California’s No Robo Bosses Act: What Employers Should Know

Quick look: California Senate Bill 947, or the No Robo Bosses Act, takes effect on July 1, 2027. The law restricts how employers can use artificial intelligence (AI) to make disciplinary and termination decisions. California employers should review their existing HR policies and prepare for the new requirements to maintain compliance.

In 2026 alone, about six in ten Californians used AI technology daily or occasionally at work. And its impact on day-to-day human resources (HR) functions is growing as it becomes more common in the workplace, including employee performance management and other people-related decisions.

To maintain fair business standards, California continues expanding its strict AI regulations. On September 30, 2026, state governor Gavin Newsom signed the No Robo Bosses Act into law to prevent employee terminations and disciplinary decisions from being based solely on AI.

Before this new mandate takes effect next year, California small and midsize businesses (SMBs) should understand where AI fits into current HR strategies and whether existing policies need to change.

Here’s what to know about the No Robo Bosses Act and how to prepare.

What is the No Robo Bosses Act?

California’s No Robo Bosses Act limits the use of an automated decision system (ADS) to discipline and terminate employees. Its purpose is to prioritize human oversight in the decision-making process.

If an employer primarily relies on an ADS to make a disciplinary or termination decision, it must give the affected employee a written notice at the time of the decision that:

• Explains what AI technology was used in the decision-making process
• Confirms a human reviewed and approved the final decision
• Provides contact information for someone who can answer employee questions

Employees also have the right to request a description of the personal data used and are protected against retaliation.

Employers that fail to comply may face a civil penalty of $500 per violation, and plaintiffs may also seek injunctive relief, punitive damages, and attorney’s fees. Enforcement may involve the California Labor Commissioner and public prosecutors. Once an employee shows an ADS was used in a decision, the burden shifts to the employer to show it did not primarily rely on the system or that it otherwise complied with the law

Businesses following No Robo Bosses Act rules are still obligated to comply with any additional and applicable California Consumer Privacy Act (CCPA) regulations involving automated decision-making technology (ADMT).

How can businesses prepare for this California AI law?

Employers don’t need to wait until July 2027 to review their AI practices. Establishing clear policies and evaluating existing HR processes can help businesses prepare for the new requirements while promoting responsible AI use across the organization.

Here are four areas California employers should review.

Clearly document your AI policies

Recent research shows that 44% of workers say their employer has no clear AI policy or they aren’t sure one exists. Without established guidelines, employees may be left to determine how and when AI should be used in their work.

Start by developing an AI governance policy that identifies approved technologies and explains how employees may use them. The policy should also address access permissions and set boundaries around using AI in disciplinary and termination decisions, in line with the Act.

Once finalized, make the policy accessible through an employee handbook or online portal. Managers should understand the policy, too, particularly when AI tools are involved in evaluating employee performance or recommending disciplinary action.

Incorporate AI risk prevention training

AI can introduce new workplace risks, especially when employees use unfamiliar tools or share sensitive information without understanding the potential consequences.

Over 20% of organizations reported a data breach that targeted AI models or applications, with the average breach costing $6 million.

Educating employees about potential AI threats helps minimize this risk. Incorporate AI guidance into learning and development programs so employees understand relevant best practices and workplace safety challenges. Investing in this training can strengthen team security awareness and accountability, which fosters a compliant, engaged workplace culture.

Reassess current disciplinary and termination processes

The No Robo Bosses Act gives California employers another reason to examine their termination and disciplinary procedures. SMBs should start by reviewing where AI currently influences these decisions, including tools that have been used to determine past incident outcomes. This evaluation will make it easier to accurately create the employee notices required by the new act.

Employers should also confirm that their offboarding procedures account for applicable state employment laws, including COBRA obligations for separated employees, final payment requirements, just-cause termination rules, and standards for reporting work status changes. SMBs should assess any applicable at-will employment policies and industry-specific requirements as well.

Monitor algorithms to improve data accuracy

Bias in decision-making is a top AI concern for 55% of the American public. If a business uses an ADS model with limited or outdated information, it can skew employee results and may lead to unfair determinations about a worker’s performance.

Employers should regularly evaluate the systems they use in HR to identify inaccurate outputs or potential bias. This includes checking whether employee data is current and determining whether a tool’s recommendations consistently produce questionable results.

Human review remains essential, even when an AI system appears to be operating as intended. Managers and HR professionals should be prepared to question recommendations that lack sufficient supporting evidence rather than accepting them at face value.

Helping California employers navigate AI compliance

The No Robo Bosses Act adds another consideration to an already complex employment landscape. For California SMBs, understanding this legislation is only one part of managing HR compliance as workplace technology continues to evolve.

Partnering with a professional employer organization (PEO) like ExtensisHR can give businesses access to additional HR expertise as they navigate changing requirements and evaluate their existing practices.

ExtensisHR supports California employers with HR guidance tailored to their business needs and the state’s regulatory environment. Our team can help businesses review HR policies, identify areas that may require additional attention, and develop training that supports responsible workplace practices.

Each ExtensisHR partner also receives a dedicated service team, including an Account Manager and HR Business Partner. These professionals work alongside your internal team to address HR questions, support day-to-day decisions, and help you navigate evolving employment requirements.

With the right support in place, California employers can approach changing regulations with greater clarity while keeping their attention on business priorities and employee needs.