California has enacted Senate Bill 947, establishing new restrictions on employers’ use of automated decision systems (ADS) in workplace discipline and termination decisions. The law becomes operative on July 1, 2027, and applies broadly to private and public employers, including state and local government entities.
The legislation focuses primarily on disciplinary and termination decisions, employee access to information, notice requirements, and employer accountability when relying on automated systems.
Background
SB 947 adds a new part to the California Labor Code governing employers’ use of automated decision systems in the workplace. The law defines an ADS as a computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues outputs such as scores, classifications, or recommendations used to assist or replace human decision-making and that materially impacts individuals.
Certain Uses of Automated Decision Systems Are Prohibited
Beginning July 1, 2027, employers may not use an ADS to:
- Prevent compliance with or violate federal, state, or local labor, employment, occupational safety and health, or civil rights laws;
- Infer an employee’s protected status under California’s anti-discrimination laws; or
- Predict and take adverse action against a worker for exercising legal rights, including rights protected by federal and state labor and employment laws.
Employers May Not Rely Solely on Automated Systems for Discipline or Termination
The centerpiece of SB 947 is a prohibition against relying exclusively on automated systems when making disciplinary or termination decisions.
An employer may not rely solely on an ADS when making a disciplinary or termination decision. If the employer primarily relies on ADS output, a human reviewer must corroborate the decision using the data used to generate the ADS output or other relevant supporting information.
Examples of permissible corroborating information include:
- Supervisory or managerial evaluations;
- Personnel files;
- Employee work product;
- Peer reviews; and
- Witness interviews, including relevant online customer reviews.
If the employer cannot corroborate the ADS output, or if the human reviewer determines that the output is inaccurate, incomplete, or misleading, the employer may not use the ADS output to make a disciplinary or termination decision.
Employees Gain New Rights to Access Information
SB 947 gives employees a new right to obtain information about the data used by an automated system.
When an employer has 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. Any disclosure must be provided in a manner that protects and anonymizes the personal information of customers, other employees, and third parties.
Written Post-Use Notice Required
Employers that primarily rely on an ADS to make a disciplinary or termination decision must provide a written notice to the affected employee when communicating the decision.
The notice must:
- Be a separate, stand-alone communication;
- Be written in plain language;
- Be provided in the language normally used for workplace communications; and
- Be delivered through an easy-to-use written method, such as email or another written format.
The notice also must disclose:
- That the employer primarily relied on an ADS in making the disciplinary or termination decision;
- That a human reviewed and corroborated the ADS output;
- Contact information for a human representative who can provide additional information and explain the employee’s data-access rights; and
- That retaliation for exercising rights under the law is prohibited.
Anti-Retaliation Protections
Employers may not discharge, threaten, demote, suspend, discriminate against, or otherwise retaliate against employees for:
- Using rights granted by SB 947;
- Filing a complaint with the Labor Commissioner;
- Alleging a violation of the law;
- Participating in an investigation; or
- Assisting with enforcement efforts.
Enforcement and Penalties
The Labor Commissioner may investigate violations, issue citations, seek temporary relief, and bring enforcement actions. Public prosecutors may also enforce the law.
In any enforcement action involving disciplinary or termination decisions, once it is shown that an ADS was used, the employer bears the burden of demonstrating either that:
- It did not primarily rely on the ADS; or
- It complied with the law’s human-review and notice requirements.
Available remedies include:
- Injunctive relief;
- Punitive damages;
- Attorneys’ fees and costs; and
- A civil penalty of $500 per violation.
Exceptions
SB 947 contains several notable exceptions.
The law does not apply where a valid collective bargaining agreement:
- Explicitly waives the law in clear and unambiguous terms;
- Addresses wages, working conditions, and other terms of employment; and
- Provides protections from algorithmic management.
The law also does not apply to certain ADS uses that are required by or reasonably necessary to comply with federal statutes, regulations, or binding federal contracts related to:
- Aircraft development;
- National security;
- Military;
- Space; or
- Defense activities.
Employer Takeaway
Effective July 1, 2027, California employers may not allow automated decision systems to serve as the sole basis for disciplinary or termination decisions. Employers that use AI, machine learning, or other automated decision tools should review their disciplinary and termination processes, establish procedures for meaningful human review and corroboration, prepare employee notice and data-access procedures, and evaluate vendor relationships to ensure compliance before the law takes effect.