California Considers AI Regulation in the Workplace

In a first-of-its-kind potential law, a new bill introduced in the California legislature would regulate artificial intelligence (AI) in the workplace and prohibit automated decision-making for employment decisions.

Senate Bill 7 – dubbed the “No Robo Bosses Act” by sponsor Sen. Jerry McNerney – would prohibit an “automated decision-making system” (ADS) from making an employment decision, including hiring, termination, promotion or disciplinary action, without human oversight.

The term ADS encompasses any computational process that uses machine learning, statistical modeling, data analytics or artificial intelligence to produce simplified outputs (such as a score, classification or recommendation) that assist or replace human decision-making and materially impacts natural individuals.

Employers would be required to notify workers (defined to include job applicants and independent contractors, as well as employees) in writing when AI tools are being used in the decision-making process and maintain a list of all ADS currently in use.

Workers would have the ability to access the data collected or used by an ADS to correct errors in the data. In addition, workers affected by an employment-related decision made by an ADS would have the option to appeal the decision within 30 days of receiving notification from the employer. The bill would require a human reviewer to respond within 14 business days, and to rectify the decision within 21 days if a determination is made that the decision should be overturned.

The proposed legislation bans the use of an ADS to obtain or infer information about a worker’s immigration status, ancestral history, health history, credit history or other protected categories. Using an ADS to predict worker behavior or assessor personality, emotional state or intentions would be prohibited, as is relying primarily on customer ratings or similar AI-generated metrics for employment decisions.

Data privacy requirements also apply.

SB 7 would prohibit employers from discharging, threatening to discharge, demoting, suspending or in any manner discriminating or retaliating against a worker for asserting their rights under the proposed legislation.

Enforcement powers would lie with the Labor Commissioner, with the potential of a $500 fine per violation, as well as workers, who would have the right to bring a civil action and recover punitive damages as well as attorney’s fees and costs.

To read Senate Bill 7, click .

Why it matters: “Businesses are increasingly using AI to boost efficiency and productivity in the workplace,” Sen. McNerney said in a statement about the legislation. “But there are currently no safeguards to prevent machines from unjustly or illegally impacting workers’ livelihoods and working conditions.” Employers should keep an eye on the bill as it makes its way through the legislature.