2027 Upcoming Changes to California Employment Law Every Employer Needs to Know
Judith C. Wolff
Overview
Outgoing Governor Newsom signed more than twenty employment bills this session, and most of them land on January 1, 2027.
The headline: the robots may be coming, but they’re getting a supervisor.
New laws stop software from firing people on its own, ban creepier kinds of workplace monitoring, and make an employer say so when AI is behind a layoff.
That's not all. The state's "stay-or-pay" ban got a one-year snooze, immigration-related retaliation rules got broader, pay data penalties got steeper, and bereavement leave got more generous. And minimum wage goes up again: $17.40 an hour, which pushes the exempt salary floor to $72,384 a year.
At a glance
Short on time? Here's the cheat sheet.
Law | What it does | Effective |
AB 1697 | Pushes the “stay-or-pay” ban to contracts signed on or after 1/1/2027 and adds exceptions. Those sign-on bonuses can remain repayable until January 1, 2027. | Now (urgency statute) |
Minimum wage | $17.40/hour statewide; exempt salary floor $72,384/year. Nobody on salary classified as “exempt” can earn less than that. | Jan. 1, 2027 |
AB 1331 | Bans workplace surveillance in bathrooms | Jan. 1, 2027 |
AB 1883 | Bans tools that read emotions or collect neural data | Jan. 1, 2027 |
SB 951 | Cal-WARN notices must flag layoffs driven by AI or automation | Jan. 1, 2027 |
AB 2155 | Arbitration agreements unenforceable where the FAA wouldn't enforce them. It strips companies of a major strategic workaround. If a contract fails federal standards, it fails entirely. This ensures that workers and consumers who were granted protections by federal exemptions actually get to exercise their right to a public trial by jury | Jan. 1, 2027 |
AB 2495 | Broader ban on immigration-related retaliation | Jan. 1, 2027 |
AB 2563 | Single statewide definition of sex discrimination. AB 2563 explicitly mandates that if any state law prohibits discrimination based on sex or gender, it must be interpreted to cover the full, modernized definition of sex discrimination outlined in the bill. If there is a conflict between state laws, the law providing the broadest protection wins. | Jan. 1, 2027 |
SB 1149 | Bereavement leave covers one "designated person" | Jan. 1, 2027 |
SB 1237 | Repeat pay data reporting failures cost up to $1,000 per employee | Jan. 1, 2027 |
AB 1961 | Workplace violence restraining orders can cover a whole location | Jan. 1, 2027 |
AB 2321 | Tougher criminal enforcement for willful Cal/OSHA violations | Jan. 1, 2027 |
SB 947 | "No Robo Bosses Act": limits on AI in discipline and firing. Employers are prohibited from relying solely on an Automated Decision System (ADS)—such as tracking algorithms, productivity metrics software, or AI evaluation tools—to make disciplinary or termination decisions. | July 1, 2027 |
AB 1803 | Anti-hate speech content added to harassment training | Jan. 1, 2028 |
AI in discipline, firing, and layoffs
"The algorithm decided" stops being an answer on July 1, 2027. That's when SB 947, the "No Robo Bosses Act," kicks in. It's the second try at this idea: Newsom vetoed SB 7 in 2025, and the legislature came back with a version he'd sign. Here's what it requires:
• Software can't be the only reason someone is disciplined or fired.
• If an automated decision system (ADS) does most of the work, a human has to double-check it.
• You have to tell the employee, in writing, that an ADS was used.
• No using an ADS to guess at protected traits, or to predict and punish people for using their legal rights.
• Employees can ask what data the system used.
• Each violation can cost $500, enforced by the Labor Commissioner.
This doesn’t only cover products with "AI" on the box. The definition reaches anything using machine learning, statistical modeling, or data analytics. Scheduling apps, productivity scores, and performance dashboards may all count.
There's a layoff angle, too. Starting January 1, 2027, SB 951 says that if AI or automation was a big reason for a layoff that needs a Cal-WARN notice, the notice has to say so. It also has to name the affected job functions and the AI system involved. Quietly blaming "restructuring" won't cut it.
