California Limits How Employers Use AI to Discipline or Fire Workers

California employers increasingly use software that scores productivity, flags rule violations, and recommends who should be written up or let go, decisions that can lead to a California wrongful termination claim when they break the law. Senate Bill 947, signed on September 30, 2026, adds a new part to the Labor Code that governs those tools when they drive discipline and termination. Starting July 1, 2027, California’s AI employment law bars an employer from relying solely on an automated decision system to discipline or fire a worker.

The core rule is in new Labor Code § 1522(b). Where an employer primarily relies on an automated system’s output to discipline or fire someone, a human must corroborate the decision. The reviewer can use the underlying data or other supporting information, such as supervisor evaluations, personnel files, or the employee’s own work product. If the output cannot be corroborated, or the reviewer finds it inaccurate, incomplete, or misleading, the employer may not use it for that decision.

What Counts as an Automated Decision System at Work?

An automated decision system is any computational process derived from machine learning, statistical modeling, data analytics, or artificial intelligence that issues a simplified output, such as a score, classification, or recommendation, as Labor Code § 1520(c) defines it. The output must be used to assist or replace human discretionary decision-making and must materially affect people. Spam filters, firewalls, antivirus software, calculators, and ordinary databases are excluded.

That definition reaches productivity scores in warehouses, route-adherence ratings for delivery drivers, call-center quality scores, and scheduling tools that flag “unreliable” workers. The law covers private employers, public employers including cities, counties, school districts, and community college districts, labor contractors, and farm labor contractors. The University of California is covered only if the regents agree.

Three Things an Employer May Never Use AI to Do

Some uses are banned outright, whether or not a human reviews the result. Under § 1522(a), an employer may not use an automated decision system to:

• prevent compliance with, or violate, any federal, state, or local labor, safety, employment, or civil rights law
• infer an employee’s protected status under Government Code § 12940, such as race, religion, or disability
• predict that a worker will exercise their legal rights and take adverse action against them for it

The third ban targets tools that try to identify likely complainers, organizers, or workers about to file a claim. A worker who was cut or written up shortly after a system flagged them, with no explanation, may have a claim for an adverse employment action under other law as well. The Nourmand Law Firm, APC reviews situations like this one at no charge. Call 800-700-WAGE (9243) to talk it through.

The Right to See the Data Used Against You

A worker disciplined or fired through an automated system gets two new rights. Under § 1522(d), the employee may request, and the employer must provide, a meaningful, objective description of the employee’s own data that the system used. Other people’s personal information in that description must be anonymized.

Under § 1524, an employer that primarily relied on an automated system must give the worker a written notice at the moment it announces the decision. The notice must be a separate, plain-language communication, in the language the employer normally uses with its workers. It must state that the employer primarily relied on an automated system, that a human reviewed and corroborated the output, whom the worker can contact for more information, and that retaliation for using these rights is prohibited. Section 1526 bars discharging, demoting, suspending, or otherwise retaliating against a worker who uses these rights or complains to the Labor Commissioner.

Who Enforces the New Rules, and What Shifts to the Employer

The Labor Commissioner enforces SB 947 through investigations, temporary relief, citations, and civil actions, and a public prosecutor may also sue. An employer that violates the law faces a civil penalty of $500 per violation. In a civil action under the section, the petitioner may seek injunctive relief, punitive damages, and attorney’s fees. The statute does not create a separate lawsuit right for an individual worker, so the starting point is a complaint to the Labor Commissioner. The Nourmand Law Firm, APC brings those complaints, and the wrongful termination claims that often go with them, for workers across California.

The burden of proof favors the worker once the system’s role is shown. Once it is shown that an automated system was used in a disciplinary decision, § 1526.1(c) requires the employer to prove either that it did not primarily rely on the system or that it followed the corroboration and notice rules. A collective bargaining agreement can waive the law only if it does so explicitly, sets wages and working conditions, and provides protection from algorithmic management.

How This Fits With California’s Anti-Discrimination Rules

SB 947 adds to existing protections rather than replacing them. A firing driven by a biased algorithm can still be unlawful discrimination under the Fair Employment and Housing Act, which the firm’s earlier post on whether employers can use AI to hire or fire describes. The new law also reaches decisions that are not discriminatory at all but rest on an unchecked score, including warehouse and delivery terminations based on a productivity rating alone.

Talking to a Lawyer About an Algorithm-Driven Firing

SB 947 is not in force until July 1, 2027, though discrimination and retaliation laws already apply to algorithm-driven decisions. Warehouse pickers, delivery drivers, and call-center staff from the Inland Empire to the Central Valley are the workers most often scored by these systems. The Nourmand Law Firm, APC represents only employees, never employers, in wrongful termination and adverse action claims across California. If you would like the firm to look at your situation, call 800-700-WAGE (9243) or contact The Nourmand Law Firm, APC. The first conversation is free.