California Lawmakers Push to Protect Workers from AI Management and Surveillance

California Bills Aim to Protect Workers from AI-Driven Management

This week, California’s Legislature will consider key bills targeting how artificial intelligence (AI) impacts employment decisions. Senate Bill 7 (SB 7) has drawn particular attention. It proposes that employers must notify workers 30 days in advance before AI tools influence decisions like hiring, firing, promotions, or pay. Workers would also gain the right to appeal AI-based decisions. The bill stops employers from using AI to make predictions about sensitive personal factors such as immigration status, health, or psychological state.

Research shows AI is increasingly used to set compensation and evaluate workers—a trend that began with gig economy platforms and now spreads widely. However, AI systems can be biased, disqualifying candidates based on arbitrary factors like race, gender, or even wearing glasses. SB 7 also prohibits AI inferences from brain data, which can reveal private health or mental information. The bill is scheduled for a hearing on August 29.

Additional Bills Target Workplace Surveillance

SB 7 is one of three bills backed by the California Federation of Labor Unions, which represents over two million workers statewide. The other two, Assembly Bills 1331 and 1221, focus on regulating workplace surveillance. Federation president Lorena Gonzalez emphasizes that employers should not predict or use sensitive personal information—such as pregnancy or opinions about management—to the employee's detriment.

Gonzalez states, “We need guardrails against surveillance and AI tools to ensure workers maintain privacy, respect, and autonomy.” The federation actively collaborates with unions in other states to prevent AI from harming frontline workers.

Legislative Challenges and Cost Concerns

Senator Jerry McNerney, author of SB 7, notes a growing race to use AI to increase efficiency or replace workers. While acknowledging AI’s potential benefits, he warns about the risks without proper oversight. To address business concerns about costs, McNerney plans amendments that could remove the AI decision appeal process, a major sticking point for business groups like the California Chamber of Commerce.

SB 7 faces scrutiny on the California Legislature’s “suspense calendar,” where bills with costs over $50,000 are reviewed. This process can delay or kill legislation with limited public debate. Compliance costs for SB 7 to the state are estimated at $600,000 or more, though it’s unclear how many state agencies use automated employment systems. Earlier self-reporting showed surprisingly low usage, despite evidence to the contrary.

Previous Attempts and Opposition

Cost and enforcement concerns have stalled AI workplace regulations before. Last month, the California Privacy Protection Agency weakened its draft rules on automated decision-making after pressure from lawmakers, business groups, and Governor Newsom.

Another bill, Assembly Bill 1018, requires testing of automated systems used in employment, education, housing, and healthcare. It would grant people the right to appeal automated decisions within 30 days. However, committee analysis estimates implementation could cost hundreds of millions of dollars across local and state agencies.

Assemblymember Rebecca Bauer-Kahan, author of AB 1018, is committed to reducing costs where possible. Last year, a similar bill was pulled after amendments limited its scope to employment and faced opposition from both tech giants and nearly 100 companies, including Blue Shield and Pfizer. Nearly 80 organizations oppose it, citing increased costs and slowed innovation. Governor Newsom vetoed related AI legislation last year due to similar concerns.

Regulators and Policy Direction

Both McNerney and Bauer-Kahan have extensive backgrounds in AI regulation. McNerney co-chaired an AI subcommittee in Congress, and Bauer-Kahan chairs the Assembly privacy and consumer protection committee. She was among the first lawmakers to propose embedding the federal AI Bill of Rights into state law.

In contrast to weakened rules by the California Privacy Protection Agency, the California Civil Rights Department recently finalized protections against automated discrimination during recruitment and promotions, effective this October. These protections echo principles from the Biden administration’s AI Bill of Rights, emphasizing transparency and appeal rights when AI affects lives.

Public Concerns and Industry Perspectives

A recent survey of 1,400 California adults by TechEquity found more people worry about AI than feel optimistic. Nearly 60% believe AI benefits mainly the wealthy, and 70% want laws to protect against AI-related harm.

Peter Leroe-Muñoz, general counsel for the Silicon Valley Leadership Group, supports responsible AI innovation but warns that compliance costs—such as audits, training, and legal risks—could drive up business expenses, potentially reducing services or innovation.

Why These Bills Matter for Managers

Veena Dubal, coauthor of a recent study on AI’s impact on workers, stresses that notifying employees when AI influences pay or employment decisions is an essential first step. Awareness can lead to banning harmful algorithms and better public understanding.

She warns that AI already affects wages and workplace dynamics, often creating hidden costs passed to taxpayers. AI tools can detect union organizers, automate discrimination, or facilitate unfair terminations—all with broad social costs.

Dubal argues that if these bills fail, it signals that AI regulation is stalling in California. This would be a setback for protecting workers’ rights against unchecked AI use.

What Managers Should Do

• Stay informed about AI regulations impacting employment decisions.
• Ensure transparency with employees when AI tools influence workplace decisions.
• Advocate for fair AI practices that respect privacy and reduce bias.
• Consider training on AI ethics and compliance—explore relevant courses such as those offered at Complete AI Training.

As AI tools become more common in management, understanding related legislation and ethical use is critical. These bills represent a push toward balancing innovation with worker protections.