Dev Mode: November 2026

Technology and AI: four new rules for software you already own

Most of the technology touched by these four laws is already in place somewhere in your business. The work for 2027 will be figuring out how it is configured, who checks its output and what you tell your employees about it.

Cal-WARN notices get an AI disclosure (SB 951) - Cal. Lab. Code §§ 1400.5, 1401, 1402.7

Why should we care?

When automation drives a layoff, the notice must say so. The Employment Development Department (EDD) must also publish a summary of those notices on its website and post a quarterly statewide summary of technology displacements. Together, these amount to a public list of companies that replaced jobs with AI, available to unions, reporters, investors and plaintiffs’ firms.

What’s new? 

Cal-WARN already requires 60 days’ notice of covered mass layoffs (a “mass layoff” is a layoff of 50 or more employees at a covered establishment during any 30-day period). Starting January 1, 2027, when a covered reduction is caused in whole or in substantial part by an AI system or other automated technology, the notice must include, at the top of the notice, the statement “This notice is for a technology displacement” (Cal. Lab. Code § 1401(d)(1)(D)). It must also explain which roles are affected, what work is moving to machines and what kind of technology is doing it.

Who can sue?

No new claim. Employees can already sue under Cal-WARN for back pay and benefits when required notice is not given, but it is unclear whether existing remedies reach a defective AI disclosure. Back pay and benefits are tied to the duty to notify employees, and the $500-per-day civil penalty is tied to the duty to notify the EDD and local officials, not to the new content requirement. The Labor Commissioner, however, may cite employers for violating the notice requirements. A PAGA claim looks difficult, because PAGA bars actions based on a violation of a notice requirement.

What could I consider?

Involve employment counsel early in automation-driven restructurings, document how you decide whether AI was a cause “in substantial part” (a phrase the statute leaves undefined) and align the notice with your investor and press messaging.

Discipline decisions need a human paper trail (SB 947) - Cal. Lab. Code § 1520 et seq.

Why should we care? 

HR platforms deployed company-wide often score and flag employees everywhere they operate. In California, starting July 1, 2027, firing or disciplining an employee based primarily on an AI output without human corroboration will be both a penalty and a ready exhibit in a wrongful termination suit. And because the employer bears the burden of proving compliance, undocumented corroboration will be hard to prove.

What’s new?

No California statute previously governed AI in discipline or termination; a broader version (SB 7) was vetoed in 2025. Starting July 1, 2027, an automated decision system can no longer be the only basis for disciplining or firing an employee. If an employer “primarily” relies on one, a human must corroborate the output with other evidence, and the employee gets a written notice and can request a description of the data used. Penalties are $500 per violation.

Who can sue?

No one, directly. The Labor Commissioner and public prosecutors (the Attorney General, district attorneys and city attorneys) enforce the law, and the statute gives employees no lawsuit of their own. Plaintiffs will likely bring PAGA claims seeking the statute’s civil penalties, plead violations as unlawful practices under the Unfair Competition Law to seek injunctive relief, and lean on a burden-shifting provision that applies to claims that an employer relied solely or primarily on AI without human corroboration, in any civil action or administrative proceeding.

What could I consider? 

Inventory tools that score or flag workers, identify which feed discipline decisions and build a documented review step and notice template before mid-2027.

Surveillance stops at the restroom door (AB 1331) - Cal. Lab. Code §§ 1560–1565

Why should we care? 

Starting January 1, 2027, employers will be expressly barred from using a workplace surveillance tool “to monitor or surveil employees in a bathroom located in the workplace” (§ 1561(a)). Most violations will be unintentional, but the exposure can add up quickly. Location trackers, wearables, body cameras and time-tracking software often run continuously and are commonly configured centrally for a global workforce, so they may follow California employees into the restroom without anyone deciding they should. Each instance can carry a penalty of up to $500, and a PAGA claim can multiply that across every affected employee and pay period. Because the subject is restroom privacy, these claims also make for unflattering headlines and can damage employee relations.

What’s new? 

