California Now Requires AI Impact Disclosures in Layoff Notices
California amends Cal/WARN Act to mandate AI and automation disclosures in layoffs.
Why it matters: Employers and legal counsel must adjust compliance practices to include AI-related layoff disclosures, highlighting AI's role in workforce changes and increasing regulatory scrutiny.
- SB 951, signed by Governor Newsom on September 30, 2026, requires disclosure of AI and automation impacts in layoff notices.
- Effective January 1, 2027, employers must detail affected job classifications, automated functions, technology types, and label notices as technology displacements.
- California's Employment Development Department will publish summaries and report on AI's workforce effects by January 1, 2028.
- Penalties for non-compliance remain up to $500 per day, consistent with existing Cal/WARN enforcement.
On September 30, 2026, California Governor Gavin Newsom signed SB 951, amending the California Worker Adjustment and Retraining Notification (Cal/WARN) Act to require employers to disclose when layoffs, relocations, or terminations result in whole or substantial part from AI or automation.
Effective January 1, 2027, these amendments mandate that notices include the number of layoffs broken down by job classifications and work locations, specific job functions set for automation, the categories of technology involved, and a clear header stating, “This notice is for a technology displacement.”
The Employment Development Department (EDD) will publicly share summaries of these notices online and provide quarterly statewide updates on technology-driven displacements.
Furthermore, the EDD will deliver a comprehensive report to the California Legislature by January 1, 2028, outlining AI’s effects on hiring, impacted industries and occupations, and assessing potential rules related to technology-driven hiring cessations.
Governor Newsom emphasized, “AI should expand opportunity—not come at the expense of workers and families,” underscoring the state’s intent to balance technological progress with worker protections.
Non-compliance with these notice requirements faces penalties up to $500 per day, maintaining consistent enforcement standards already in place under Cal/WARN.
This legislative update reflects California’s proactive approach to ensuring transparency around AI-driven workforce changes, mandating that employers and their legal teams now explicitly account for automation’s role during workforce reductions.
By the numbers:
- January 1, 2027 — Effective date for AI disclosure requirements under SB 951
- January 1, 2028 — Deadline for EDD report to California Legislature on AI impacts
- $500 per day — Penalty for failure to comply with Cal/WARN notice requirements
What's next: Employers and legal teams should prepare updated layoff notice templates and internal processes by early 2027 to ensure compliance with new AI disclosure rules.