AI in hiring and firing: California rules for 2026 and 2027

Discrimination rules already apply

Since October 1, 2025, regulations from the California Civil Rights Council under the Fair Employment and Housing Act cover "automated-decision systems." That means any computational process that makes a decision, or helps a person make one, about an employment benefit. The rules cover AI, machine learning, algorithms, and statistics.

• It is unlawful to use an automated-decision system, or selection criteria, that discriminates against applicants or employees on a protected basis.
• Employers must keep employment records, including automated-decision data, for at least four years.
• Evidence that the employer tested a tool for bias, or did not, is relevant to a discrimination claim and to the defense.

Privacy rules starting January 1, 2027

The California Privacy Protection Agency adopted rules on "automated decisionmaking technology" under the California Consumer Privacy Act. They apply to businesses covered by that Act that use the technology to make significant decisions, including about hiring, pay, promotion, and firing. By January 1, 2027, those businesses must give a pre-use notice, honor opt-out requests unless an exception applies, and answer requests for information about how the technology was used. Risk assessments for existing uses are due by December 31, 2027.

The No Robo Bosses Act, starting July 1, 2027

On September 30, 2026, Governor Newsom signed SB 947. It adds rules to the Labor Code for discipline and termination decisions:

• An employer may not rely solely on an automated-decision system to discipline or fire a worker.
• If the employer relies primarily on one, a person must review the decision and corroborate it with other evidence, such as supervisor evaluations, personnel files, work product, or witness interviews.
• The employer must give the worker a plain-language written notice that a system was primarily relied on, that a person reviewed the decision, whom to contact, and that retaliation is prohibited.

The Labor Commissioner, the Attorney General, and local prosecutors enforce it. The Governor also signed AB 1883, which limits workplace surveillance tools that use AI to read emotions or collect neural data.

The vendors are being sued too

In Mobley v. Workday, Inc., a federal court in San Francisco is hearing claims that AI screening tools rejected applicants because of age, race, and disability. In May 2025 the court let the age claims proceed as a nationwide collective action. In June 2026 it let California discrimination claims go forward against the vendor. The case has not been decided on the merits, but it shows that both the employer and the company that sells the tool can face claims.

What a company using these tools should do now

• List every tool that scores, ranks, screens, or recommends action on applicants or employees.
• Keep the data and the results for at least four years.
• Test for bias, keep the results, and act on them.
• Put a person with real authority in charge of every discipline and firing decision.
• Read your vendor contract for testing duties, data access, and indemnity.