Legislative Update: Updates to Cal/WARN Act - Notifying employees of technological displacement (SB 951)
Governor Gavin Newsom has also signed Senate Bill (SB) 951, which takes effect on January 1, 2027, regarding warning employees of mass layoffs specifically involving AI.
Current law, the California Worker Adjustment and Retraining Act (Cal/WARN Act), prohibits an employer from ordering a mass layoff, relocation, or termination at a covered establishment unless, 60 days before the order takes effect, the employer gives written notice of the order to the employees affected by the order and to the Employment Development Department and certain local officials. Existing law makes an employer who fails to give specified notice regarding a mass layoff, relocation, or termination subject to a civil penalty of not more than $500 for each day of the employer’s violation, back pay and the value of lost benefits.
This bill would revise the Cal/WARN Act to also require an employer giving notice of a mass layoff, relocation, or termination caused in whole or in substantial part by an artificial intelligence (AI) system or other automated technology replacing or automating employment positions to include certain information in the notice.
The information in the notice must include all of the following:
· The number, classification or occupation, and work location of layoffs that are substantially due to the replacement or automation by AI or other automated technology.
· The job functions performed by those replaced workers that will be automated by AI or other automated technology.
· The specific category or type of AI system or other automating technology that substantially resulted in technological displacement.
· The notice shall include the statement “This notice is for a technology displacement” at the top of the notice.
In support of SB 951, the sponsor, the California Federation of Labor Unions, provided:
Policy makers cannot ignore the blaring alarm bells warning of massive economic upheaval and worker suffering. AI poses an existential threat to human workers, government revenue, and society. The first step to tackling the growing threat is to collect and use reliable, local data to inform policy responses and to support workers who are the canaries in the coal mine of AI. This bill is a small, but crucial first step to that process. SB 951 provides policy makers and the public with data on AI-related job loss.
On the other hand, employer organizations countered:
… while we appreciate amendments the author has taken to more closely align with California’s current WARN Act (Cal-WARN), the bill's core structural problems remain unresolved…Further, data suggests that expanding statutory triggers tied to workforce changes can significantly increase litigation exposure under other laws. According to a recent study, The Impact of PAGA on Business Viability and Employment Security-Comparing the Relationship Between PAGA Settlements and WARN Notice Issuance, California businesses paid approximately $823,710,861 in settlements in FY 2022–2023 in matters where WARN notices and PAGA claims overlapped. The study identified a strong correlation between WARN related workforce actions and representative litigation exposure. By layering new notice requirements and liability standards on top of existing WARN obligations, SB 951 is likely to substantially increase settlement pressure and litigation costs for employers, including small businesses, that lack the resources to absorb prolonged legal disputes.
Rosasco Law Group can assist with all of your employment law needs in the workplace. Give our office a call today!
