California Enacts Significant AI Laws Affecting Public Employers, Workplace Technology, and Legal Services

10.07.2026

California’s 2025-2026 legislative session produced a sweeping package of artificial intelligence (AI) legislation affecting employment practices, workplace surveillance, legal services, government procurement, and AI governance. Although only a handful of these measures impose immediate compliance obligations on public employers, together they reflect a clear trend toward increased regulation of AI-driven workplace decision-making and oversight of emerging technologies.

Public agencies, special districts, transit agencies, educational institutions, and other public employers should evaluate their use of automated decision-making tools, employee-monitoring systems, AI vendors, and legal-practice protocols in anticipation of upcoming compliance obligations.

The most consequential AI developments affecting California public employers are:

SB 947, regulating AI-assisted discipline and termination decisions
AB 1883, restricting certain AI-enabled workplace surveillance tools

SB 574, establishing new requirements for attorneys who use generative AI

The Legislature also enacted several measures establishing California’s broader AI governance framework, including SB 813 and AB 1405, while the Governor vetoed AB 2656, which would have imposed advance-notice requirements before public employers deploy certain AI tools.

SB 947 Automated Decision Systems (Mandatory Human Review)

Effective July 1, 2027

SB 947 regulates the use of automated decision systems (ADS) in disciplinary and termination decisions. The statute generally prohibits employers from relying solely on automated systems to make those employment decisions and requires meaningful human involvement in the process.

The law also:

Requires an employer who primarily relies upon an ADS output to make a disciplinary or termination decision to direct a human to corroborate the decision using data that was collected or used to produce the ADS output or other relevant corroborating or supporting information
Requires an employer that primarily relied upon an ADS to make a disciplinary or termination decision to provide the affected employee with a written notice at the time the employer informs the employee of the decision
Grants employees access to certain data used in the ADS decision-making process

Authorizes enforcement by the Labor Commissioner and public prosecutors

Imposes civil penalties, including $500 per violation

Public employers using AI-assisted attendance, productivity, performance-management, or disciplinary systems should ensure that supervisors independently review and validate employment decisions rather than rely solely on automated outputs.

Agencies should also evaluate whether implementing these technologies triggers collective-bargaining obligations or warrants contractual provisions governing AI use.

The statute contains an exemption for certain parties covered by qualifying collective bargaining agreements that contain specified provisions and an explicit waiver. Public employers entering successor negotiations should evaluate whether contractual language governing AI-assisted employment systems is appropriate.

AB 1883 Workplace Surveillance Tools

Effective January 1, 2027

AB 1883 regulates workplace surveillance technologies and prohibits certain uses of AI-driven monitoring tools. The law generally prohibits employers from using workplace surveillance tools that employ AI to:

Recognize or infer emotional states
Collect neural data

Violations may be enforceable by the Labor Commissioner and public prosecutors with civil penalties of up to $500 per violation.

Public employers should review employee-monitoring technologies to determine whether any system uses AI to infer fatigue, stress, engagement, emotional state, or other behavioral characteristics. Such functionality may require modification or elimination before January 1, 2027. Particular attention should be paid to:

Driver-monitoring systems
Voice analytics tools

Productivity-monitoring software

AI-enabled safety technologies

SB 574 Generative AI: Attorneys and Arbitrators

Effective January 1, 2027

SB 574 establishes statutory duties governing attorneys’ use of generative AI. Among other requirements, attorneys:

May not delegate the practice of law to AI
Must protect confidential and nonpublic information

Must verify AI-generated content

Must verify all citations included in court filings

The law also establishes AI-related requirements affecting arbitrators and alternative-dispute-resolution providers.

Public agencies and agency counsel should update AI-use policies and litigation protocols to ensure legal staff independently verify AI-generated content, protect confidential information, and comply with the statute.

Attorneys using Microsoft Copilot, ChatGPT, Claude, Westlaw Precision AI, Lexis+ with Protégé, Harvey, or similar tools should review compliance procedures before January 1, 2027.