A separate code section, Labor Code § 435, has long barred audio and video recording in workplace restrooms. Starting January 1, 2027, AB 1331 will extend that ban to any workplace surveillance tool, unless a court order directs otherwise. The law defines “workplace surveillance tool” broadly, including “video or audio surveillance, continuous incremental time-tracking tools, geolocation,” but not smoke or carbon monoxide detectors or weapon-screening systems. Employers may still check tools for the one-time entry and exit of bathrooms. Workers may leave a surveillance tool behind when entering a bathroom unless they must remain available during meal or rest periods. An employer isn’t liable if an employee voluntarily brings a tool in. Nor is it liable if policy requires a badge or personal alarm for identification, safety, or access to a locked bathroom, as long as the tool doesn’t detect or record audio or video and has no embedded or attached AI. Uses required by federal or state law, and certain aerospace and defense work, are also exempt.

Who can sue? 

There is no express private right of action. The Labor Commissioner and public prosecutors enforce the law, and violations carry a penalty of up to $500 each. Unlike AB 1883 (No Emotion-Reading Or Neural-Data Tools, see below), AB 1331 has no provision letting an employee recover the penalty. But because it creates a Labor Code civil penalty, PAGA representative actions are a realistic risk.

What could I consider? 

Identify tools that record audio, video or location inside restrooms, configure them to stop monitoring there (entry and exit checks remain permitted), and update monitoring policies.

No emotion-reading or neural-data tools (AB 1883) - Cal. Lab. Code §§ 1580–1583

Why should we care? 

Emotion-reading features hide in ordinary software: call-center sentiment scoring, collaboration analytics and fatigue-tracking wearables. The Governor’s signing message, which also covered AB 1331 (Surveillance Stops At The Restroom Door, see above), said AB 1883 “lacks key definitions, which may create confusion about which tools are covered,” and encouraged lawmakers to refine the law.

What’s new?

Starting January 1, 2027, employers may not use a workplace surveillance tool that uses AI for recognizing, or making inferences or predictions about, an individual’s emotional state or for collecting neural data. “Neural data” means information generated by measuring activity in an employee’s central or peripheral nervous system, and not inferred from nonneural information. The ban doesn’t stop employers from using surveillance tools to ensure safety. It also exempts aircraft, national security, military, space and defense work where a tool is reasonably necessary to comply with a federal statute, regulation or contract. Penalties are up to $500 per violation.

Who can sue?

The statute provides that an employee, the Labor Commissioner or a public prosecutor may recover a penalty under this part as a statutory penalty paid to the employee or a civil penalty, but not both, for the same violation. The provisions that expressly authorize lawsuits name only the Labor Commissioner and public prosecutors. Still, the employee language, plus PAGA, gives plaintiffs something to work with.

What could I consider?

Ask IT and procurement which tools have sentiment, mood or biometric features switched on for California users, turn off what you cannot justify and add a compliance warranty to vendor contracts.

Pay and contracts: a reprieve and a bigger stick

Repeat pay data misses will cost up to $1,000 per employee (SB 1237) - Cal. Gov. Code § 12999

Why should we care?

For a company with 2,500 reportable employees, a repeat failure to file California’s annual pay data report will carry potential exposure of $2.5 million. The next report, due May 12, 2027, must also use 23 detailed job categories under the 2025 amendments to the statute (SB 464) that take effect that year, which is an HR systems project rather than a form update.

What’s new?

Private employers with 100+ employees already submit pay data each year, and those with 100+ workers hired through labor contractors file a separate report. Starting January 1, 2027, a second or further failure to file can cost up to $1,000 per employee -- up from $200. The penalty for a first miss is unchanged at up to $100 per employee. The Civil Rights Department (CRD) must also publish the total number of reports filed each year.

Who can sue? 

No one privately. The CRD asks a court to impose penalties, and the court must do so.

What could I consider? 

Put the report on the same compliance calendar as your EEO-1 and tax filings, require staffing vendors to deliver their data by contract, and do a trial run on the new job categories this winter until the CRD issues guidance.

People and enforcement: what managers say and do will carry more weight

Broader protection against immigration-related retaliation (AB 2495) - Cal. Lab. Code § 1019

Why should we care? 

Immigration enforcement is a fast-moving area, and HR teams often field the first questions. Starting in 2027, a single remark about a worker’s immigration status that would reasonably tend to discourage the worker from exercising workplace rights can create liability, even before any complaint is filed.

What’s new? 

