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California's New AI-at-Work Laws: What Small Employers Should Inventory Before 2027

California signed three workplace technology laws on September 30 that reach employers of every size: no firing or discipline by software alone starting July 1, 2027, and limits on bathroom surveillance and emotion-reading AI expected from January 1, 2027. What to list now, and who should review automated decisions.

Kevin R.

13 min read

Photo by Raj Rana on Unsplash

The takeaway

List every tool that tracks your staff or scores their work, look for emotion or mood features, and name the person who will check any software-driven discipline decision before July 1, 2027.

On Wednesday, September 30, 2026, Governor Gavin Newsom signed a package of AI bills, including four aimed at the workplace (Office of the Governor). Three of them apply to California employers no matter how small:

  • SB 947, which its author calls the “No Robo Bosses Act,” bars employers from relying only on software to discipline or fire someone. It starts on Thursday, July 1, 2027.
  • AB 1331 bans surveillance tools in workplace bathrooms.
  • AB 1883 bans AI-powered workplace surveillance tools that read emotions or collect “neural data.”

Neither surveillance law sets its own start date, so both are expected to take effect on Friday, January 1, 2027 (more on that below). The governor has also asked the Legislature to rework both, so the details may change.

None of this applies yet. That leaves time for the practical part, which is mostly a technology question: what in your business watches employees or scores their work, and who checks what it says?

This article is general information, not legal advice. For decisions about your policies or a specific employee, talk to an employment attorney.

SB 947: software can’t make the call alone

SB 947 covers any “automated decision system,” or ADS. According to the chaptered bill text (California Legislature), that is a computational process based on machine learning, statistical modeling, data analytics or AI that produces a simplified output, such as a score, classification or recommendation, that helps or replaces human decisions and materially affects people. The law excludes spam filters, firewalls, antivirus software, identity and access management tools, calculators, databases and datasets.

From July 1, 2027, the law says:

  • No decisions by software alone. “An employer shall not rely solely on an ADS when making a disciplinary or termination decision.”
  • A person must corroborate. If an employer primarily relies on an ADS output to discipline or fire someone, it must have a person check the decision against the data behind the output or other relevant information. The law’s examples include supervisor evaluations, personnel files, the employee’s work product, peer reviews and witness interviews, which may include relevant online customer reviews. If the reviewer can’t corroborate the output, or finds it inaccurate, incomplete or misleading, the employer can’t use it.
  • A written notice. When an employer primarily relied on an ADS, it must give the employee a separate, plain-language written notice at the time it tells them about the decision. Email or a link is acceptable. It must use the language of the employer’s routine communications. The notice must say that the employer primarily relied on an ADS, that a person reviewed and corroborated the output, identify a human contact and the employee’s right to request a description of their own data used by the ADS, and state that retaliation is prohibited.
  • The employee’s own data. The employee can ask for “a meaningful, objective description” of their own data the system used. Other people’s personal information must be anonymized.
  • Off-limits uses. An employer can’t use an ADS to infer an employee’s protected status under California’s anti-discrimination law (such as race, religion, disability or age), or to predict that a worker will exercise their legal rights and take action against them for it.

Sen. Jerry McNerney’s office says the law will be enforced by “the California labor commissioner, the state attorney general, or local prosecutors” (McNerney press release). The bill text sets a civil penalty of $500 per violation. It also says that in an enforcement case, once it’s shown that an ADS was used for a disciplinary decision, the employer has to show that it didn’t primarily rely on the ADS, or that it followed the review and notice rules. In practice, that makes a written record of each review important.

AB 1331: no surveillance tools in workplace bathrooms

AB 1331 defines a “workplace surveillance tool” broadly: any system, application, instrument or device that collects employee data, activities, communications, actions, biometrics or behaviors “by means other than direct observation by a person.” Its examples include video or audio surveillance, “continuous incremental time-tracking tools” and geolocation (California Legislature, chaptered text). Smoke and carbon monoxide detectors and body-screening weapon detectors are excluded.

