California's 2026 AI Legislation Wave: New Laws Target AI Throughout the Employment Lifecycle

Artificial intelligence has rapidly moved from an experimental workplace tool to a core business function. Employers increasingly use technology to monitor performance, evaluate productivity, assist with personnel decisions, and identify opportunities for automation. California's response in 2026 was not to prohibit these technologies, but to regulate how employers use them and to require greater human oversight, transparency, and accountability.

Taken together, California's newest AI-related laws reveal a common theme: lawmakers are increasingly concerned about technology that monitors workers, makes decisions about workers, or replaces workers. The result is a collection of laws that will require employers to rethink not only their AI governance strategies, but also their broader approach to workplace surveillance, automated decision-making, and workforce planning.

California Is Drawing New Boundaries Around Workplace Monitoring

Several of this year's bills focus on how employers gather information about employees and the technologies used to monitor workplace activity.

AB 1883 prohibits employers from using AI-powered workplace surveillance tools that recognize, infer, or predict an employee's emotional state or collect "neural data," meaning information generated through measurements of the central or peripheral nervous system. While the legislation targets emerging technologies rather than traditional workplace monitoring systems, employers should not assume that a product is compliant simply because it is marketed as a productivity, wellness, engagement, or fatigue-management tool. Technologies that purport to measure attention, stress, focus, sentiment, or emotional responses may present significant compliance risks. Employers may find it difficult to draw a line between technologies that assess whether, for example, a call center employee was rude during a customer call and technologies subject to AB 1883. 

California also continued its broader scrutiny of workplace surveillance through AB 1331. Although not strictly an AI law, the statute restricts the use of workplace surveillance tools in employee bathrooms. The original version of this law also banned their use in places like cafeterias, lounges, and other common places. However, the bill was significantly narrowed in the last days of the legislative session to apply strictly to bathrooms, as opponents cited workplace safety concerns for the lack of monitoring in common areas. The law reflects a growing legislative interest in limiting not only what information employers collect, but also where and how workplace monitoring occurs.

Taken together, these laws suggest that California lawmakers increasingly view workplace monitoring technologies through a privacy lens. Employers should expect continued scrutiny of surveillance tools, particularly those utilizing biometric identification, wearables, artificial intelligence, geolocation capabilities, or other forms of advanced data collection.

AI May Assist Managers, But It Cannot Become the Manager

While AB 1883 and AB 1331 regulate how employers collect information, SB 947 regulates how employers use information generated by AI systems.

The "No Robo Bosses Act" prohibits employers from relying solely on automated decision systems when making disciplinary or termination decisions. If an employer primarily relies on an AI-driven system, a human reviewer must independently evaluate the proposed action, corroborate the system's conclusions, and disregard the recommendation if it cannot be verified. In addition, the employer must provide a post-use notice regarding the use of the automated decision system and comply with employees’ requests for a description of the employee’s data used as an input. The law represents one of the clearest examples yet of California's preference for "human in the loop" decision-making. Employers may continue using technology to assist with performance management and workforce administration, but the ultimate employment decision must remain subject to meaningful human judgment.

The No Robo Bosses Act adds another layer of complication for California employers that rely on automated decision systems to make disciplinary or termination decisions. Regulations under California’s Fair Employment and Housing Act (FEHA) and California Consumer Privacy Act (CCPA) also impose requirements in this situation, but each sets a different threshold for the level of influence an automated decision system must have to trigger those requirements. As a result, employers might consider implementing a higher level of human review than that required by SB 947 to avoid application of these FEHA and CCPA regulations. Otherwise, disciplinary and termination decisions may trigger not only SB 947’s post-use notice and data access requirements, but also requirements for a risk assessment, pre-use notice, data retention, and the right to opt out. 

Organizations should assess where automated systems influence employment decisions, evaluate their legal obligations, and develop procedures on human review. If SB 947 applies, employers should add the post-use notice and access right to their compliance program. 

New Rules for AI-Driven Workforce Reductions

California lawmakers also addressed a third concern: the impact of technology on the employment workforce.

SB 951 expands California's WARN framework by imposing additional notice requirements when a covered layoff occurs "in whole or in substantial part" because an AI system or other automated technology replaces or automates employment positions. Beyond traditional WARN obligations, employers may be required to disclose information regarding the automated functions involved, affected job classifications, and the technologies that contributed to the displacement.

The law also contemplates public reporting by the Employment Development Department, meaning that AI-related reductions in force may attract greater public attention than traditional workforce restructurings.

For employers exploring automation initiatives, workforce planning now presents both operational and compliance considerations. Discussions that once centered on efficiency and productivity gains must now account for additional public disclosure requirements and therefore, public scrutiny.

AI Regulation Is Expanding Beyond Human Resources

California's efforts are not limited to the employer-employee relationship. SB 574 imposes new obligations on attorneys who use generative AI, including requirements relating to verification of AI-generated content, confidentiality of information entered into AI systems, and disclosures regarding AI use in court filings.

Effective January 1, 2026, Assembly Bill 316 added Section 1714.46 to the California Civil Code, effectively eliminating the "AI did it" defense in civil litigation. The statute provides that a defendant who develops, modifies, or uses an AI system cannot avoid liability by arguing that the AI system independently caused the harm.

The law defines "artificial intelligence" 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." Importantly, Section 1714.46 does not eliminate traditional defenses based on causation, foreseeability, or comparative fault. As a result, courts may still allocate responsibility among participants in the AI supply chain under established tort principles. In short, a defendant may not escape liability by pointing to an AI system's autonomy, but liability will continue to turn on traditional tort concepts, and a well-governed AI deployment may still be defensible.

Even at the local level, San Mateo County recently adopted a first-of-its-kind permitting framework governing certain AI-controlled workplace robots. Meanwhile, California's recent executive order and multi-state initiatives involving attorneys general suggest that governments are continuing to explore broader regulation of advanced AI systems.

AI governance is rapidly expanding beyond traditional employment law and into a broader regulatory framework touching privacy, professional responsibility, consumer protection, workplace safety, and public policy.

Looking Ahead

The common threads running through California's 2026 AI legislation are transparency and accountability. Whether monitoring employees, assisting managers, or automating jobs altogether, artificial intelligence is increasingly subject to legal requirements designed to ensure human oversight and involvement.

For employers, the message is clear: AI can remain part of the workplace, but California increasingly expects employers to understand how it works, document how it is used, and remain accountable for its consequences.