SB 813 and AB 1405: California’s AI Audit Infrastructure

SB 813 effective January 1, 2027

AB 1405 registry and registration requirements effective January 1, 2029

SB 813 establishes a framework for independent verification organizations (IVOs), while AB 1405 creates California’s AI Auditor Registry. Together, these laws create California’s framework for independent AI assessments and audits. Neither statute imposes immediate compliance obligations on public employers. However, agencies procuring AI tools should expect increased reliance on independent AI auditors and risk-assessment frameworks during:

Procurement reviews
Contract negotiations

Vendor due diligence

Future regulatory compliance efforts

SB 928 California State University Faculty

Effective January 1, 2027

SB 928 requires California State University (CSU) faculty positions and instructors of record to be filled by qualified individuals (i.e., human beings) who meet applicable CSU qualification standards.

Other Noteworthy Developments

AB 2656 (Public Employees: Artificial Intelligence Notice), which would have required advance notice to unions regarding workplace AI deployments, was vetoed. AB 2656 would have required state and local public employers to provide recognized employee organizations at least 45 days’ written notice before developing, purchasing, or requiring the use of generative AI to perform bargaining-unit work.

SB 951 (Technological Displacement Notice): As introduced, SB 951 would have created a broad framework governing AI-related job displacement. The bill was substantially narrowed before enactment and ultimately amended California’s existing WARN Act to require additional disclosures when covered layoffs are caused in whole or in substantial part by AI or automation. Because the law operates through California’s existing WARN Act framework, it does not create new notice or bargaining obligations for most public employers.

Executive Order N-6-26 AI Workforce Disruption and Labor Market Impacts

Effective May 21, 2026

Executive Order N-6-26 directs state agencies to study the workforce impacts of AI, including:

Technological displacement
Labor-market monitoring
Workforce retraining
Potential WARN Act revisions
Collective-bargaining issues
Worker-transition policies

Although the order imposes no direct obligations on employers, it signals heightened state scrutiny of AI-related workforce disruption and potential future labor-law reforms.

Executive Order N-9-26 Accelerated AI Oversight and Independent Assessment Framework

Effective September 18, 2026

Executive Order N-9-26 accelerates implementation of California’s newly enacted AI governance laws and directs further study of advanced AI safety mechanisms by moving the SB 813 IVO implementation deadline to May 1, 2027, and accelerating creation of the online AI Auditor Registry under AB 1405 to December 1, 2027. The order also requires recommendations regarding:

Independent on-site AI evaluators
Independently verified AI safety plans

Emergency AI shutdown (“kill switch”) mechanisms

Expanded reporting of AI loss-of-control incidents

Although it imposes few direct obligations on public employers, Executive Order N-9-26 accelerates implementation of California’s AI oversight framework and signals increased scrutiny of:

AI vendors
Independent audits

Procurement practices

Advanced-model safety measures

Recommended Action Items

Review AI-assisted disciplinary, attendance, productivity, and performance-management systems for compliance with SB 947
Evaluate employee-monitoring technologies for compliance with AB 1883

Update legal-department and outside-counsel AI-use policies to comply with SB 574

Assess whether collective bargaining agreements address AI deployment, employee monitoring, and automated decision-making

Incorporate AI-governance, risk-review, and audit considerations into procurement and vendor-management processes

Monitor implementation of SB 813, AB 1405, and Executive Order N-9-26

Bottom Line

California’s 2025-2026 AI legislation reflects a clear trend toward increased oversight of workplace AI, employee monitoring, and automated decision-making. For public employers, the most immediate compliance priorities are SB 947, AB 1883, and SB 574. Agencies should review workplace technologies, procurement practices, legal-department protocols, and AI-governance policies now while monitoring future developments involving workforce displacement, collective bargaining, and AI oversight.

Our experienced attorneys are here to help employers navigate changes and maintain legally compliant workplaces. Employers with questions regarding these developments may contact one of the authors or their usual 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.}