At a glance
- California Governor Gavin Newsom has signed several important employment-related bills that:
- Regulate use of artificial intelligence in disciplinary and termination decisions.
- Require California’s Worker Adjustment and Retraining Notification Act (Cal-WARN) notices to disclose if positions are being replaced or automated by AI.
- Expand availability of bereavement leave.
- Alter pay data reporting requirements.
- Give enhanced protection against workplace threats.
- Require ‘anti-hate speech’ training.
- Relax restrictions on so-called ‘stay or pay’ agreements.
California Governor Gavin Newsom has signed several important employment-related bills that:
- Regulate use of artificial intelligence in disciplinary and termination decisions.
- Require California’s Worker Adjustment and Retraining Notification Act (Cal-WARN) notices to disclose if positions are being replaced or automated by AI.
- Expand availability of bereavement leave.
- Alter pay data reporting requirements.
- Give enhanced protection against workplace threats.
- Require ‘anti-hate speech’ training.
- Relax restrictions on so-called ‘stay or pay’ agreements.
Employers are encouraged to prepare for these developments by reviewing their policies, employment practices, and compliance procedures.
In this alert, we summarize each bill, outline compliance considerations, and highlight key takeaways for employers.
Regulations on employers’ use of AI
SB 947: ADS in employment decision-making
California continues to expand its regulation of workplace uses of AI. Senate Bill (SB) 947 establishes a comprehensive framework governing employers’ use of automated decision systems (ADS) in employment decision-making. SB 947 builds on existing obligations. The California Civil Rights Department’s regulations on automated decision systems under the Fair Employment and Housing Act (FEHA), which took effect on October 1, 2025, already apply to the use of such tools in hiring, promotion, and other employment decisions. Those regulations clarify that using an ADS that discriminates against applicants or employees on the basis of a protected characteristic may violate the FEHA. They also treat certain vendors that perform employment functions through an ADS as the employer’s agents, make evidence of anti-bias testing (or its absence) relevant to discrimination claims and defenses, and require employers to retain ADS data for at least four years. Separately, regulations on automated decision-making technology under the California Consumer Privacy Act (CCPA), which will be fully effective on January 1, 2027, require covered businesses using ADS to make significant employment decisions to provide pre-use notices, honor opt-out requests, and conduct privacy risk assessments.
SB 947, effective July 1, 2027, adds new requirements under the Labor Code that apply regardless of CCPA coverage. If an employer relies primarily on an ADS, a human reviewer must validate its output using other information, such as supervisory evaluations, personnel files, or work product. When communicating the decision, the employer must provide a standalone, plain-language notice disclosing its primary reliance on an ADS and confirming that human review validated the output.
The law also grants employees certain transparency rights, including the right to request a description of the employee-specific data used by the ADS. SB 947 authorizes enforcement by the Labor Commissioner and public prosecutors, provides anti-retaliation protections, and subjects employers to a civil penalty of USD500 per violation.
Compliance considerations: Employers are encouraged to identify and inventory AI and algorithmic tools currently used in discipline and termination decisions. Organizations using such tools may wish to assess whether future modifications to governance, documentation, and notice procedures may be required.
SB 951: Additional Cal-WARN notice requirements for AI-driven workforce reductions
SB 951, effective January 1, 2027, amends Cal-WARN to require additional content in Cal-WARN notices when a covered mass layoff, relocation, or termination results, entirely or substantially, from a position’s replacement or automation by AI or other automated technology.
In such circumstances, the notice must prominently display ‘This notice is for a technology displacement‘ at the top of the notice. The notice must also include information regarding the AI displacement, including the type of AI or automated technology involved; the number, job classifications, and work locations of affected employees; and the job functions that are being automated or replaced.
The legislation directs the Employment Development Department to publish summaries of technology displacement notices, issue quarterly statewide displacement summaries, and report AI’s effects on hiring to the Legislature by January 1, 2028.
Although the law imposes new notice content requirements when an employer conducts an AI-driven covered mass layoff, relocation, or termination, it does not redefine the definitions of mass layoff, relocation, or termination or otherwise expand circumstances in which Cal-WARN notices must be given.
Compliance considerations: Employers contemplating layoffs, relocations, or business closures that may require a Cal-WARN notice are encouraged to assess whether AI or automated technology played a substantial role in a position’s replacement or automation. If so, they must ensure that the required additional information is included in the Cal-WARN notice.
Expanded employee bereavement leave rights
SB 1149: Bereavement leave expanded to include a designated person
Existing law, which took effect in 2024, requires California employers with five or more employees to provide up to five days of bereavement leave to employees who have been employed for at least 30 days.
SB 1149, effective January 1, 2027, expands California’s bereavement leave protections by permitting eligible employees to take such leave following the death of a ‘designated person.’
The new law uses the same definition of ‘designated person’ as California’s FEHA. Under both laws, a ‘designated person’ may include an individual related by blood or someone whose relationship with the employee is equivalent to a family relationship; the designated person may be identified by the employee at the time the leave is requested. Employers may limit employees to one designated person during a 12-month period.
This amendment reflects a broader trend in California employment law toward expanding leave protections to recognize a wider range of family and caregiving relationships.
Compliance considerations: Employers are encouraged to review bereavement leave policies, employee handbooks, leave request forms, and manager training materials to ensure they address requests involving designated persons.
