California Amends its WARN Act (Again)

On September 30, 2026, Governor Gavin Newsom signed Senate Bill (SB) 951, which amends the California Worker Adjustment and Retraining Notification Act (Cal-WARN) to require additional disclosures when a mass layoff, relocation, or termination is caused by artificial intelligence (AI) or other automated technology. The law does not change Cal-WARN’s coverage thresholds, 60-day notice period, or penalty provisions. Instead, it adds new notice content requirements, directs the Employment Development Department (EDD) to publish summaries of these “technology displacement” notices, and requires the EDD to report to the state legislature on AI’s effects on hiring. These changes will take effect on January 1, 2027.

SB 951 was signed almost one year to the day Governor Newsom signed SB 617, which expanded the required contents of Cal-WARN notices effective January 1, 2026. Employers planning reductions in California in 2027 now need to account for both sets of requirements.

What SB 951 Requires

Definition of Artificial Intelligence

SB 951 amends Labor Code section 1400.5 to define “artificial intelligence” or “AI” as “an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.” The bill does not separately define “other automated technology,” “technological displacement,” or “in substantial part.”

Additional Notice Content for AI-Related Reductions

New Labor Code section 1401(d)(1) provides that when a covered mass layoff, relocation, or termination is “caused in whole or in substantial part by an AI system or other automated technology replacing or automating employment positions” the employer’s notices must include all of the following in its Cal-WARN notices, in addition to the content already required:

1. The number of layoffs substantially attributable to replacement or automation by AI or other automated technology, including the classifications or occupations and work locations involved.
2. The job functions performed by affected workers that will be automated by AI or other automated technology.
3. The specific category or type of AI system or other automating technology that substantially resulted in the technological displacement.
4. The statement “This notice is for a technology displacement” at the top of the notice.

Public Reporting by the EDD

Under new section 1401(d)(2), the EDD must publish summaries of notices involving technological displacement and a quarterly statewide summary of reported technological displacements.

Report on AI and Hiring

New Labor Code section 1402.7 requires the EDD to submit a report to the state legislature on or before January 1, 2028, on AI’s effects on business hiring practices, including its impact on industries and occupations at the state and regional level. The report must include one or more of several enumerated items, one of which is recommendations regarding a public notice requirement for employers or businesses engaged in “technological cessation in hiring,” defined as “the permanent ending of hiring or contracting for a particular occupation or position caused in whole or in part by the employer’s use of artificial intelligence or other automated technology,” regardless of whether any workers in that occupation or position remain employed or under contract and regardless of whether the cessation results in an overall reduction in occupations or positions. Section 1402.7 imposes no obligation on employers, and it is repealed by its own terms on January 1, 2029. It does, however, signal that the state may consider a separate notice obligation for employers that permanently stop hiring for particular positions because of AI.

What Remain Unchanged and Open Questions

SB 951 leaves Cal-WARN’s core framework intact. The statute continues to apply to a “covered establishment” that employs, or has employed in the preceding 12 months, 75 or more persons, and the 60-day notice requirement to affected employees, the EDD, and specified local officials is unchanged. Remedies under Labor Code section 1402 (back pay and benefits) and the civil penalty of up to $500 per day under section 1403 are also unchanged. The SB 617 content requirements that took effect on January 1, 2026, also remain in place.

The new law leaves several questions unanswered. For example, the statute does not define when a reduction is caused “in substantial part” by AI or automated technology or suggest how to handle layoffs where only part of the workforce is affected by AI or automated technology. In fact, the statute uses seemingly different causation phrasing in different places: The trigger in section 1401(d)(1) is “in whole or in substantial part,” the required disclosures refer to layoffs “substantially due to” technology that “substantially resulted in” the displacement, while section 1402.7 uses “in whole or in part.” 

Workforce reductions frequently have multiple causes, and the reasons for eliminating particular positions may not be uniform. The statute does not explain how employers should evaluate a broader reduction in which AI or automated technology affects only certain positions or functions. In those circumstances, employers may need to identify and disclose the portion of the reduction substantially attributable to the technology while distinguishing positions eliminated for other reasons.

Also, only “artificial intelligence” is defined. The scope of “other automated technology” is not.  Whether and under what circumstances conventional automation, robotics, or software outside the AI definition triggers the new disclosure requirements remain unclear.

As Cal-WARN is a statute focused on layoffs of employees at covered establishments only, it might seem unusual for the legislature to require the EDD to issue a report by January 1, 2028, about the broad effects of AI on business hiring practices or the level of exposure certain industries or occupations have to technological cessations in hiring. It remains to be seen how the EDD will gather the information necessary for this report and what the legislature might do with that information.     

Recommendations for Employers

Employers with California operations should consider the following steps before January 1, 2027:

1. Update Cal-WARN notice templates to include a technology displacement section, for use when applicable, containing the three new data points and the required statement at the top of the notice. 
2. Clearly and contemporaneously document the business reasons for the reduction, including the extent to which AI or automated technology contributed to the elimination or automation of particular positions or functions, so the company can evaluate, with counsel, whether a reduction is caused “in whole or in substantial part” by AI or other automated technology.
3. Confirm consistency between Cal-WARN notices, OWBPA disclosures, separation agreements, and internal and external communications, so that the stated reasons for the reduction (which may be summarized publicly by the EDD) do not conflict.

Employers with questions about SB 951 or Cal-WARN compliance should contact counsel with experience in complying with WARN notice obligations and the use of AI in the workplace.