On September 30, Governor Newsom's office announced that he had signed a batch of AI bills. One of them is SB 947, which governs how employers use "automated decision systems" (AI and similar tools) on workers. The governor's office describes it as "prohibiting employers from only relying on AI when making a disciplinary action or termination decision."
According to the enrolled bill text:
- An employer "shall not rely solely on an ADS when making a disciplinary or termination decision."
- If such a system was primarily used, the employer must tell the worker in writing at the time of the decision.
- The worker can then request a description of their own data the system used.
- The rules become operative July 1, 2027.
- The bill's definition of "employer" sets no minimum headcount.
- Penalties include a civil penalty of $500 per violation.
What it means for an SMB
- Size isn't an exemption. If you employ people in California, plan as if this applies to you.
- "AI-assisted" is fine. "AI-decided" is not. Tools can flag attendance or performance issues. A person has to review the flag and own the decision.
- Check your vendors. Scheduling, timekeeping and performance tools increasingly score workers. Ask each vendor what their tool decides on its own.
- Write the review step down now. Our AI approval matrix shows how to record which decisions always need a human sign-off.
This is a summary, not legal advice. Confirm your obligations with employment counsel.