Listen to “California Amends Cal/WARN Act to Require AI and Automation Disclosures in Layoff Notices”
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- Under SB 951, Cal/WARN notices for job losses caused in whole or in substantial part by AI or other automated technology must include four additional items: (1) the number of affected layoffs (with classifications or occupations and work locations); (2) the job functions that will be automated; (3) the category or type of technology involved; and (4) at the top of each covered notice, the following technology-displacement statement: “This notice is for a technology displacement.”
- The Employment Development Department will publish a summary of the notices it receives on its website, along with a quarterly statewide summary of reported technological displacements.
- SB 951 takes effect on January 1, 2027.
Background: The Existing Cal/WARN Act
The Cal/WARN Act already requires employers to provide sixty days’ notice of: (a) cessations or substantial cessations of operations at covered establishments; (b) mass layoffs affecting fifty or more employees at covered establishments; and (c) relocations of all or substantially all employer operations at a covered establishment by one hundred or more miles. A “covered establishment” is any industrial or commercial facility (or part thereof) that employs or has employed seventy-five or more persons at any point in time within the past twelve months. Cal/WARN notices must be provided to the affected employees, the EDD, the local workforce development board, and certain local officials. Employers that fail to give the required notice may be liable to affected employees for back pay and benefits and face a civil penalty of up to $500 for each day of the violation.
New notice content: SB 951 applies when a mass layoff, relocation, or termination is “caused in whole or in substantial part by” an AI system or other automated technology replacing or automating employment positions. In those cases, the employer’s Cal/WARN notice must include, in addition to the content already required: (1) the number of layoffs substantially attributable to replacement or automation by AI or other automated technology, including the classifications or occupations and work locations involved; (2) the job functions performed by affected workers that will be automated; (3) the specific category or type of AI system or other automating technology that substantially resulted in the technological displacement; and (4) the statement “This notice is for a technology displacement” at the top of the notice.
Definition of AI: SB 951 defines “artificial intelligence” as “an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.” This definition is broad and may reach workforce software that employers do not ordinarily think of as AI.
Public reporting: The EDD must publish a summary of the technology displacement notices it receives on its website and post a quarterly statewide summary of the technological displacements reported.
Legislative report: By January 1, 2028, the EDD must submit a report to the legislature on AI’s effects on business hiring practices, including its impact on industries and occupations at the state and regional levels. The requirement to submit that report will be repealed on January 1, 2029, but it signals that a broader AI-related notice requirement could follow.
Employers planning workforce reductions, relocations, or closures in California may want to consider the following steps before January 1, 2027:
- Updating existing Cal/WARN notice templates.
- Documenting the extent to which AI or automated technology contributed to the elimination of specific positions or functions, in order to evaluate whether the “in whole or in substantial part” trigger is met.
- Ensuring that legal, HR, technology, and communications teams coordinate their work so that the reasons stated in Cal/WARN notices align with reduction in force documentation and internal/external communications.
Ogletree Deakins’ California offices and RIF/WARN Practice Group will continue to monitor developments and will provide updates on the Artificial Intelligence and Innovation, California, and Reductions in Force blogs as additional information becomes available.
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