Labor & Employment Law Blog

On September 30, 2026, Governor Gavin Newsom signed Senate Bill 947 into law.  The new law will not prohibit employers from using AI tools when making employment decisions, but it will prohibit employers from relying solely on automated decision systems when making disciplinary or termination decisions.

What the Statute Covers

SB 947 governs employers’ use of “automated decision systems” (“ADS”), defined 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, that is used to assist or replace human discretionary decision-making and “materially impacts” natural persons.  SB 947 does not define the phrase “materially impacts.”  Per SB 947, an ADS does not include a spam email filter, firewall, antivirus software, identity and access management tools, calculator, database, dataset, or other compilation of data. 

Employers are prohibited from using an ADS to violate employment or civil rights laws, to infer an employee’s protected status under the Fair Employment and Housing Act, or to predict and take adverse action against a worker for exercising legal rights.

The Core Rule: No Sole Reliance, and Corroboration When Reliance Is Primary

Per SB 947, an employer will not be able to rely solely on an ADS when making a disciplinary or termination decision.  Where an employer “primarily relies” on an ADS’s output, a human must corroborate the decision using data collected or used to produce the ADS’s output or other relevant corroborating or supporting information, such as supervisor evaluations, personnel files, employees’ work product, peer reviews, witness interviews, or relevant online customer reviews.  If the ADS output cannot be corroborated, or the reviewer finds it inaccurate, incomplete, or misleading, the employer may not use the ADS output to make a disciplinary or termination decision.  Employers are cautioned that the statute offers no percentage, weighting test, or safe harbor to determine when an employer has “primarily relied” on ADS output. 

Notice and Data Requests

When an employer communicates a disciplinary or termination decision in which the employer primarily relied upon an ADS, the employer must deliver to the employee a plain-language, standalone written notice, in the same language used for other routine employment communications, via a simple and easy-to-use method, such as an email, hyperlink, or other written format.

The notice must inform the employee that the employer primarily relied on an ADS in making the disciplinary or termination decision and that a human reviewed and corroborated the ADS output, and provide the contact information for a human that the employee may contact for more information about the decision.  The notice must also explain the employee’s right to access a description of the employee’s own data used by the ADS and state that the employer is prohibited from retaliating against the employee for exercising any rights under SB 947. 

Where an employer primarily used an ADS to make a disciplinary or termination decision, the employee may request, and the employer must provide, a meaningful, objective description of the employee’s own data used by the ADS.  When an employer is required to provide a description of employee data pursuant to this part, that description shall be provided in a manner that anonymizes the personal information of customers, other employees, or other individuals.

Enforcement

The Labor Commissioner and public prosecutors will be tasked with enforcement of SB 947. Violations of SB 947 carry a civil penalty of $500 per violation.  In superior court actions, the petitioner may seek temporary or preliminary injunctive relief, punitive damages, and reasonable attorney’s fees and costs. 

What to Do Before July 1, 2027

Employers should carefully consider their approach to using ADS in employment decisions now, in anticipation of the July 1, 2027 effective date of SB 947.  At the outset, employers should inventory every ADS tool currently in use that informs disciplinary or termination decisions, including performance dashboards, productivity analytics, attendance systems, and scoring built into HR platforms.  Employers should be prepared to have a human review decisions made by those systems and the data being utilized, consistent with the requirements of SB 947.  Employers that intend to primarily rely on an ADS to make disciplinary or termination decisions should also develop a template notice that can be delivered to the employee at the time the decision is communicated.  Supervisors and human resources managers should also familiarize themselves with the new requirements to ensure their conduct aligns with the law and the employer’s compliance expectations.

Employers with questions regarding SB 947 may contact the author of this post or their usual employment law counsel at AALRR.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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