Quick Hits
- California Senate Bill 951 would require employers to provide at least ninety days’ advance written notice before eliminating positions due to AI or automation affecting twenty-five or more workers or twenty-five percent of the workforce, and to separately notify state agencies when they permanently stop hiring for roles replaced by AI.
- The bill would protect affected workers at companies with more than one hundred employees by prohibiting discharge without reasonable cause during the notice period and granting a right of first bid on other open positions within the company.
- Noncompliant employers would face liability for back pay and benefits to each affected worker, civil penalties of up to $500 per day, and potential lawsuits brought by workers, local governments, or worker representatives, with courts empowered to award attorneys’ fees and costs.
What the Bill Would Do
1. Technological Displacement Notice
An employer would be required to provide at least ninety days of advance written notice before any “technological displacement”—defined as the elimination of employment positions caused in whole or primarily by an AI system or other automated technology—if the displacement affects twenty-five or more workers or 25 percent of the workforce, whichever is less. This is a notably low threshold. By comparison, the existing California WARN Act (Cal-WARN) applies only to employers with seventy-five or more employees and requires notice only for layoffs of fifty or more workers.
Employers would be required to deliver notices to affected workers, the Employment Development Department (EDD), the local workforce investment board, and city council members and county board supervisors in each jurisdiction where the displacement occurs. The notice itself would have to contain detailed information covering the specific AI system used, the vendor that developed or sold it, the job functions being automated, the justification for the technology’s adoption, and whether retraining opportunities are available.
2. Technology Hiring Disruption Notice
Separately, employers would have to provide a written “technology hiring disruption notice” when they permanently stop hiring for an occupation or position because AI or automation has taken over that work. This notice would be sent to the EDD and the local workforce investment board. It would include the number of positions no longer being filled, the occupational classifications affected, the AI tool responsible, and whether the cessation led to the creation of any new positions elsewhere in the company.
Worker Protections During the Notice Period
Beyond the notice requirements, SB 951 would create two additional protections for affected workers:
- Employers with more than one hundred workers would be prohibited from discharging any worker affected by a technological displacement during the ninety-day notice window without “reasonable and substantiated cause.”
- Workers at those same employers would also be entitled to a right of first bid on any other open positions within the company.
Penalties for Noncompliance
The bill would impose substantial penalties for failure to comply. An employer that skips the required notice would be liable to each affected worker for back pay calculated at the higher of the worker’s average compensation over the last three years or their final rate—plus the value of lost benefits, including medical expenses that would have been covered under a benefit plan. Liability would be capped at sixty days or one-half the number of days the worker was employed, whichever is shorter.
On top of back pay, noncompliant employers would face a civil penalty of up to $500 per day of violation—though the penalty would be waived if the employer paid all owed back pay within three weeks of ordering the displacement. The labor commissioner would be empowered to investigate violations, examine employer books and records, and issue citations. Third parties and advocacy organizations would also be able to file reports with the commissioner, and the bill would allow workers, local governments, or worker representatives to bring civil actions. The bill would also empower courts to award prevailing plaintiffs their attorneys’ fees and costs.
All civil penalties collected would flow into a newly created Technological Displacement Act Fund, available to the commissioner upon legislative appropriation.
Practical Takeaways for Employers
SB 951 was introduced in February 2026 and amended for the third time in April. If it is signed into law, there are several areas employers may wish to consider:
Identifying AI and automation tools currently in use. Employers may wish to consider taking stock of which systems are currently deployed and whether any are being evaluated for roles currently filled by employees. Gaining a clear picture of potential exposure before a displacement event occurs could prove valuable.
Assessing how the bill’s workforce definitions may apply. The bill’s definition of “worker” encompasses independent contractors employed for at least six months—a broader category than most WARN-type statutes. Employers may find it worthwhile to consider whether their existing workforce planning accounts for that broader scope.
Evaluating internal notice workflows. The ninety-day window is longer than the sixty-day period under Cal-WARN. Employers may want to consider whether early coordination between technology, operations, and HR teams would help ensure that notice obligations are identified well in advance of implementation decisions.
Reviewing documentation practices around AI adoption decisions. Because the required notice would have to include the purpose and justification for using an AI tool, employers may find it useful to consider how technological decisions are currently documented and whether contemporaneous records are being maintained.
Examining existing collective bargaining agreements. For employers with unionized workforces, the bill’s right-of-first-bid provisions and discharge prohibition may interact with or conflict with existing collective bargaining agreement (CBA) terms. Employers in this situation may wish to assess how the two frameworks would apply together.
Reviewing AI vendor contracts. Because the bill would require disclosure of the entity that developed, sold, or leased the AI system involved in a displacement, employers may want to consider whether their existing vendor agreements address or permit that kind of disclosure.
Ogletree Deakins’ California offices and Technology Practice Group will continue to monitor developments and will post updates on the California, Reductions in Force, and Technology blogs as additional information becomes available.
Follow and Subscribe
LinkedIn | Instagram | Webinars | Podcasts