Workplace surveillance
Some of this should go without saying, but now it's the law. Both changes take effect January 1, 2027.
AB 1883: no mind-reading. Employers can't use tools that detect, infer, or predict how a worker is feeling, or that collect neural data.
AB 1331: stay out of the bathroom. No surveillance tools in workplace bathrooms unless a court orders it. Employees can leave monitoring devices outside, with limited exceptions. Each violation can cost up to $500.
Stay-or-pay agreements: a one-year reprieve
AB 692 banned most deals that make workers pay money back when they leave, starting in 2026. AB 1697 now says the ban applies only to contracts signed on or after January 1, 2027. It took effect right away as an urgency statute when Newsom signed it on September 30, 2026.
What changed:
• No liability for conduct between January 1, 2026 and the new start date. Pending claims based on that period are moot.
• You can offer a repayable retention bonus after someone is hired, not just on day one.
• Exceptions cover government grant-funded retention bonuses, certain securities and insurance recruiting payments, and advanced PTO repaid when someone quits. The PTO exception is capped at 40 hours, has to be disclosed separately, and can't carry interest.
• Get it wrong and you owe actual damages or $5,000 per worker, whichever is more, plus injunctive relief and attorneys' fees.
Other notable changes
These got fewer headlines, but they'll show up in your policies and inbox just the same. Unless noted, each takes effect January 1, 2027.
Immigration-related retaliation (AB 2495). The protections now cover applicants and former employees, not just current staff, and apply to rights under any local, state, or federal law. Anything tied to real or perceived immigration status that would scare someone off from using those rights is off-limits. Take adverse action within 90 days of protected activity and retaliation is presumed. Fines reach $10,000 per employee per violation, and repeat offenders can lose their business licenses for a while.
Arbitration (AB 2155). If the Federal Arbitration Act wouldn't enforce your arbitration agreement, California won't, either. That pulls in the transportation-worker exemption and the federal carve-out for sexual harassment and assault claims.
Sex discrimination, defined once (AB 2563). One definition now applies across more than two dozen codes. It covers sex stereotypes, gender identity and expression, pregnancy, sexual orientation, and variations in sex characteristics, including perceived traits.
Bereavement leave (SB 1149). Employers with five or more employees must allow up to five days of bereavement leave for a "designated person" who's family in everything but paperwork. You can limit employees to one designated person every 12 months.
Pay data reporting (SB 1237). Miss the filing twice and it can cost up to $1,000 per employee, up from $200. This applies to private employers with 100 or more employees. The May 2027 report also jumps from 10 job categories to 23.
Workplace safety (AB 1961, AB 2321). You can now get a workplace violence restraining order that protects everyone at a location. And getting in Cal/OSHA's way during an inspection is now a misdemeanor, with criminal liability for willful violations that cause serious injury.
Harassment training (AB 1803). Starting January 1, 2028, the required training for employers with five or more employees has to cover hate speech too.
What employers should do before January 1
The clock is running: most of this is less than two months out. Here's where to start:
1. Find your algorithms. List every tool that scores, ranks, schedules, or flags employees. Add human review and written notice to any discipline or firing process that leans on them, well before July 1, 2027.
2. Check your cameras. Get surveillance out of bathrooms. Make sure nothing reads emotions or collects neural data unless it's there for safety.
3. Update layoff planning. Add a "was AI involved?" check to your Cal-WARN notice templates.
4. Finish the repayment review. Fix retention bonus, training repayment, and advanced PTO terms for anything signed on or after January 1, 2027.
5. Reread your arbitration agreements. Pay extra attention to transportation workers and sexual harassment or assault claims.
6. Refresh policies and training. Update anti-retaliation, EEO, and bereavement policies. Make sure managers know the new immigration-retaliation rules.
7. Update payroll. Raise minimum-wage rates to $17.40 an hour and exempt salaries to at least $72,384 a year.
8. Get ahead of pay data. With 100 or more employees, plan for 23 job categories in May 2027, and make sure your labor contractors will send their data on time.
None of this is hard, but all of it takes longer than you'd think. Starting now beats explaining later.
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