State law already barred threats and over-documentation aimed at workers who asserted rights under state labor and employment laws or local ordinances. Starting January 1, 2027, those protections will further extend to rights arising under federal, state and local law alike. They will also bar any other conduct related to any person’s perceived immigration status that would reasonably tend to dissuade a person from engaging in conduct that the person has a legal right to engage in, even before the worker acts. The existing presumption of retaliation for violations within 90 days of protected activity will now cover the broader set of rights. Applicants and former employees are covered, and penalties can reach $10,000 for each person and each violation.

Who can sue? 

Workers could already, and starting in 2027 more of them will be able to. Section 1019 has long allowed a civil action; the amendments extend coverage to applicants and former employees, and the civil penalty is payable to the person harmed.

What could I consider? 

Train managers and recruiters, request only the work authorization documents federal law requires, and send any government enforcement contact to legal.

Serious workplace accidents will reach prosecutors faster (AB 2321) - Cal. Lab. Code §§ 6314, 6315, 6315.3, 6322, 6409.2, 6425

Why should we care? 

A single bad day on a job site will be able to open a regulatory file and a prosecutor’s file in parallel. When fire or law enforcement personnel respond to a workplace accident involving serious injury, illness, exposure or a death, they will have to notify the district attorney as well as the Division of Occupational Safety and Health (Cal/OSHA). A site manager who stalls or blocks a Cal/OSHA inspector will risk a misdemeanor, and supervisors who willfully violate safety standards will face criminal exposure for a broader range of harms.

What’s new? 

Cal/OSHA’s Bureau of Investigations previously had to investigate cases involving a death, serious injury to five or more employees, or a request for prosecution. Starting January 1, 2027, it must also investigate serious illnesses and serious exposures affecting five or more employees. It must also investigate any serious injury, illness or exposure for which Cal/OSHA cites a willful violation. Cal/OSHA must immediately notify prosecutors when it learns of such incidents.

Anyone who “willfully resists, prevents, impedes, or interferes with” Cal/OSHA’s inspection and investigation duties will be guilty of a misdemeanor, punishable by imprisonment in a county jail, not exceeding six months, or by a fine not exceeding five thousand dollars ($5,000) or both. Willful safety violations that cause a serious injury, illness or exposure, not just death or permanent impairment, will also carry criminal penalties of up to one year in county jail and a $100,000 fine, or more under the felony alternative, with corporate fines of up to $1.5 million.

Who can sue? 

No new private claim. The consequences here run through Cal/OSHA citations and criminal prosecution.

What could I consider? 

Update inspection-response plans so legal is called first, and train site leaders on cooperating with inspectors, preserving evidence and complying with any Cal/OSHA preservation order.

Changelog

Unless noted, each takes effect January 1, 2027.

Bereavement leave for one chosen person (SB 1149) - Cal. Gov. Code § 12945.7.

Employees will be able to take bereavement leave for a designated person, meaning any individual related to the employee by blood or whose association with the employee is the equivalent of a family relationship. The employee may identify that person at the time the employee requests the leave, and employers may limit employees to one designated person per 12-month period. That also widens who can bring a bereavement leave claim through the existing Fair Employment and Housing Act (FEHA) process. Update leave policies and request forms.

Anti-harassment courses get an anti-hate speech module in 2028 (AB 1803) - Cal. Gov. Code § 12950.1. 

Starting January 1, 2028, the state’s mandatory anti-harassment training must include an anti-hate speech component that gives supervisors and employees practical guidance on recognizing, reporting and confronting workplace speech that vilifies, humiliates or incites hatred based on characteristics protected under FEHA. The required hours stay the same. A training that includes information about the prohibition against unlawful harassment and prevention of abusive conduct that is based on an individual’s protected characteristics satisfies the requirement. Ask vendors for an updated module.

One definition of sex discrimination (AB 2563) - 29 codes, including amendments to Cal. Civ. Code § 51 and Cal. Gov. Code § 12926.

A single definition of sex discrimination will apply across state codes, confirming that gender-stereotyping claims are covered. The Legislature stated that the bill is declaratory of existing law, so it is not intended to expand or contract any existing rights or responsibilities.

Paid family leave for more military absences (AB 2054) - Cal. Unemp. Ins. Code § 3302.1. 

