California limits employers' use of automated decision systems in discipline and firing

California employers will need a human to check any discipline or firing decision that rests mainly on an algorithm, starting July 1, 2027. Governor Gavin Newsom signed SB 947 by Senator Jerry McNerney on September 30, 2026, and it was chaptered the same day as Chapter 859, Statutes of 2026 (status). The law adds a new Part 5.5.5 to Division 2 of the Labor Code, Sections 1520 through 1526.7, titled “Automated Decision Systems in the Workplace” (text).

What the law requires

An automated decision system, or ADS, is defined in Section 1520(c) as a computational process derived from machine learning, statistical modeling, data analytics or artificial intelligence that issues a simplified output, such as a score, classification or recommendation, used to assist or replace human discretionary decisionmaking. Spam filters, firewalls, antivirus software, identity and access management tools, calculators and databases are excluded.

Section 1522 sets three tiers of rules. First, an employer may not use an ADS to violate labor, safety, employment or civil rights law, to infer an employee’s protected status under Government Code Section 12940, or to predict and take adverse action against a worker for exercising legal rights. Second, an employer “shall not rely solely on an ADS when making a disciplinary or termination decision” (Section 1522(b)(1)). Third, when an employer “primarily relies” on ADS output for such a decision, it must direct a human to corroborate the decision using the underlying data or other information, which the statute says may include supervisory evaluations, personnel files, work product, peer reviews and witness interviews. If the output cannot be corroborated, or the reviewer finds it inaccurate, incomplete or misleading, the employer may not use it (Section 1522(c)).

Notice and access to data

An employer that primarily relied on an ADS must give the affected employee a written postuse notice when it informs the employee of the decision (Section 1524). The notice must be a separate, plain-language communication in the language the employer normally uses with employees. It must state that an ADS was primarily relied on, that a human reviewed and corroborated the output, whom to contact, and that retaliation is prohibited. The employee may also request a “meaningful, objective description” of the employee’s own data the system used, with other people’s personal information anonymized (Section 1522(d) and (e)).

Who it covers and who it does not

The definition of employer in Section 1520(d) reaches private employers, labor contractors, farm labor contractors and foreign labor contractors, and expressly includes state government, cities, counties, special districts, school and community college districts, the California State University and, upon agreement by the regents, the University of California. Section 2 of the act declares the law a matter of statewide concern, so it applies to charter cities. Local ordinances that give equal or greater protection are not preempted (Section 1526.2).

Two exemptions apply. Parties to a collective bargaining agreement are exempt if the agreement waives the part “in clear and unambiguous terms,” covers wages and working conditions, and “provides protection from algorithmic management” (Section 1526.5). And the part does not apply where an ADS is required by, or reasonably necessary to comply with, a federal statute, regulation or binding contract on aircraft for the national airspace or on national security, military, space or defense products and services (Section 1526.6).

Enforcement

The Labor Commissioner may investigate, order temporary relief, issue citations and sue, and public prosecutors may also enforce the part (Section 1526.1). Once it is shown that an ADS was used, the burden shifts to the employer to show it did not primarily rely on the system or that it complied with Sections 1522 and 1524. In a civil action, the petitioner may seek injunctive relief, punitive damages and attorney’s fees, and each violation carries a $500 civil penalty. Retaliation against employees who use these rights is prohibited (Section 1526).

How the bill changed

According to the Senate Floor Analysis of August 30, 2026 (analysis), McNerney’s 2025 bill on the same subject, SB 7, was vetoed. The analysis lists the Assembly amendments to SB 947: they struck bans on using an ADS to inform compensation or run predictive behavior analysis, struck a limit on using customer ratings, removed independent contractors and “deactivations,” narrowed the data an employee can request, removed a worker’s own right to sue, and delayed the start to July 1, 2027. The Senate concurred 28 to 10 on August 31, 2026.

Where the sides stand

The bill was sponsored by the California Federation of Labor Unions. The analysis lists supporters including the California Employment Lawyers Association, the Electronic Frontier Foundation, SEIU California and the California Teachers Association. Opponents include the California Chamber of Commerce, TechNet, the Silicon Valley Leadership Group, SHRM California, Uber, Lyft, DoorDash, the League of California Cities and several counties. The employer coalition argued that the bill “will drive up costs for consumers and employers” and could chill development of tools that “help combat bias” (analysis, p. 13). Local government opponents argued that public employees already have appeal rights under collective bargaining agreements, and that the bill would add an unfunded mandate.

McNerney’s office called SB 947 “the first such law in the nation” (release). The Governor’s office described it as part of a package of “first-in-the-nation” worker protections signed the same day, alongside SB 951 on notice of technological displacement and AB 1331 and AB 1883 on workplace surveillance (Governor’s release).

How it fits with other law

An employer that meets SB 947’s notice requirements need not comply with substantially similar ADS notice provisions in other state law (Section 1526.3). That safe harbor does not reach quotas under Labor Code Section 2100. Under Section 1526.4, a business subject to the California Consumer Privacy Act remains subject to any automated decisionmaking technology regulation adopted by the California Privacy Protection Agency.

What is not yet known

The statute does not define “primarily relies,” and no Labor Commissioner guidance on what corroboration is sufficient appears in the sources reviewed. Section 1526.1(c) refers to a “disciplinary or deactivation decision,” although the Assembly struck the deactivation provisions elsewhere in the bill. How employers will reconcile the postuse notice with the California Privacy Protection Agency’s automated decisionmaking rules is not addressed in the sources reviewed. Whether any collective bargaining agreements will adopt the Section 1526.5 waiver before July 1, 2027 is not known.

Sources

SB 947 chaptered text and status; the Senate Floor Analysis of August 30, 2026; the Governor’s release of September 30, 2026; and Senator McNerney’s release of the same date.