California Governor Gavin Newsom has signed a landmark AI law banning Golden State employers from relying solely on artificial intelligence to fire or discipline workers.

SB 947, dubbed the No Robo Bosses Act, prevents businesses around the state from exclusively using "automated decision-making systems" in matters of employee discipline and termination. It also restricts their capacity to use AI as a principal tool in such decisions.

Under the bill, employers that rely "primarily" on AI output to make termination or disciplinary decisions must now have a human reviewer corroborate those decisions using additional information, such as managerial evaluations, peer reviews, and personnel files. Additionally, affected employees must be provided with written notice that AI was "primarily used" in their termination or disciplinary decision, a description of the employee data used by the system, and a human point of contact who can further explain the decision.

"No worker should ever be fired or disciplined by a machine, AI or not. Artificial intelligence systems have the potential to boost productivity, but they've also made errors and misjudgments and exhibited bias," California State Senator Jerry McNerney, the bill's author, told CNBC. "AI must remain a tool controlled by humans, not the other way around." McNerney, a Democrat, first introduced the act in 2025, following a concerted push by organized labor in the state to erect guardrails around management's ability to use AI in taking adverse action against workers. "When working people organize, we get results.

Workers across California have demanded that our state lead the way in regulating AI in our workplaces. And today, we see that begin to happen," said Lorena Gonzalez, president of the California Federation of Labor Unions, AFL-CIO and lead sponsor of No Robo Bosses Act, in a statement after Newsom signed it. "Today, California's workers and our unions have changed the national narrative on how Americans can fight back and win against AI taking over our jobs and workplaces."

Newsom has taken a flurry of recent actions on AI, including g a broader executive order earlier this month addressing the potential existential risks posed by AI models "before it's too late," and a measure to provide a state framework for independent evaluation and auditing of AI models. Newsom said of the broad EO that the federal government was abdicating "its responsibility to protect Americans."

The U.S. is leading the way globally in adoption of automated management software and systems, according to survey results from the OECD published late last year. It found that algorithmic management software is being widely adopted across countries, but nowhere as widely as in the U.S., where 90% of managers say their firms have adopted at least one tool to "instruct, monitor or evaluate workers." Meta is facing a lawsuit filed in July, in which former employees allege AI-assisted systems were used to rank and select workers for layoffs, disproportionately affecting employees who had taken medical or family leave. Meta has denied the allegations.

Walmart and Amazon workers are increasingly concerned that HR decisions are being automated, according to a May survey released by nonprofit United for Respect, which has its roots in the labor movement and retail sector specifically. The nonprofit failed in an effort last summer to convince Walmart shareholders to approve a measure requiring company management to disclose more on use of AI with the workforce.

California's No Robo Bosses Act saw its momentum hit a wall in October when Newsom vetoed it despite clearing both of the state's legislative chambers with overwhelming majority support. Among his concerns, Newsom cited a requirement that would have compelled businesses to alert workers in advance whenever an AI system was in use that could affect work conditions.

"I share the author's concern that in certain cases unregulated use of ADS [automated decision-making software] by employers can be harmful to workers," the governor noted in his explanation previewing future willingness to accept similar legislation. "However," he continued, "rather than addressing the specific ways employers misuse this technology, the bill imposes unfocused notification requirements on any business using even the most innocuous tools."

Upon re-introducing the bill in February after Newsom's resistance, McNerney removed the pre-notification requirement and stripped language that would have extended the Act's protections to gig workers, which had drawn heavy criticism from rideshare giants such as Uber and Lyft. Although these modifications have somewhat blunted the fierce lobbying efforts by tech and commerce groups that played a role in dooming the act's 2025 counterpart, California business leaders still rallied against SB 947 in the weeks leading up to its enactment.

"The bill's obligations generally apply when an employer 'primarily relies' on an automated decision system, but that critical term is never defined. Employers are given no objective standard for determining when a technology has moved from merely informing a decision to being a primary basis for it," Robert Singleton, the Chamber of Progress' senior director of policy and public affairs for California and US West, wrote in a letter to Newsom earlier this month, urging the governor to veto the bill. "Uncertainty about whether ordinary tools qualify as regulated automated decision systems could discourage employers from using technologies that improve consistency, identify safety risks, or help managers make better-informed decisions," he added.

First such law in nation as public turns on AI ahead of elections While the aforementioned changes were made specifically to gain Newsom's approval, No Robo Bosses backers also benefitted from the fact that, this time around, the bill hit the governor's desk amidst all-time high public distrust surrounding AI's introduction and continued presence in the workplace. A July Gallup poll found that 39% of Americans believe that AI does more harm than good, an 8% increase from the 31% who felt similarly in 2025.

Pew Research in a study released this past August, similarly found that 71% of Americans think AI will "take people's jobs," an increase of around 7% from around two years ago.

This trend has solidified as Newsom weighs running for president in 2028, an election in which AI policy is expected to be a hot-button issue particularly among Democratic hopefuls. But Democrats aren't alone on the issue. Earlier this month, Steve Hilton, California's Republican nominee for governor, came out in full support of the No Robo Bosses Act.

"The California Chamber…says rules requiring human review and basic accountability are too burdensome for employers. What a ridiculous thing for them to say," Hilton wrote in an open letter to Gonzalez. "In some ways, I don't think SB 947 goes far enough," he wrote. "Employers should not be allowed to use AI to decide whether someone is fired, demoted, loses regular hours, or is shut out of the program they rely on for income."

California businesses will be the first to navigate its distinct regulatory framework, which establishes a largely unprecedented level of oversight over workplace AI use. Some local regulations throughout the past five years have imposed restrictions on how AI can be used in employment decisions, perhaps most notably Illinois' Public Act 103-0804, which also requires employers to notify workers when they use AI for a set of specified employment purposes. However, these restrictions have never gone to the lengths now seen under California law. Even the Illinois law, which went into effect this past January, stops short of an outright prohibition on deploying agentic digital systems for employment decisions.

While the No Robo Bosses Act is the first of its kind to become law, many other bills currently sit in limbo across the nation, designed to fulfill the very same purpose. This past June, U.S. Senators Ed Markey (D.-Mass.) and Brian Schatz (D.-Hawaii), both Democrats, introduced federal legislation donning the same name, which would bar employers from "relying on automated decision systems to make work-related decisions." Markey's bill, presented to a Congress that has been slow to develop any sort of legislation regulating AI, was effectively dead on arrival. A number of states, including New York Louisiana New Jersey have seen similar legislation be proposed but have yet to act on their own accord.

Earlier this year, New York became the first state in the nation to enact a ban on the construction of new AI data centers.

California's action may have just provided the push other states need to move on workplace AI legislation.

Left-leaning civil liberties nonprofit Electronic Frontier Foundation said in a statement to CNBC thatg the law is a "strong step toward giving workers the protections they need in workplaces that use automated decisionmaking systems" and it planned to continue its work with labor groups to "advance policies that protect human dignity in the workplace." Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.