California enacts AI regulation to prevent automated employee dismissals

California has passed SB 947, a law that restricts the use of AI in employee disciplinary decisions, including termination. Signed by Governor Gavin Newsom last week, the law prohibits employers from relying solely on Automated-Decision Systems (ADS), including AI, to determine an employee's continued employment. The law also mandates that AI use be disclosed to affected employees and requires human review for decisions involving AI as a primary factor. The law defines ADS as any computational process that uses machine learning or data analytics to make decisions impacting individuals. Employers must provide corroborating information, such as evaluations and witness testimony, when AI is a key element in termination decisions. Newsom previously vetoed a 2025 version of the bill due to concerns over notification terms, but the current law excludes gig workers. Violations could result in civil penalties, and the California Labor Commissioner’s Office will enforce the law. The law marks the first of its kind in the U.S., joining other states that have banned AI-enabled discrimination. The federal government has also clarified that existing discrimination laws apply to AI systems. Despite these measures, AI remains a complex element in workplace management.