California lawmakers have taken a decisive step toward regulating the use of artificial intelligence in the workplace with the passage of SB 7, widely known as the “No Robo Bosses” Act. If Governor Gavin Newsom signs the bill by September 30, 2025, the law will take effect on January 1, 2026, immediately reshaping how employers use AI in hiring, performance evaluations, promotions, discipline, and terminations.

SB 7 comes at a time when AI tools are increasingly influencing workplace decisions, raising questions about fairness, bias, and accountability. “The law is designed to ensure that no worker faces discipline or termination solely at the hands of a machine,” said a California labor official.

Story Highlights:

• Broad definition of AI: SB 7 covers “automated decision systems” (ADS), including resume scanners, performance tracking, scheduling assistants, and training programs that impact employment decisions.

• Comprehensive employment coverage: Wages, benefits, schedules, promotions, terminations, tasks, skills, access to training, productivity, and workplace safety are all included.

• Prohibitions: Employers cannot rely solely on AI for discipline, termination, or deactivation decisions, nor use AI to violate the law, infer protected characteristics, or retaliate against employees.

• Human oversight mandatory: Even when AI is primarily used, a human reviewer must verify outputs and evaluate other relevant information.

• Notice and data rights: Employees must be notified before and after AI is used and can request access to their data from AI systems.

• Enforcement: No private right of action exists, but civil penalties of $500 per violation apply, enforceable by the Labor Commissioner or local prosecutors.

What AI Tools Are Covered?

SB 7 uses the term “automated decision systems” or ADS to define AI tools as:

“Any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decisionmaking and materially impacts natural persons.”

This broad definition encompasses many commonly used AI tools. Employers who use resume scanners, keystroke monitors, voice or text analysis tools, performance trackers, scheduling assistants, or AI-based training programs should assume their systems fall under the law. Essentially, any AI tool that affects employment decisions, from hiring to termination, is covered.

Wide Scope of Employment Decisions

SB 7 defines “employment-related decision” broadly, including:

“Any decision … that materially impacts a worker’s wages, benefits, compensation, work hours, work schedule, performance evaluation, hiring, discipline, promotion, termination, job tasks, skill requirements, work responsibilities, assignment of work, access to work and training opportunities, productivity requirements, or workplace health and safety.”

This leaves little room for interpretation—virtually all decisions affecting employees are included. From scheduling shifts to assigning work tasks, employers must consider SB 7 in nearly every aspect of employee management.

Prohibitions and Limitations on AI Use

SB 7 prohibits employers from relying solely on AI for discipline, termination, or deactivation decisions. The law also forbids the use of ADS to:

• Violate the law or prevent compliance with regulations.

• Infer a worker’s protected status, such as race, gender, or national origin.

• Collect worker data for undisclosed purposes.

• Retaliate against employees for exercising their legal rights.

Additionally, the law restricts reliance on customer ratings as the only or primary input for AI-driven employment decisions. For example, a gig worker cannot be disciplined or terminated solely based on customer reviews.

Human Oversight Required

While SB 7 allows employers to rely primarily on AI, it requires human review for high-stakes decisions such as discipline, termination, or deactivation.

“Employers must use a human reviewer to evaluate the AI output and consider other relevant information,” the bill states.

The law does not define “primarily,” leaving room for interpretation, but it emphasizes the need for human judgment alongside automated recommendations.

Notice and Employee Data Access

SB 7 imposes pre-use and post-use notice requirements:

• Pre-use notice: Employers must provide written notice at least 30 days before using AI, describing the type of decisions affected, data collected, key parameters, and AI creators. Applicants must also be notified if AI will influence hiring decisions.

• Post-use notice: When AI is used primarily for discipline, termination, or deactivation, employees must receive a written notice detailing the human reviewer contact, AI’s role, and instructions for accessing their data.

Employees can request a copy of their data used in the previous 12 months by an AI system, limited to one request per year. Employers must maintain an updated list of all AI systems in use.

Enforcement and Penalties

While SB 7 does not include a private right of action, violations carry civil penalties of $500 per incident, enforceable by the Labor Commissioner or local prosecutors. Though modest, penalties could accumulate if multiple employees are affected or if claims are pursued under PAGA.

Employer Recommendations

Experts advise employers to take several steps to ensure compliance:

1. Audit all AI systems in use and assess their impact on employment decisions.

2. Determine reliance on AI to identify when human oversight is necessary.

3. Organize and safeguard employee data to meet access and retention requirements.

4. Draft and distribute notices for all AI tools used in hiring, evaluation, or discipline.

5. Develop a compliance plan, including training human reviewers, documenting review processes, and establishing employee data access protocols.

“Compliance with SB 7 will require careful planning and oversight, but it represents a crucial step in protecting workers while responsibly using AI,” said a California employment attorney.

SB 7 represents a major regulatory shift in AI workplace governance. California employers will need to rethink AI use, ensure human oversight, and maintain robust records to comply when the law takes effect in January 2026.

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