While Gov. Gavin Newsom vetoed a high-profile bill regulating artificial intelligence in employment decisions, other measures, such as expanded protections for detained workers and strengthened pay reporting enforcement, will take effect early next year. Here’s what you should know.

SB 294: Workplace Know Your Rights Act

Senate Bill 294, effective Jan. 1, 2026, will require employers to provide a stand-alone written notice of worker rights to each new hire and annually to all current employees. The law aims to strengthen awareness of labor and civil rights, including protections during workplace interactions with law enforcement—prompted in part by recent concerns over immigration enforcement and worksite detentions.

Annual and New Hire Notices

To aid compliance, the Labor commissioner will issue a model notice by Jan. 1, 2026, with annual updates. The written notice will cover topics such as paid sick leave, protections against immigration-related retaliation, and constitutional rights during law enforcement encounters at work. Notices must also be furnished to any union representing their workforce.

Language Access and Education

Acknowledging California’s multilingual workforce, notices must be delivered in the language customarily used for employment communications. The Labor commissioner will make templates available in at least nine languages, including Spanish, Chinese, Tagalog and Punjabi. By July 1, 2026, the agency will also release educational videos for employers and employees to reinforce awareness.

Emergency Contact Notifications

Employers must notify an employee’s designated emergency contact if the employee is arrested or detained at the worksite. For arrests occurring offsite during work hours, notice is required only if the employer has actual knowledge. Employers must request and/or collect emergency contact details by March 30, 2026.

Compliance and Penalties

Employers must maintain proof of notice delivery for three years. Noncompliance with the notification requirements may result in penalties of up to $500 per employee per day, capped at $10,000 per employee. Enforcement will be handled by the Labor Commissioner and public prosecutors, with anti-retaliation protections for employees exercising their rights or participating in investigations.

Implications for Employers

Beyond revising onboarding and annual communication processes, businesses should prepare for multilingual communications, recordkeeping, and emergency contact protocols. Employers should consider:

• Auditing current notice practices.
• Preparing the required written notice.
• Training HR teams on new requirements.
• Updating systems for three-year retention of delivery records.

Early preparation will help employers avoid potentially costly enforcement actions and maintain employee trust in an increasingly regulated environment. 

SB 464: Pay Data Reporting 

SB 464, which was signed into law on Oct. 13, expands the already significant annual pay reporting requirements that California has imposed on employers since the 2020 pay data reporting law. That law required certain employers to submit pay data reports to the California Civil Rights Department (CRD). A 2022 amendment expanded the demographic and job categories that must be reported. There are two primary changes employers should know about SB 464’s further expansion. 

Expanded and Reporting Requirements

The law currently requires private sector employers to report pay data for employees based on their race, ethnicity, sex, and hours worked, across 10 job categories. Beginning in 2027, employers will be required to include in the reports more granular information, increasing analyzed job categories from 10 to 23 to align with the Bureau of Labor Statistics Standard Occupational Classification groups. According to the law’s drafters, this change aims to improve pay equity analyses by increasing the number of factors being considered. 

Mandatory Civil Penalties

SB 464 mandates civil penalties starting at $100 per employee for employers that fail to submit the report upon request. Previously, such penalties were authorized but not required.

Implications for Employers

• Reports will include expanded job categories, so employers must ensure they collect the requisite employee data.
• While the time and effort to gather the information and documentation is significant, failure to submit the report will now trigger a mandatory fine, which can stack up for large employers.

SB 7: No Robo Bosses Act Vetoed

On Oct. 13, Newsom vetoed Senate Bill 7 (SB7), the “No Robo Bosses Act.” The law would have imposed strict limitations on how employers use AI in the workplace. While the governor acknowledged that unregulated AI use by employers can, in certain circumstances, be harmful to workers, he explained in a letter to lawmakers that he found SB7 unfocused and overly broad.

What Would SB 7 Have Required?

SB7 would have required employers to notify workers (defined to include employees and independent contractors) when deploying and/or using an automated decision system (ADS) in employment-related decisions. ADS was broadly defined to include tools derived from machine learning, statistical modeling, data analytics, or AI that issue outputs such as scores or recommendations to assist or replace human decision-making and impact workers.

Employers would have been required to provide workers with pre-use and post-use written notice of ADS usage. Specifically, if an employer relied primarily on ADS output to make discipline, termination, or deactivation decisions, human review and written notice to the worker of the ADS use would be required. Employers would have been prohibited from relying solely on an ADS when making discipline, termination, or deactivation decisions. SB7 would also have required employers to, upon request, provide employees with a copy of the most recent 12 months of the worker’s own data used by an ADS to make such a decision. Employers would also be required to notify applicants of ADS use in hiring decisions.

Lastly, SB7 prohibited using ADS to violate labor, civil rights, or safety laws, infer protected characteristics, or retaliate against workers. Employers would have faced civil penalties for violations, with the Labor commissioner and public prosecutors enforcing the law.

What Else Should Employers Know?

• This isn’t the first time a California bill aimed at regulating AI in employment decisions has failed. AB 2930, which also would have regulated the use of ADS in employment decisions, failed last year. Employers should expect a similar bill will be introduced in 2026.
• Although SB7 was vetoed, its drafters’ goals to address concerns about employer use of ADS for disciplinary, termination or deactivation decisions are partly covered by the notice requirements in upcoming California Privacy Protection Agency regulations, which take effect on Jan. 1, 2026. In fact, Newsom cited these overlapping protections as a reason for his veto.
• Separately, the CRD’s AI regulations took effect as of Oct. 1. Among other things, these regulations impose recordkeeping requirements related to ADS usage, a key provision ofSB7. Specifically, the regulations require that ADS inputs or outputs about an employee or applicant and “any data used to design develop or customize” an ADS for use by a particular employer be retained for four years.

Reprinted with permission from the November 12, 2025 issue of The Recorder © 2025 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.