California Mandates Human Review for AI-Based Layoffs

California Governor Gavin Newsom signed a package of laws on Wednesday (30) that restricts the use of artificial intelligence in workforce decisions in the state home to Apple, Google, Nvidia, OpenAI, and Anthropic. The most notable is SB 947, nicknamed the No Robo Bosses Act, which prohibits employers from using solely automated systems to fire or discipline employees.

"AI should expand opportunities, not come at the cost of workers and families," Newsom said in a statement, according to the Associated Press. "As this technology reshapes the workplace, California places people at the center."

Three Rules Coming to HR

SB 947 requires that when an employer primarily relies on the outcome of an AI system to terminate or discipline an employee, a human reviewer must confirm the decision with additional information, such as manager assessments, peer evaluations, and the employee's work history. The affected worker must receive written notice regarding the data used by the system and a human contact capable of explaining the decision. Newsom had vetoed an earlier and broader version, SB 7, in October 2025, deeming it too sweeping. SB 947 takes effect on July 1, 2027.

SB 951, sponsored by Senator Eloise Gómez Reyes, amends Cal/WARN, California's mass layoff notice law. When the layoff is caused, in whole or in substantial part, by AI or other automation, the notice must include at the top the phrase "This notice is for a technology displacement," along with the number of affected positions, the roles being automated, and the type of system that caused the displacement. The rule takes effect on January 1, 2027, according to legal analyses of the law.

AB 1883 prohibits surveillance tools using AI to recognize, infer, or predict an employee's emotional state, or to collect "neural data."

The Side Effect That Matters for the Board

SB 951 turns into law something almost no American company has had to declare until now: a public record, signed by the employer, of how many jobs were cut because of AI. New York added a similar question to its notice form in 2025, and in a year no company admitted to an automation-driven cut. Beyond that, attribution is voluntary and shifts with the audience. British firm Legal & General announced on September 23 around a thousand layoffs by mid-2027, nearly 10% of its workforce, and CEO António Simões justified the cuts by saying the group had become "too complex," without attributing the decision to automation.

Starting in 2027, a company telling investors that AI will reduce staffing costs and then cutting teams in California without marking the notice as technological displacement will be subject to scrutiny. The law does not impose a penalty for the narrative but creates a document that can be compared against it.

The Same Question in Three Jurisdictions

In the European Union, the AI Act already categorizes systems used for recruiting, promoting, terminating, and monitoring employees as high risk, with human oversight and technical documentation requirements that take effect over the coming years. California takes a different approach, regulating the usage by the employer instead of the system's provider, but the practical outcome converges: a multinational operating in both markets will need to prove that a human reviewed the decision.

In Brazil, Bill 2338/2023, approved by the Senate in December 2024 and still awaiting a vote in the Chamber of Deputies, also lists systems used in recruiting, evaluating, and terminating employees among those classified as high-risk. For consultancies and BPOs with significant operations in the country serving Californian clients, the question becomes not just local: the performance management system used in Campinas or Recife may influence a decision about an employee in San Jose, and the audit trail needs to cross borders.

India enters the fray from the supply side. Delivery centers for TCS, Infosys, Wipro, and Cognizant manage HR and payroll processes for American companies. If SB 951 requires that the notice specify which roles have been automated, the automation performed from Bangalore or Pune to replace teams in California must be accurately described by the client, and the provider will be called to document what was delivered.

The Package's Limitation

Unions wanted more. A report from CalMatters summarized the signing as Newsom giving the labor movement "only part of what it demanded." The laws do not prohibit layoffs caused by AI nor impose additional costs on them: they require human review, transparency, and notice. For a board planning to reduce headcount through automation, this means the decision remains permissible but will leave a written trail.