New AI Laws in California for 2027!

Governor Newsom signed several new laws regulating artificial intelligence (AI) in the workplace in the New Year. California employers need to get up to speed on AI regulations before 2027!

Here's what's new for 2027:

1. Workplace Privacy (AB 1331): This is California’s first law to specifically target bathroom surveillance in the workplace, reinforcing existing privacy protections and expanding them to cover certain tracking devices. It is part of a broader 2026 package of workplace privacy and AI regulation laws.

Starting January 1, 2027, California employers cannot monitor employees in workplace bathrooms, with narrow exceptions, and must adjust surveillance practices to comply with the new privacy rules. Civil penalty: up to $500 per violation.

2. Employee Surveillance (AB 1883): This is the second law in California that will ban workplace surveillance as of January 1, 2027. Under AB 1883, an employer may not use tools that rely on AI to recognize, infer, or predict a worker’s emotional state, or to collect neural data, meaning information generated by measuring activity of the brain or nervous system (Labor Code 1581). The law states that it does not prohibit tools used to ensure safety. Example: A California employer could no longer use an AI‑powered “employee engagement” software that analyzes call transcripts to score a worker as “frustrated” or “disengaged”. Civil penalty: up to $500 per violation.

3. AI Can’t Have Final Decision-Making Authority (SB947): In other words, AI can’t be the boss when making decisions about discipline and terminations. Employers cannot rely solely on AI or other automated decision systems to discipline or fire employees, starting on July 1, 2027. When an employer relies on an algorithm’s output, a human must check the decision against real evidence, and the worker must be told in writing. Civil penalty: up to $500 per violation.

4. AI-Driven Layoffs (SB 951): Effective January 1, 2027, any industrial or commercial facility with 75+ employees located in California, SB 951 will now require employers to disclose Cal/WARN layoff notices when a mass layoff, relocation, or termination is caused by AI. This amends the Cal/WARN Act by adding four mandatory elements to qualifying notices. Penalties can include back pay, benefits, and/or civil penalties.

• • Number of affected layoffs — with job classifications/occupations and work locations.
  • Job functions being automated — the specific tasks or roles replaced.
  • Category/type of technology — the AI system or automation tool that caused the displacement.
  • A top‑of‑notice statement — such as “This notice is for a technology displacement.”

Takeaways for Employers:

• Audit surveillance technology for bathroom use and other tracking tools.
• Update monitoring/surveillance policies to reflect AB1331 and AB1883 bans and exceptions.
• Update disciplinary and termination policies and practices to reflect SB 947 and SB941 changes.
• Train supervisors/HR on new AI requirements

When it comes to recruiting policies, investigations, and performance reviews, are your current policies keeping you compliant?

At CEA, we aren’t just here to tell you about the new laws—we’re also here to help you navigate this new AI workplace culture and create policies that will keep you out of court!