The core rule: “Unless directed by a court order, an employer shall not use a workplace surveillance tool to monitor or surveil employees in a bathroom located in the workplace.” The law also says:

  • Employees have the right to leave tracking tools they carry behind when they enter a bathroom. That right doesn’t apply when federal or state law requires the employee to stay available during meal or rest breaks.
  • Despite the ban, an employer may check its surveillance tools for “the one-time entry and exit of bathrooms in the workplace.”
  • It isn’t a violation if an employee chooses to bring a tool into the bathroom. It also isn’t a violation if the tool, such as a badge or personal alarm, is one the employer requires staff to carry for identification or safety, or is needed to open a locked bathroom, as long as it doesn’t detect or record audio or video and has no physically embedded or attached AI.

Violations can cost up to $500 each.

AB 1883: no AI that reads emotions or collects neural data

AB 1883 uses a similar definition of a workplace surveillance tool. It bars employers from using one “that uses artificial intelligence on employees” to recognize, infer or predict a person’s emotional state, or to collect neural data (California Legislature, chaptered text). The law defines neural data as information generated by measuring activity in an employee’s central or peripheral nervous system, not information inferred from other sources. In plain terms, that means devices that measure brain or nerve activity.

The law adds that it “does not prohibit an employer from using a workplace surveillance tool to ensure safety, or otherwise if it does not meet the specifications” of the ban. How far that safety language reaches is not spelled out. Violations can cost up to $500 each. The text does not specify a universal counting rule for repeated uses of a system; ask counsel how it applies to your setup.

When the rules start, and what could change

SB 947 has its own start date. The Labor Code section it adds, 1526.7, says the new rules “shall become operative on July 1, 2027.”

AB 1331 and AB 1883 contain no separate operative date or urgency clause. California Constitution, article IV, section 8(c)(1) sets January 1 following a 90-day period from enactment as the default for regular-session statutes. Applying that rule to these September 30, 2026 enactments gives January 1, 2027. This is an application of the constitutional rule, not a date printed in either bill; counsel should recheck amendments and applicability before changing a policy.

The governor signed AB 1331 and AB 1883 with a joint letter that asks for changes (signing message, PDF). “I encourage the Legislature to refine these two measures to address ambiguities and possible unintended consequences,” he wrote. He said AB 1331 “may interfere with systems used by employees to access locked facilities” and that AB 1883 “lacks key definitions, which may create confusion about which tools are covered.” Any amendments would have to pass the Legislature, so watch for them during 2027 before treating the current wording as final.

Who is affected

All three laws define an employer as anyone who employs, or controls the wages, hours or working conditions of, “any person.” None of the bill texts sets a minimum number of employees. That is different from the accommodation rules in our post on the Vallejo telework settlement, which start at five employees.

Exceptions need individual review. SB 947 excludes qualifying collective bargaining agreements that explicitly waive its provisions and provide protection from algorithmic management. All three laws contain limited exceptions for specified federally governed aircraft, national-security, military, space or defense operations. AB 1331 also preserves surveillance required by existing state or federal law or regulation. These are conditional exceptions, not blanket exemptions for every contractor or union workplace. Have counsel check the relevant section.

Two related rules have different coverage tests:

  • SB 951 adds AI-related details to layoff notices under Cal/WARN, California’s mass-layoff notice law. Cal/WARN covers only establishments that employ, or employed in the past 12 months, 75 or more people (SB 951 text via CalMatters).
  • The California Privacy Protection Agency’s rules on “automated decisionmaking technology” require businesses that use it to make significant decisions to comply starting January 1, 2027 (CPPA). They apply only to businesses covered by the California Consumer Privacy Act. The CPPA’s FAQ lists the thresholds, including gross annual revenue of $26.625 million or more. SB 947 says employers covered by the CCPA remain subject to those rules.

Step 1: Inventory what watches or scores your staff

Start with one inventory shared by the people responsible for IT, HR and facilities. Include tools bought by individual teams as well as centrally managed systems.

For each tool, write down what it collects (video, audio, location, activity, time), where it is installed or carried, which features use AI, who can see the data, and whether it can flag, warn or discipline anyone on its own. In settings and product pages, look for words like “sentiment,” “emotion,” “mood,” “engagement,” “fatigue,” “risk score” and “productivity score.”

