Cal. Governor’s Executive Order Aims at Shielding Workers From AI Displacement

Quick Hits

• Governor Gavin Newsom’s recent executive order directs several state agencies to conduct a comprehensive review of AI’s impact on the labor market.
• The executive order’s mandates include potential revisions to existing worker protection laws and required notices with reductions in force.
• The order also emphasizes the need for transparency in AI-related employment data and highlights protections against automated decision-making discrimination.

Governor Newsom’s Executive Order N-6-26 directs multiple California state agencies to study AI’s impact on the labor market, review existing worker protection laws, and develop recommendations for policy updates. The order imposes no specific compliance requirements but lays out an ambitious policy framework, including multiple exploratory reviews and reports that could set the stage for legislative or regulatory proposals.

The order comes after Governor Newsom issued Executive Order N-5-26 in March 2026, focused on state government adoption of AI and government procurement, and Executive Order N-12-23 in September 2023, aimed at addressing potential safety and privacy risks. Meanwhile, the current presidential administration’s executive actions have sought to establish federal preemption over state and local AI laws and regulations and clear barriers to the development of the technology in the United States.

Key Points From the Executive Order

Potential California WARN Act Revisions

The executive order requires the California Labor and Workforce Development Agency (LWDA) to, within 180 days, recommend revisions to the California Worker Adjustment and Retraining Notification (Cal-WARN) Act to make it more responsive to emerging industry trends. The recommendations could lead to changes to notice requirements for layoffs related to AI-driven workforce changes, possibly including shorter trigger thresholds or AI-specific notification obligations.

Currently, at least two states, Connecticut and New York, have amended their WARN Acts to require certain employers to provide notice when reductions in force are related to the adoption of AI. Meanwhile, the California Senate has passed a bill, Senate Bill (SB) No. 951, that would require employers to provide advance written notice when AI or automation drives workforce reductions or hiring freezes, but the bill has stalled in the state Assembly.

Severance and Displaced Worker Safety Net Review

The executive order also tasks the LWDA with reviewing policies that provide displaced workers with safety-net protections, including severance practices, equity compensation, and temporary, subsidized employment programs. This review will include a “comparative analysis” of practices in other countries. That analysis may foreshadow California-specific legislative proposals around mandatory severance or other restrictions related to AI-displacement of workers.

Collective Bargaining and Technology Adoption

By October 15, 2026, the LWDA must review how collective bargaining agreements (CBAs) and the bargaining process are addressing new technologies such as AI “to identify what can be learned from unionized workplaces.” The order notes that this can include looking at how “worker voice is incorporated in the adoption of emerging technologies.” Unionized employers may expect heightened scrutiny on technology-related bargaining obligations, while non-union employers may see pressure to adopt similar consultation practices.

AI-Related Employment Data Reporting

The California Employment Development Department (EDD) is required to launch a dashboard within ninety days, “showing AI’s impacts on employment across various sectors.” Additionally, the order directs EDD to report feedback from businesses about the role of technological adoption in hiring and workforce decisions in its “California Labor Market Review” publication, at least twice annually through 2027. These reports may require employers to report data.

Automated Decision-Making Discrimination Protections

The order further highlights California’s existing protections against employment discrimination through automated decision-making technologies, as outlined in the 2025 regulations adopted by the California Civil Rights Department and the California Privacy Protection Agency. Employers may wish to review their use of AI tools in hiring, performance evaluation, and discharge decisions to ensure compliance with these existing frameworks.

Employee Ownership Models

Notably, the executive order directs the California Governor’s Office of Business and Economic Development (GO-Biz) to evaluate regulatory barriers to employee-owned company structures and explore ways to enable workers to share in AI-driven productivity gains through equity ownership. Such an analysis signals the potential for future incentives or requirements to compensate employees for AI adoption, but at this time, the proposal appears to be in an exploratory stage, and it is not immediately clear whether this could lead to substantive policy proposals.

Next Steps

Although Executive Order N-6-26 does not impose immediate compliance obligations on employers, it establishes an ambitious road map for California’s AI regulatory priorities. Employers with California operations may want to consider auditing their use of automated decision-making and AI tools to make employment decisions and reviewing WARN Act and Cal-WARN Act compliance protocols in anticipation of potential changes to notification requirements. Employers should also note developments from the LWDA, EDD, and other state agencies as those agencies issue their reports.

Ogletree Deakins’ California offices and Technology Practice Group will continue to monitor developments and will provide updates on the California, Cybersecurity and Privacy, Diversity, Equity, and Inclusion Compliance, Reductions in Force, Technology, Traditional Labor Relations, and Workforce Analytics and Compliance blogs as additional information becomes available.

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