The rapid rise of artificial intelligence (AI) is reshaping workplaces across the country, and California is stepping up to ensure businesses using AI remain compliant with existing laws. While New York’s recent move to track AI-driven layoffs has made headlines, California employers face equally significant responsibilities to ensure their AI systems align with state regulations on privacy, anti-discrimination, and consumer protection.
California’s Approach: AI and Compliance
California’s Attorney General has made it clear: AI must comply with the same legal standards as any other business practice. AI-driven decisions in employment decisions are not exempt from laws that protect consumers, ensure privacy, and prevent discrimination. For example, if an AI system used in hiring creates biased outcomes, you could face significant liability under California’s robust anti-discrimination laws.
Lessons from New York: AI Layoff Transparency
New York recently announced groundbreaking measures to track AI-driven layoffs, requiring employers to disclose whether job reductions are a result of automation or AI. While California hasn’t introduced similar measures yet, the move signals a growing trend toward transparency in AI's impact on employment.
What California Employers Should Do Now
As an employer, you should take proactive steps to ensure compliance and build trust with their workforce. Audit your AI systems to confirm they align with California’s anti-discrimination, privacy, and consumer protection laws. This includes reviewing hiring algorithms and any other automated tools to ensure fairness and legality.
You should also prepare for potential reporting requirements by establishing systems to track the role of AI in workforce changes. While California hasn’t mandated AI-related layoff disclosures yet, being proactive could position your business to adapt quickly if such regulations arise. At the same time, investing in workforce development is essential. AI is transforming jobs, not just replacing them, and reskilling or upskilling employees can mitigate talent shortages while showing the organization’s commitment to its workforce.
Looking Ahead
The regulatory landscape surrounding AI is only beginning to take shape. California employers have a unique opportunity to lead by example, embracing compliance and transparency as key components of their AI strategy.