California Passes “No Robo Bosses” Act – With September 30 Deadline for Governor Action

California lawmakers have taken a significant step forward in regulating the use of artificial intelligence (“AI”) in the workplace by passing SB 7, a bill aptly referred to as the “No Robo Bosses” Act. If Governor Newsom signs the bill into law—a decision he must make by September 30, 2025—SB 7 would take effect on January 1, 2026 and would have an immediate impact, including prohibiting employers from relying solely on AI to make decisions regarding employee discipline or termination. Below, we highlight the most salient aspects of SB 7 and make some recommendations for employers going forward, if Governor Newsom signs the bill into law. 

What AI Tools are Covered?

SB 7 uses the term “automated decision systems” or “ADS” to define AI tools as: 

[A]ny computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues simplified output, including a score, classification, or recommendation, that is used to assist or replace human discretionary decisionmaking and materially impacts natural persons. 

This definition covers a broad range of tools, including commonly used AI tools, such as resume scanners, but adds several other broad categories of AI, such as: (1) keystroke or computer system monitoring tools; (2) tools that analyze voice or text (which can be used to analyze interviews or rate employee performance); (3) performance tracking tools; (4) scheduling assistant tools (including in connection with just-in-time scheduling protocols); and (5) training programs or protocols that rely on AI to assess or score performance, among others. Any employer that uses an AI tool to assist with any aspect of the employment lifecycle—e.g., hiring, performance evaluation, discipline, promotions, terminations, etc.—should assume SB 7 covers this as ADS tool. 

SB 7 Defines “Employment-Related Decision” Incredibly Broadly.

SB 7 defines “employment-related decision[s]” as: “any decision … that materially impacts a worker’s wages, benefits, compensation, work hours, work schedule, performance evaluation, hiring, discipline, promotion, termination, job tasks, skill requirements, work responsibilities, assignment of work, access to work and training opportunities, productivity requirements, or workplace health and safety.” California lawmakers have left little room for interpretation on this front—“employment-related decision” means virtually all decisions relating to an employee’s employment and does not just encompass hiring or termination. 

SB 7 Includes Several Prohibitions and Limitations.

One significant feature of SB 7 is what it expressly prohibits. Most notably, employers may not rely solely on an ADS when making a discipline, termination, or deactivation decision. “Deactivation” is a term often used in the gig economy to refer to a termination and literally references a company “deactivating” an employee’s access to the company’s systems. In addition, employers may not use ADS tools to: (1) prevent compliance with or violate the law; (2) infer a worker’s protected status (e.g., race, gender, national origin, etc.); (3) collect worker data for a purpose not disclosed under the specific SB 7 notice requirements; or (4) “[i]dentify, profile, predict, or take adverse action against a worker for exercising their legal rights” (i.e., retaliate against workers). 

SB 7 also places limits on the type of data employers can use. Specifically, the bill makes clear that employers “shall not use customer ratings as the only or primary input data for an ADS to make employment-related decisions.” For example, if an employee works in a customer-facing role where customers can leave reviews, the employer may not rely solely on those ratings to promote, discipline, or terminate the employee—those decisions must be informed by other data. 

SB 7 Places a Premium on Human Oversight.

As indicated earlier, SB 7 prohibits employers from relying solely on ADS when making a “discipline, termination, or deactivation decision.” But employers may rely heavily on them—i.e., employers may, as SB 7 explains, rely “primarily” on an ADS for such decisions. But when an employer “relies primarily” on an ADS to make these specific types of decisions (discipline, termination, or deactivation), the employer must also use a “human reviewer to review the ADS output and compile and review other information that is relevant to the decision, if any.” In other words, SB 7 requires a person to conduct second level review for more significant decisions. 

SB 7 offers no guidance on what it means to “primarily” rely on an ADS to make a given decision as opposed to relying “somewhat” or some different degree. Instead, SB 7 leaves this to the employer. Whether an employer relies “primarily” on an ADS or to some lesser degree will likely depend on a combination between the decision at issue and the type of ADS being used, but it is nevertheless an area that will require significant consideration by employers. 

Employers Must Provide Notice and Respond to Data Requests.

SB 7 includes two types of notices that employers are required to provide: pre-use notice and post-use notice. 

Pre-Use Notice. With respect to pre-use notice, for all employment-related decisions except hiring (which has a separate set of notice requirements), employers must: (1) deliver notice at least 30 days before an ADS is used (or by April 1, 2026 if an ADS is already in use) and within 30 days of hire for new workers; (2) provide notice in writing as a “separate, stand-alone communication” in the same manner by which other information is provided to workers; and (3) provide notice through a “simple and easy-to-use method,” such as email, hyperlink or other similar format. In the hiring context, employers must notify job applicants whether an ADS will be used in making any hiring-related decisions. The notice at the hiring stage must include:

• The type of employment-related decisions potentially affected by the ADS.
• A general description of the categories of worker input data the ADS will use, the sources of worker input data, and how worker input data will be collected.
• Any key parameters known to disproportionately affect the output of the ADS.
• The individuals, vendors, or entities that created the ADS.
• A description of the worker’s right to access and correct the worker’s data used by the ADS.
• An anti-retaliation notice.
• If applicable, a description of each quota set or measured by an ADS to which the worker is subject.

