Fall is upon us, we will soon turn back the clocks and leftover Halloween candy will be placed on the corner of everyone’s desk, and its also the time of year that the Governor decides what new legislation to sign into law.
Of the 1,160 bills the Legislature sent to the Governor’s Desk, 1,040 were signed and only 120 were vetoed; many of the new laws will impact California employers.
Below is a brief summary of the significant employment related legislation to take effect in the coming months. Most new laws will become effective as of January 1, 2027 while a few do not become effective until later this year or next year providing businesses time to take necessary implementation steps.
AI LEGISLATION
As can be expected, there were several new bills signed into law addressing AI in the workplace – something that is going to be an on-going “hot” topic.
“No Robo Bosses Act” Automated Decision Systems (ADS)
Beginning July 1, 2027, this law prohibits employers from relying solely on an Automated Decision Systems (ADS), including AI, when making disciplinary or termination decisions. An “ADS” includes any computational process derived from machine learning, statistical modeling, data analytics, or AI that issues simplified output, including scores, classifications, or recommendations, that is used to assist or replace human discretionary decision-making.
It prohibits employers from using an ADS to:
- Prevent compliance with any federal, state or local labor laws;
- Not comply with occupational health and safety, employment or civil rights laws or regulations;
- Infer an employee’s protected status under the Fair Employment and Housing Act (FEHA); or
- Predict or take adverse action against a worker for exercising their legal rights.
The use of ADS will be permitted when making disciplinary or termination decisions, but a human must independently corroborate the decision if the employer is “primarily relying” on an ADS, including reviewing the data that produced the ADS output or other relevant information, such as supervisory evaluations, personnel files, work product, peer reviews and witness interviews.
Employer will be required to provide a post-use notice at the time they inform the employee of the decision if the employer primarily relies on ADS when making an employment related decision.
If the ADS output cannot be corroborated, or a human reviewer concludes it is inaccurate or misleading, the employer will be prohibited from relying on it.
The Labor Commissioner and public prosecutors have enforcement authority and employees may also bring private rights of action to recover in part civil penalties up to $500 per violation.
Cal/WARN: AI Technological Displacement Notice
This new law revises existing Cal/WARN to require a notice of a mass layoff, relocation, or termination caused in whole or in substantial part by an AI system (or other automated technology that replaces or automates employment positions). (SB 951)
This notice must state at the top: “This notice is for a technology displacement,” and include:
- the number, classification or occupation, and work location of layoffs substantially due to AI or other automated technology;
- the job functions performed by those replaced workers that will be automated; and
- the specific category or type of AI system or other automating technology resulting in the technological displacement.
The Employment Development Department (EDD) must publish on its website a summary of the notices received and post a quarterly state-wide summary of reported technological displacements. Other sections of the Cal-WARN act remain unchanged.
Attorneys’ Use of Generative AI
Due to the significant increase in the use of AI in the legal field and the often reported instances of AI hallucinations in court filings, legislation was enacted which imposes several limitations on the use of AI by attorneys and requires attorneys to disclose their use of generative AI in court filings. (SB 574)
The attorney conduct prohibited by this new law includes:
- Entering confidential, personal identifying, and other nonpublic information into a generative AI system where access is not restricted to the attorney or authorized users with the obligation to keep the information confidential; and
- Including in any paper filed in any court citations that have not been personally verified.
The new law requires attorneys to take reasonable steps to verify the accuracy of generative AI outputs and to correct any erroneous or hallucinated output.
The new law also prohibits an arbitrator from (1) delegating any part of their decision-making process to a generative AI tool; and (2) relying on information from generative AI outside the record without making appropriate disclosures to the parties beforehand.
ANTI-DISCRIMINATION AND HARASSMENT
Standardized Definition of Sex Discrimination
This bill creates a standardized definition of “sex discrimination” across California’s statutory codes, to align the definition in FEHA, the Unruh Act, the Education Code, and more. (AB2563)
This new law provides the following definitions shall apply.
- “Discrimination” includes, but is not limited to, harassment.
- “Pregnancy or related medical conditions” includes, but is not limited to, childbirth, abortion, lactation, miscarriage, fertility, and contraception.
- “Sex discrimination” includes, but is not limited to, discrimination based on any of the following actual or perceived characteristics or actions:
(A) Assigned sex or gender category, including female, male, or nonbinary.
(B) Degree of conformity to sex or gender stereotypes.
(C) Gender, including gender identity, gender expression, and access to, and use of, gender affirming care and other related health care.
(D) Pregnancy or related medical conditions.
(E) Decision-making, access to care, or potential or actual use of a drug, device, product, or service relating to pregnancy or related medical conditions.
(F) Sexual orientation.
(G) Variations in sex characteristics, including intersex traits or differences in sex development.
As this bill seeks to standardize the definitions across many laws, if there is a statutory conflict, the conflict shall be resolved in favor of the interpretation providing broader civil rights protections.
Employers must ensure that their discrimination and harassment policies are updated and the dress code, grooming and uniform policies are gender neutral.
Interestingly, a bill that would have added peri-menopause, menopause, post-menopause or other related medical conditions to FEHA’s definition of sex, making those conditions protected categories under the FEHA, and required the Civil Rights Department to update its poster notifying women of their rights relating to peri-menopause, menopause, and post-menopause was vetoed. The Governor cited significant cost and implementation concerns due to lack of clarity with some undefined terms. However, while the addition of menopause and related conditions are not part of this new law, employers should not discount these conditions.
Mandating Anti-Hate Speech Training
Beginning January 1, 2028, mandated sexual harassment training shall include, anti-hate speech training consisting of practical guidance on recognizing, reporting, and confronting workplace speech that vilifies, humiliates, or incites hatred against people based on FEHA protected characteristics. AB 1803
Unlawful Immigration-Related Practices
California law currently prohibits an employer from engaging in unfair immigration-related practices against a worker in retaliation for exercising certain legal rights.
Effective January 1, 2027, there is a new law that makes it unlawful for an employer, or any person, to engage in conduct, related to any person’s actual or perceived immigration status, that would reasonably tend to dissuade them from engaging in conduct that the person has a legal right to engage in under any federal, state, or local statute or regulation that is applicable to employees, or to induce a person to engage in conduct where the person has a legal right to abstain.
The law also clarifies that the actual immigration status of a person is irrelevant to liability under Labor Code Section 1019 and that these protections apply to applicants, employees and former employees.
The new law also provides for a rebuttable presumption of retaliation in the event that an employer violates Labor Code section 1019 within 90 days of a person’s exercise of protected rights under any employment law.
Additionally, if an employer or other person violates Labor Code Section 1019, they will be liable for civil penalties not exceeding $10,000 per employee or person for each violation. This penalty is in addition to other remedies already provided by Section 1019.
Supervisors and managers should be trained on this new law to ensure that there is no violation of this new law.
REMINDER: Last year, the Labor Code was amended to include an obligation on employers to provide a stand-alone written notice to each current employee, and to all new hires, the Know Your Rights Notice. The Notice must be provided to employees either by personal service, email, or text (but it must be received within one business day of sending). An employer may, in addition to the required written notice, choose to provide a link to, or show, the video developed by the Labor Commissioner’s office. Lastly, employers shall keep records of compliance with the requirements of this section for three years, including the date that each written notice is provided.
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