADS output to make such decisions, the employer must have a human corroborate the decision using the data used to produce the ADS output or other relevant supporting information. So, a human manager or HR person will need to review supervisor or manager evaluations, personnel files, employee work product, peer reviews, and witness interviews to corroborate and support the ADS recommendation. If the ADS output cannot be corroborated, or the human reviewer determines that it is inaccurate, incomplete, or misleading, the employer may not rely on ADS to discipline or terminate the employee.
Moreover, if ADS is used for discipline or termination decisions, employees will be entitled to a “meaningful, objective description” of the employee’s own data used by the ADS. The employer must also provide a “postuse” notice to the employee at the time the employer informs the employee of the discipline or termination decision. The notice is required to state that the employer primarily relied on ADS, that a human reviewed the decision and corroborated ADS, provide contact information for a human the employee may contact for additional information, explain the employee's right to obtain a description of the employee data used by ADS, and advise the employee that retaliation for exercising rights under the statute is prohibited.
The Labor Commissioner is empowered to enforce the law through civil penalties and remedies such as reinstatement. A violation may result in a $500.00 civil penalty.
Certain employees covered by collective bargaining agreements are exempt if the CBA expressly waives the statute, provides for specified wages and working conditions, and provides protection from certain AI oversight.
What Should California Employers Do To Prepare?
We anticipate the SB 947 will be signed into law, therefore California employers using ADS should assess their existing practices now. The California Civil Rights Council’s regulations on automated decision systems in employment took effect on October 1, 2025, and already impose anti-discrimination obligations on employers using these tools. Practical steps to consider now include:
- Inventory your automated tools. Identify every system that scores, ranks, flags, schedules, or evaluates workers—applicant tracking systems, performance management platforms, productivity monitoring software, and workforce analytics—whether built in-house or licensed from vendors.
- Build human review into the process. Ensure that a trained human decision-maker reviews and corroborates any ADS or AI-assisted recommendation before discipline or termination, and document that review.
- Assess your data and notice capabilities. Confirm that you can locate and produce worker-specific ADS data and prepare draft written notices. Prepare a compliant post-use notice process for decisions in which ADS is primarily relied upon.
- Review vendor contracts. Consider whether agreements with AI and HR technology vendors address transparency, data access, and compliance support.
- Consult with Counsel to ensure that your processes are defensible.
We will continue to monitor SB 947 and related developments as the legislative session progresses. Employers with questions about AI in the workplace or California employment law compliance should contact the author or their favorite CDF lawyer for guidance tailored to their circumstances.
