California Governor Vetoes Bill That Would Have Required Employers to Provide Notice of AI Use

Quick Hits

• Governor Newsom vetoed the latest bill passed by lawmakers to regulate employers’ use of AI.
• The legislation would have required employers to provide written notice to employees and job applicants that AI was being used to make employment-related decisions and would have prohibited employers from relying solely on such tools to discipline or discharge employees.
• The veto would have added to California’s growing set of AI laws and regulations after California already finalized two separate sets of AI regulations in 2025.

Governor Newsom vetoed Senate Bill (SB) No. 7, known as the “No Robo Bosses Act,” saying the legislation would impose “overly broad restrictions” on how employers use AI and automated decisionmaking technologies and that it “fail[ed] to directly address incidents of misuse.”

The legislation would have prohibited employers from relying “solely” on what the legislation referred to as “automated decision systems” (ADS) to make disciplinary decisions or decisions to terminate employment, and it would have required employers to provide written notice to employees and job applicants regarding AI’s use in making employment-related decisions.

“I share the author’s concern that in certain cases unregulated use of ADS by employers can be harmful to workers,” Governor Newsom stated in his veto message. “However, … the bill imposes unfocused notification requirements on any business using even the most innocuous tools.”

The veto comes even after the legislature sought to tone down certain aspects of the bill that would have restricted employers’ use of AI and other technologies without human oversight. Still, the legislation faced opposition from business groups over concerns of the increasingly burdensome compliance obligations related to the emerging technology in the state, particularly after recent regulations.

Governor Newsom added that “[b]efore enacting new legislation in this space, we should assess the efficacy of these regulations to address these concerns.”

Recent California AI Regulations

California recently finalized two sets of regulations concerning AI. In June 2025, the California Civil Rights Department (CRD) finalized new regulations prohibiting employers from using an “automated decision system” to discriminate against applicants or employees on a basis protected by the California Fair Employment and Housing Act (FEHA). Those regulations took effect on October 1, 2025.

In July 2025, the California Privacy Protection Agency finalized regulations on automated decisionmaking technologies (ADMT), risk assessments, and cybersecurity audits pursuant to the California Consumer Privacy Act (CCPA), with the requirement for businesses that use ADMT to take effect on January 1, 2027.

SB 7 – ‘No Robo Bosses Act’

While SB 7, as amended, toned down certain aspects of the bill that would have required employers to maintain human oversight over the technology, the legislation would have imposed several requirements for employers’ use of ADS.

Specifically, SB 7 would have:

• required employers to provide prior written notice to employees and job applicants when an ADS would be used to make an employment-related decision;
• imposed potentially burdensome employee data access requirements;
• prohibited employers from relying “solely” on an ADS to discipline employees or terminate their employment;
• prohibited employers from using ADS to prevent compliance with state, federal, or local labor, workplace safety, or civil rights laws;
• prohibited employers from using an ADS to “[i]nfer a worker’s protected status” or to identify, profile, predict, or take adverse action against a worker for exercising their legal rights; and
• prohibited employers from using an ADS to collect worker data for undisclosed purposes.

Contrasting Definitions

Further, SB 7 had used several definitions with subtle and potentially conflicting distinctions from the recent regulations that likely would have contributed to further confusion amid the overlapping regulatory schemes.

Specifically, SB 7 had defined ADS broadly to include computational processes, machine learning, data analysis, or AI “that is used to assist or replace human discretionary decisionmaking and materially impacts natural persons.” This differed from the CRD AI regulations, which more narrowly focus on technology used to make decisions “regarding an employment benefit,” and the CCPA AI regulations, which define “automated decisionmaking technology,” or “ADMT,” as technology that “processes personal information and uses computation to execute a decision, replace human decisionmaking, or substantially replace facilitate human decisionmaking.” (Emphasis added.)

Additionally, SB 7 applies to “workers,” defined as both employees and independent contractors. The CCPA AI regulations have a similarly broad definition. By contrast, the CRD AI regulations apply only to “applicants” and “employees,” and expressly exclude independent contractors from coverage.

Next Steps

Governor Newsom’s veto of SB 7 highlights the concern regarding overregulation of employers’ use of AI and automated decisionmaking technologies, which have the potential to improve efficiency and decisionmaking. Still, the governor’s veto message indicated a shared concern over the potential discriminatory impact of such technology and its unregulated use, suggesting that future legislation could be possible. The governor urged lawmakers to first consider the efficacy of the state’s new AI regulations and focus on specific potential harms.

Even with the veto of SB 7, employers may want to review their use of ADS tools and similar technology and how they impact their employment-related decisions, including performance monitoring and hiring. They may also wish to implement internal safeguards and adopt policies that promote responsible AI use across their organizations.

Ogletree Deakins’ Cybersecurity and Privacy Practice Group and Technology Practice Group will continue to monitor developments and will provide updates on the California, Cybersecurity and Privacy, Employment Law, Technology, and Workforce Analytics and Compliance blogs as additional information becomes available.

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