California has enacted several new employment laws that change how employers use workplace technology, draft employment agreements, train employees, administer leave, file pay data reports, and respond to Labor Commissioner investigations. Most changes take effect January 1, 2027, with a few others taking effect later in 2027 or 2028. This installment highlights the “Top 10” new California employment laws with direct implications for employers.
ARTIFICIAL INTELLIGENCE & WORKPLACE SURVEILLANCE
AB1331: Workplace Bathroom Surveillance
Beginning January 1, 2027, employers generally may not use a workplace surveillance tool to monitor employees in a workplace bathroom. Among other things, the law:
- Allows employees to leave behind surveillance tools in their possession when entering a workplace bathroom, subject to limited exceptions;
- Permits employers to check for a one-time entry and exit of the bathroom;
- Allows certain identification or safety devices to be brought into a bathroom if they do not detect or record audio or video and do not have embedded artificial intelligence; and
- Establishes a civil penalty of up to $500 for each violation.
AB1883: Workplace Surveillance Tools
Beginning January 1, 2027, AB1883 prohibits employers from using an AI-enabled workplace surveillance tool to recognize or infer an employee’s emotional state or collect neural data. The law:
- Defines neural data as information generated by measuring activity of the central or peripheral nervous system, excluding inferences from nonneural information;
- Includes surveillance tools ranging from video/audio collection devices to geolocators to general employee data collection devices;
- Permits surveillance tools used for safety or other purposes if they do not perform the prohibited functions;
- Provides a narrow exception for specified federally required aerospace, defense, and national-security operations; and
- Establishes a civil penalty of up to $500 for each violation.
SB947: Automated Decisions Affecting Discipline and Termination
Employers using automated decision systems will be subject to new limitations on their usage. Beginning July 1, 2027, the law:
- Defines an automated decision (“ADS”) as any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that produces a score, classification, or recommendation that helps make, or otherwise replaces, human judgment in a decision that materially affects a person. The term does not include ordinary tools such as spam filters, antivirus software, calculators, or databases.
- Prohibits employers from using ADS to infer protected status, predict and take adverse action against a worker for exercising legal rights, or evade employment and civil rights requirements.
- Prohibits employers from solely relying on ADS to discipline or terminate an employee. If an employer primarily relies on an ADS output for discipline or termination, a human must corroborate the decision.
- Prohibits ADS output(s) from being used if it cannot be corroborated or is inaccurate, incomplete, or misleading.
- Requires employers to provide a separate written notice identifying the ADS use, any human review, a human contact, the employee’s right to request a meaningful description of their own data used by the ADS, and applicable anti-retaliation protections when communicating a disciplinary or termination decision based primarily on an ADS.
- Imposes a civil penalty of $500 per violation against employers violating this law.
SB951: Notice of Technology-Driven Layoffs
The California Worker Adjustment and Retraining Act (Cal-WARN) already generally requires 60 days’ notice of a covered mass layoff, relocation, or termination. SB951 requires additional notice compliance. Beginning January 1, 2027, employers must meet the following notice requirements when a covered action results, in whole or in substantial part, from AI or other automated technology that replaces or automates jobs:
- The notice must identify the number, classification or occupation, and work location of affected layoffs; the job functions to be automated; and the category or type of technology involved.
- The notice must also begin with the following language: “This notice is for a technology displacement.” A separate Cal-WARN notice requirement for every use of AI is not required.
The Employment Development Department will be required to submit a report to the California Legislature by January 1, 2028, documenting the effect of AI on business practices. The data collected as a result of SB951 will be utilized in this report.
DISCRIMINATION, HARASSMENT & LEAVES
AB1803: Anti-Hate Speech Training
California already requires employers with five or more employees to provide two hours of sexual harassment training to supervisors and one hour to nonsupervisory employees every two years, including prevention of abusive conduct. AB1803 requires that beginning January 1, 2028, employers must:
- Add anti-hate speech training to their harassment training; and
- Include practical guidance on recognizing, reporting, and confronting workplace speech that vilifies, humiliates, or incites hatred based on protected characteristics.