ToolWhat to checkWhy it’s on the list
Security cameras, including cloud and doorbell-style camerasThat no camera or microphone can see or hear inside a restroom, and whether audio recording is onAB 1331’s definition includes video and audio surveillance
Company phones and tablets managed through MDM (mobile device management)Whether location tracking is on, and whether staff can set the device down outside a restroom without triggering alertsAB 1331 lists geolocation and gives employees the right to leave tracking tools behind
Badges, key fobs and door-access systemsWhether any restroom is badge-locked, and whether the badge records audio or video or has AI built inAB 1331’s badge exception depends on those details, and the governor flagged locked facilities
Vehicle trackers, dashcams and wearablesLocation tracking, and AI alerts about fatigue, distraction or moodAB 1331 covers geolocation; AB 1883 covers AI emotion inference, and its safety language is not spelled out
Phone, call-center and meeting softwareSentiment, emotion or engagement analytics applied to staffAB 1883 bars AI emotion inference on employees
Time clocks, time trackers and productivity software (screenshots, activity levels)What it records, and whether it produces scores or flags that managers act onAB 1331’s definition names time-tracking tools; SB 947 applies if a score drives discipline
HR, scheduling, point-of-sale, and delivery or routing appsAutomatic attendance points, warnings, performance scores or account deactivationSB 947 covers software outputs used in discipline or firing
IT management software on company computersLogin records, remote screen viewing, activity logs, and who can see themThe surveillance-tool definition is broad, so list it to make sure nothing is missed

That last row covers remote monitoring and management (RMM) software, the tools IT providers use to maintain and patch computers. NightSquawk Tech is an IT services provider, so this inventory can also include the tools used by your external provider.

Whether a particular tool legally counts as a “workplace surveillance tool” or an ADS is a question for your attorney, and the governor himself said AB 1883 lacks key definitions. The inventory gives your attorney something concrete to review.

Step 2: Decide who reviews automated decisions

If software has any role in discipline at your business, set up a routine before July 1, 2027:

  1. Mark every place where a score, flag or recommendation from software feeds a warning, write-up, suspension or firing.
  2. Name a reviewer and write down what they check. The law’s list of corroborating information (evaluations, personnel files, work product, peer reviews, witness interviews) is a ready-made checklist.
  3. Make the rule explicit: if the reviewer can’t confirm the software’s output, it isn’t used.
  4. Draft the notice template now with the required language, human contact, data-access right and other items listed above, so nobody writes one from scratch on the day of a termination.
  5. Know how to export one employee’s data from each system without exposing other people’s information.
  6. Keep a dated record of each review, since the burden of showing the rules were followed falls on the employer.

It’s the same habit we suggested for accommodation requests: one owner, a written record and a clear answer.

Questions for your IT provider and software vendors

  • Which of our systems collect location, video, audio or activity data about staff, and who can see it?
  • Do any of our tools have emotion, sentiment, mood or engagement features? Are they turned on, and can we turn them off?
  • Can any system issue warnings, attendance points or other discipline on its own?
  • Can we export the data a system used about one employee, with other people’s information removed?
  • Does any camera or microphone cover a restroom, and does any badge reader control a restroom door?

The short version

  • Now: list every tool that monitors staff or scores their work, using the table above.
  • Before January 1, 2027: confirm that no surveillance tool covers a restroom, that staff can leave tracking devices outside, and that any emotion-reading or neural-data features have been switched off or reviewed with counsel.
  • Before July 1, 2027: have the human review routine, the notice template and a way to export an employee’s data ready for any software-driven discipline.
  • During 2027: watch for amendments to AB 1331 and AB 1883.

If you’d like help building the technology side of that inventory, NightSquawk Tech offers a free assessment. The legal decisions belong with your employment attorney.

Sources

Editorial note: This article was drafted with AI assistance from the Governor’s office and Sen. McNerney’s releases, the governor’s signing message, the California Legislature’s chaptered bill texts, the California Constitution, CalMatters and the California Privacy Protection Agency, linked above. Bill wording is as published on October 7, 2026, and may change if the Legislature amends these laws. It is general information, not legal advice. NightSquawk Tech is an IT services company, not a law firm.