Increased consequences for pay data reporting violations
SB 1237: Higher penalties for repeat reporting failures
California has expanded pay transparency and pay equity requirements in recent years. Existing law requires certain private employers to submit annual pay data reports to the California Civil Rights Department (CRD), including workforce demographic information and compensation data broken down by race, ethnicity, sex, and job category.
The reporting requirement assists the CRD in identifying potential pay disparities and enforcing California’s anti-discrimination laws. SB 1237 strengthens the state’s pay data reporting framework by increasing the consequences for noncompliance.
Under existing law, a court must, upon the CRD’s request, impose a civil penalty of up to USD100 per employee for an employer’s initial failure to file a required pay data report and up to USD200 per employee for subsequent failures. Effective January 1, 2027, the penalty for subsequent failures to file will increase to as much as USD1,000 per employee. The legislation also requires the CRD to publish the total number of pay reports submitted annually.
Compliance considerations: Covered employers are encouraged to review current pay data reporting processes, verify the accuracy of workforce demographic and compensation data, and ensure appropriate controls are in place for timely submissions. Employers that have previously experienced reporting issues may wish to address compliance gaps given the substantially increased penalties for repeat violations.
Changes to California’s stay-or-pay restrictions
AB 1697: Delayed effective date and new exceptions
Last year, California enacted AB 692, which placed restrictions on certain ‘stay-or-pay’ agreements that would require workers to repay a debt or impose any other penalties, fees, costs, or debts upon termination of employment. An important exception allowed employers to require employees to repay unearned advances made at the outset of employment that are not tied to job performance, including sign-on and relocation bonuses, as long as specified conditions were met.
In welcome news for California employers, AB 1697 delays the effectiveness of AB 692 until January 1, 2027, and it moots any pending claims for alleged violations of AB 692. Employers will also welcome two new exceptions to AB 692’s restrictions on ‘stay-or-pay’ arrangements.
First, employers may now require repayment of advanced but unearned retention bonuses even if those bonuses were not paid at the outset of employment. As under AB 692, the repayment obligation is permissible only if it is set out in a separate contract, the worker is told of the right to consult an attorney and given at least five business days to do so, repayment is prorated over a retention period of no more than two years without interest, the worker may defer payment until the period is fully served, and repayment is required only if the worker leaves early by choice or is terminated for misconduct.
Second, the new law also allows employers to require repayment of negative vacation balances as long as (1) the employee resigned voluntarily, (2) the repayment terms are disclosed clearly upon the employee’s request to borrow vacation, (3) the maximum repayment obligation is 40 hours, and (4) there is no interest accrual.
The legislation provides employers and workers additional time to evaluate existing agreements while clarifying categories of arrangements that may continue to be permissible under California law.
Compliance considerations: Employers that require employees to repay unearned advances upon termination of employment are encouraged to review existing agreements and assess whether revisions may be warranted in light of the amended law.
Expanded workplace violence protections
AB 1961: Broader workplace violence restraining orders
AB 1961, effective January 1, 2027, expands an employer’s ability to seek workplace violence restraining orders. Under current law, employers generally seek workplace violence restraining orders on behalf of identified employees who were subjected to threats or violence. The new law will allow employers to seek protection on behalf of all employees at a workplace or work location when harassment, violence, or credible threats are directed at the workplace itself. Employers are not required to identify a specific employee as a protected party when seeking such relief.
The change provides employers with greater protection against threats that may affect an entire workplace rather than a particular individual employee.
Compliance considerations: Employers are encouraged to review workplace violence prevention plans and response procedures to ensure management and security personnel understand the expanded protections available under California law.
Expanded harassment prevention training requirements
AB 1803: Anti-hate speech training
Effective January 1, 2028, AB 1803 adds an ‘anti-hate speech’ component to the harassment prevention training California employers with at least five employees are already required to provide. The training must now also address how employees and supervisors can recognize, report, and confront workplace expression that vilifies, humiliates, or incites hatred against individuals on the basis of a characteristic protected by FEHA. Employers are permitted to incorporate the new training material into their existing programs.
The amendment also provides that existing training materials satisfy the ‘anti-hate speech’ training requirement if they address the prohibition of unlawful harassment and the prevention of abusive conduct based on protected characteristics.
Compliance considerations: Employers are encouraged to review internally developed and third-party harassment prevention training materials before January 1, 2028, to ensure that they (1) address workplace speech involving the full range of protected characteristics, (2) include practical guidance and examples, (3) identify reporting channels and supervisors’ reporting obligations, and (4) align with the employer’s harassment prevention and complaint procedures.
Key takeaways for employers
Collectively, these measures reflect California’s ongoing efforts to regulate workplace technology, expand employee protections, increase transparency obligations, and strengthen enforcement.
While several of these laws require future implementation and some become effective on a delayed timetable, employers may begin evaluating:
- The use of AI and automated decision-making tools in disciplinary and termination decisions.
- Workforce planning initiatives involving automation or technological displacement.
- Anti-harassment and abusive conduct training materials.
- Bereavement leave policies and handbook provisions.
- Pay data reporting compliance processes.
- Harassment prevention training content, including hate speech components.
- Retention bonus, training repayment, and other stay-or-pay arrangements.
- Workplace violence prevention and response protocols.
For more information, please contact the authors.