State Paid Family Leave (PFL) benefits will cover more military-related absences, including training, domestic deployments and National Guard and reserve duty under federal or state orders, starting when EDD’s new claims system is updated or July 1, 2028, whichever comes first.

State arbitration law follows the FAA (AB 2155) - Cal. Code Civ. Proc. § 1281. 

California arbitration agreements become unenforceable wherever the Federal Arbitration Act (FAA) would not enforce them, which matters most for transportation and logistics workers, including last-mile delivery drivers, whom the FAA’s transportation-worker exemption increasingly covers.

Restraining orders for an entire workplace (AB 1961, AB 2179) - Cal. Code Civ. Proc. § 527.8.

Employers may seek restraining orders to protect an entire workplace without naming one employee. Remote hearings and e-filing follow in 2028.

Naloxone training joins CPR certification (AB 2150) - Cal. Health & Safety Code § 1797.197b. 

Employers that require CPR certification must also require those employees “to take an online video module training on the use of naloxone” approved by the Emergency Medical Services Authority, “separate from the existing CPR training curriculum,” and must pay for it. Existing CPR, first aid or other training that meets the Authority’s minimum standards counts, as long as the employer keeps documentation. The training creates no duty for employees to administer naloxone.

Longer-lived wage liens and a records rule (SB 1316) - Cal. Lab. Code §§ 98.2, 1174.1, 1742.05.

Wage-judgment liens on real property can be renewed for further 10-year terms. Payroll and time records not produced on time in response to a Labor Commissioner request cannot be introduced or relied on as evidence in citation appeals or public works assessment hearings, subject to limited exceptions. Add these liens to real estate and deal diligence.

A $19.75 floor for temporary out-of-state farmworkers (AB 2646) - Cal. Lab. Code § 1208. 

Out-of-state agricultural workers employed temporarily or seasonally under a state-approved application or job order (in practice, H-2A-type workers), and California residents doing the same work for the same employer in the same county, must earn at least $19.75 an hour, adjusted each January 1, starting in 2027, by the Social Security cost-of-living adjustment. Food and consumer goods buyers may see the cost passed through.

Bigger bonds and fines for farm labor contractors (AB 2227) - Cal. Lab. Code §§ 1683, 1684. 

Contractor bonds double, to $50,000, $100,000 or $150,000 depending on payroll, and the existing civil penalties (capped at $10,000, $20,000 and $50,000 for first, second and later citations) will reach licensed contractors as well as unlicensed ones. Check that your contractors are bonded.

Wage-and-hour history in public works bids (AB 1838) - Cal. Pub. Cont. Code § 2011. 

Contractors bidding on local public works must disclose five years of wage-and-hour violations or risk disqualification, with a right to appeal; projects under project labor agreements or existing prequalification are exempt.

A reprieve from pixel and cookie litigation (SB 690) - Cal. Penal Code § 637.2.

Employment law adjacent: Starting January 1, 2027, an action against a private actor for a violation of Section 638.51 (the “pen register” and “trap and trace” prohibition) that arises from conduct on an internet website, online application or mobile application may be brought only by the Attorney General. The change applies retroactively to any pending claim in an action commenced within two years before the operative date of the law, which reaches pending suits filed on or after January 1, 2025. Wiretapping claims and other private claims under the same chapter remain available.

Next build

AB 1697 (delaying the exit-fee ban to contracts signed on or after January 1, 2027) is already in force. Most of the other measures begin January 1, 2027, so this quarter is the window for policy, contract and training updates. The next pay data report is due May 12, 2027, and SB 947’s human-review rules apply starting July 1, 2027. The hate-speech training requirement and the remote hearing and e-filing procedures for workplace violence restraining orders follow on January 1, 2028, and the expanded PFL military coverage begins no later than July 1, 2028.

Read together, this year’s laws say a lot about where California is headed, and the technology rules say it loudest. The state is not content simply to regulate what employers decide; it increasingly wants to know how they decide, with which tools and on whose say-so. That shift matters more than any single bill. The companies that handle 2027 well will not be the ones that rewrite the most policies. They will be the ones that can answer a simple question before a regulator, a plaintiff or a reporter asks it: What is actually running in our workplace, and what is it doing to our people? Start that inventory now, while it is still a project and not an exhibit.

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If you have any questions about this legal briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.