In terms of timing, employers can either provide the required notice upon receiving a job application from a candidate or include the notice on a job posting—SB 7 gives employers a choice. 

Post-Use Notice. SB 7 also imposes “post-use” notice requirements where an employer primarily relied on an ADS to make a “discipline, termination, or deactivation” decision. Specifically, at the same time the employer notifies the employee of the employment decision (i.e., the discipline, termination, or deactivation), the employer must also provide a written notice (in plain language and as separate, stand-alone communication), that must include: 

• The “human” to contact for more information about the employment decision and the ability to request a copy of data relied upon in the decision.
• That the employer “used an ADS to assist the employer in one or more discipline, termination, or deactivation decisions with respect to the worker.”
• The worker has the right to request a copy of the worker’s data used by the given ADS.
• An anti-retaliation notice. 

Data Requests and Retention. Separately, SB 7 gives workers the right to request (and requires employers to provide) “a copy of the most recent 12 months of the worker’s own data primarily used by an ADS to make a discipline, termination, or deactivation decision.” Workers are limited to one such request every 12 months. Likewise, employers must maintain an “updated list of all ADS currently in use” at a given point in time.

There is No Private Right of Action.

Employers can breathe (a little) easier on the enforcement front. SB 7 does not include a private right of action. Indeed, the final iteration of the bill expressly cut a portion that would have given aggrieved workers the option of bringing a civil action for damages. That said, it is still possible that individual workers could assert alleged violations in a PAGA action. Regardless, violations of SB 7 still carry a civil penalty of $500 per violation and the law may be enforced by the Labor Commissioner or local prosecutors. While $500 is not steep, penalties could certainly add up if an employer fails to remedy a faulty AI tool that results in dozens of violations impacting several employees (or if an alleged violation forms the basis for a PAGA claim). 

Takeaways and Recommendations

SB 7 represents a significant shift in the regulatory paradigm governing AI in the workplace and (if signed into law) will require California employers to consider how to address AI in the workplace moving forward. If Governor Newsom signs the bill into law, there are a few critical steps employers could take to ensure compliance with SB 7.

• Review and Audit All AI Systems. Employers should conduct a thorough review of all systems in use to understand where and how AI is being used across the company. The first step to compliance is knowledge—you can’t comply with the law until you know what aspects of your workplace are impacted by AI and the extent to which you are using covered ADS tools in the workplace.
• Determine and Understand Your Reliance on AI. Are you relying on AI to make any employment-related decisions? If so, how much? These are critical questions to ask in determining whether and to what extent you need to comply with SB 7, particularly given the “human” review requirement that is triggered where an employer relies “primarily” on an AI tool in a decision involving discipline, termination, or deactivation. 
• Understand and Safeguard Your Data. SB 7 has significant data storage and retention implications, particularly because the law gives employees the right to request and receive their data used by a given AI tool. Because of this, employers need to (a) understand the specific employee data that is used in a given ADS; (b) ensure that such data is stored in an organized an easily accessible manner; and (c) that the storage and/or use otherwise complies with other data privacy laws in California.
• Draft Notices for Each AI Tool. This is another area where employers can get a head start. Employers can, and should, draft notices for all AI tools where such notice is necessary, and determine how the notice will be distributed and to whom (i.e., current employees, applicants, etc.). Also, employers should consider developing a notice form that is customizable to the extent necessary, particularly where there is a second level “human” review component that might change based on the type of decision or employee impacted.
• Develop a Compliance Plan and Process. Establishing processes and procedures to ensure compliance is key and likely the most important next step (or set of steps) employers should consider. This would include: (a) identifying and training individuals who will serve as the “human” second level reviewers when an employer relies “primarily” on a covered ADS to arrive at an employment decision; (b) determining how they will respond to employee data requests; (c) outlining how to document the “human” second level review process to ensure compliance with the law; (d) formulating a process by which employees can correct, supplement, and/or access their own data used in AI processes; and (e) assessing the degree of reliance on a specific ADS and identifying situations and decision-making processes where human review is either required or needed.

Employers would be wise to consult with counsel to accomplish these next steps, among others, and Mintz’s Employment Team stands ready to assist any employer looking to comply with SB 7 and any other AI-related laws as they continue to emerge. The Mintz California Employment Practice will monitor this bill going forward and we will update this advisory promptly when Governor Newsom acts. 

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