Several recently signed California laws imposing new rules on companies that use artificial intelligence to manage their workforces include broad concepts that experts said could give the statutes wider reach than employers may be anticipating.
California's newly enacted S.B. 947, the No Robo Bosses Act, bars companies from relying "solely" on the output of an automated decision system when disciplining or firing an employee. (iStock.com/Blue Planet Studio)
Among
the AI measures Gov. Gavin Newsom
signed on Sept. 30 was S.B. 947, known as the No Robo Bosses Act, which bars companies from relying "solely" on the output of an automated decision system when disciplining or firing an employee.
Newsom also inked S.B. 951, which sets notice requirements for when companies' AI tools "lead to the displacement or automation" of a job; A.B. 1331, which bans corporate policies mandating employees bring AI-embedded surveillance tools into a workplace bathroom; and A.B. 1883, which prohibits employers from using AI-driven tools to collect neural data or track users' emotional states, with some exceptions.
Management-side employment attorneys told Law360 it's not yet clear exactly how these protections will function in practice, the ways they can be enforced, and what kinds of automated tools and employer decisions fall under their coverage.
"Things are moving so fast in this space, AI in the employment context and the human resources context," said
Fisher Phillips LLP partner Benjamin M. Ebbink, who heads the firm's California government relations practice and focuses on legislation and regulations affecting Golden State businesses.
Here are four questions compliance experts have about the state's new AI laws.
Is PAGA in Play?
The bills do not contain a private right of action, with enforcement left up to the state's labor commissioner. However, the new laws are modifications to California's labor code, which attorneys said is notable, because it could make way for claims under California's Private Attorneys General Act.
PAGA, originally enacted in 2004, was created to aid the state in enforcing labor laws by allowing employees to sue companies for labor code violations. A worker bringing a PAGA claim can recover civil penalties on behalf of the state's Labor & Workforce Development Agency, and a portion of that is distributed among the aggrieved employees
Newsom signed a PAGA reform bill in 2024, which, among other changes, increased the money allocated to employees from 25% to 35%. The measure also aimed to encourage labor code compliance by capping penalties for employers that move quickly to fix the problem, and installed higher penalties for companies that act "maliciously, fraudulently or oppressively."
Danielle Ochs, a San Francisco-based shareholder at
Ogletree Deakins Nash Smoak & Stewart PC who serves as co-chair emeritus of the firm's artificial intelligence and innovation practice group, said it's not yet clear if PAGA claims can be brought under the AI guardrails Newsom codified last week.
"None of these carry a private right of action, but they do potentially carry the possibility that someone might be able to assert a PAGA claim," Ochs said. "I certainly expect that people will be exploring that, and if that's the case, that opens up a new realm of litigation that we haven't seen before."
Ebbink, of Fisher Phillips, agreed, adding this may be something for the judiciary to sort out.
"For a couple of these, there's still an open question about PAGA because it creates civil penalties that the labor commissioner can recover," Ebbink said. "So even if it doesn't have an express private right of action that lets an employee bring a lawsuit, does that still raise the specter of PAGA?
"That's an open question for some of these that probably is going to need to be litigated and the courts to weigh in," he said.
A representative for Newsom's office did not respond to questions about whether PAGA will be an enforcement mechanism for the new AI laws.
What Does "No Robo Bosses" Cover?
Employment attorneys told Law360 that S.B. 947, the No Robo Bosses Act, stands out from the pack of new laws due to the strict prohibitions it contains, as it bars businesses in California from relying exclusively on output from an automated decision system, or ADS, to fire or discipline workers.
Most of the AI legislation that California and other states are pushing through attaches compliance requirements to AI use, rather than explicitly banning a particular action, said Ochs of Ogletree.
"This is really one of the first laws that limits the use of AI for a particular activity," Ochs said. "The other automated decision laws out there right now really install a compliance load to particular types of activities."
However, experts said it's not yet clear what precise kinds of conduct trigger the law's outright prohibition versus its
compliance obligations.
According to the text of S.B. 947, "an employer shall not rely solely on an ADS when making a disciplinary or termination decision."
If employers "primarily" do so, they have to take a few extra steps, including "direct a human to corroborate the decision" with the data that was collected or "other relevant corroborating or supporting information," like employee evaluations, personnel files and peer reviews.
The lines between "solely," "primarily" and a level of reliance that doesn't trigger the law aren't yet in focus, said Ebbink of Fisher Phillips.
"It is going to be a challenge," Ebbink said. "You make a discipline or termination decision, and you may use some AI information, but it's probably based on other information as well. And so how do you draw the line and say, this is 'primarily?'
"It's just where the legislation landed, and now the employers and the attorneys are going to have to fight over what those terms mean," Ebbink said.
Adam S. Forman, an
Epstein Becker Green employment partner and management-side attorney who co-leads the firm's AI cross-practice working group, agreed, noting the statute doesn't define these terms.
"There's going to be a lot of litigation as to what 'solely' relying on an automated decision-making system will mean," Forman said.
What Counts as "Disciplinary"?
In a similar vein, regarding the "disciplinary" trigger, Forman said companies might have AI tools that interact with disciplinary decisions that they haven't fully considered. He offered the example of an outside vendor that uses AI to analyze workers' time cards, which is information an employer may use to dole out
points for late arrivals or absences.
"It's going to really come into play when you have specific functions that you've automated as an employer that touch discipline that you might not even think about," Forman said.
Ochs, of Ogletree, said there are broader forms of worker penalties that some might argue fall under the law, beyond formal discipline.
"The most obvious interpretation of discipline or termination would be like using an automated tool to decide whether someone should receive a write-up, or using an automated tool to decide if someone should be fired," Ochs said. "But there'll be other, grayer interpretations of the law, and so that remains to be seen whether or not this law means something else, something more abstract."
Longtime workers' rights advocate Mariko Yoshihara, a principal at Yoshihara Law & Policy LLC who also serves as legislative counsel and policy director at the California Employment Lawyers Association, said the term should be viewed broadly under legal frameworks companies are already accustomed to.
"To me, a disciplinary action seems akin to an adverse action, and lawyers were used to this term around an adverse action, which is pretty broad, as it should be," Yoshihara said. "It includes things that impact hours, wages and conditions of the workplace in an adverse way."
What Companies Must Comply?
Three of the AI protections that Newsom signed into law last week include a similar definition of "employer."
The No Robo Bosses Act and the two surveillance-related laws — A.B. 1331 and A.B. 1883 — define this term as a "person" that "directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person."
Forman, of Epstein Becker Green, said this is an open-ended definition that could encompass a wide array of entities, including staffing agencies and contractors.
"The insertion of the word 'indirectly' arguably means that we're talking about co-employment, co-employers," he said. "So you could work for a staffing company. You could be assigned to the staffing company's customer. Go to their office every day. Work at their desk.
"And to the extent that a customer is indirectly exercising control over your wages, hours, or working conditions, that customer is going to be obligated to comply with this law," Forman said.
Three of the bills Newsom signed on Sept. 30 — A.B. 1331, A.B. 1883 and S.B. 951 — will take effect in January, while No Robo Bosses goes into effect in July.
Speaking on the latter measure, Forman said companies in California should take a cautious approach, and start getting their ducks in a row now.
"The big takeaway for me from all this is: Employers have nine months, and they've got work to do," Forman said.
--Additional reporting by Vin Gurrieri and Lauren Berg. Editing by Bruce Goldman and Nick Petruncio.
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