Training that already addresses unlawful harassment and abusive conduct based on protected characteristics satisfies the new requirement.
SB1149: Bereavement Leave for a Designated Person
California already requires covered employers to allow eligible employees up to five days of bereavement leave following the death of a family member, including a spouse, child, parent, sibling, grandparent, grandchild, or domestic partner. Beginning January 1, 2027, SB1149 expands the definition of family member to include a “designated person”, someone related to the employee by blood or has an association equivalent to a family relationship. The employee may identify the designated person when requesting leave, and the employer may limit an employee to one designated person per 12-month period.
AB2495: Immigration-Related Intimidation
Existing law prohibits unfair immigration-related practices intended to retaliate against someone for exercising rights under state employment law or a local employee ordinance. Beginning January 1, 2027, the law:
- Expands the protected rights to those under local, state, or federal laws and regulations applicable to employees and covers attempts to exercise those same protected rights.
- Outlines the legislative intent to protect immigrant workers from exploitation and intimidation, describing immigrant workers as “uniquely vulnerable” in the workplace. The intent is further described as an attempt to level the playing field for employers who do not engage in these unfair business practices.
- Prohibits conduct tied to a person’s perceived immigration status that would reasonably deter the person from asserting a protected right or induce conduct the person may legally refuse.
- Imposes liability upon employers under this law regardless of the employee’s actual citizenship status at the time of violation. Employers and other covered persons may face a civil penalty of up to $10,000 per affected person for each violation, in addition to other remedies.
WAGE & HOUR
SB1237: Pay Data Reporting Penalties
Covered California employers are already required to submit annual pay data reports to the Civil Rights Department (CRD). Existing law authorizes a court, upon the CRD’s request, to impose a penalty of up to $100 per employee for an initial failure to file and up to $200 per employee for a subsequent failure. Beginning January 1, 2027, SB1237 increases the maximum possible penalty for a subsequent failure to $1,000 per employee.
SB1316: Wage Liens and Late-Produced Records
Beginning January 1, 2027, the law strengthens Labor Commissioner enforcement in two ways:
- First, a lien on an employer’s real property securing amounts due under a final wage order, which otherwise lasts 10 years unless satisfied or released, may be renewed for additional 10-year periods before it expires.
- Second, the law expands the rule restricting employer use of payroll, time, and employment records in specified citation and writ proceedings if they are not produced by the Labor Commissioner’s requested deadline. A parallel rule applies to contractors and subcontractors in specified public-works proceedings. The law provides exceptions, including a timely court challenge, certain corrected clerical errors, reasonable extension requests, and the Commissioner’s discretionary admission of records after substantial good-faith compliance.
EMPLOYMENT CONTRACTS
AB1697: Stay-or-Pay Employment Contracts
AB692 prohibited certain employment terms requiring a worker to repay a debt or pay a fee upon termination of the work relationship for contracts entered into on or after January 1, 2026. Effective immediately, AB1697:
- Prohibits such terms in contracts entered into on or after January 1, 2027, and makes the 2026 versions of the relevant provisions inoperative for that year;
- Prevents liability from accruing under applicable provisions for acts between January 1, 2026 and its effective date and renders pending claims based on that period moot;
- Adds narrow exceptions, including government-funded recruitment and retention bonuses, certain affiliation payments to registered or licensed financial and insurance representatives, and repayment for advanced paid time-off after voluntary separation, subject to a 40-hour cap and other conditions.
EMPLOYER TAKEAWAYS
- Review surveillance and ADS tools, including vendor features that analyze employee behavior, emotions, or neural data.
- Review template repayment agreements, bereavement policies, harassment training contents, and Cal-WARN notices.
- Review pay data reporting practices and establish a prompt process for Labor Commissioner records requests.
Please note, this is not an exhaustive list of all potentially relevant California laws. If you have any questions related to any of the new employment laws taking effect in California, please reach out to the Nukk-Freeman & Cerra Attorney with whom you typically work or call us at 619.292.0515 or 973.665.9100.