California expands requirements for layoff notices tied to AI and automation
California will require more details about the role of artificial intelligence and automation in layoffs covered by the Cal/WARN Act. According to an analysis published by law firm Ogletree Deakins, SB 951 changes the requirements for these notices and takes effect on January 1, 2027.
The change applies when AI systems or other automated technologies are the sole or substantial cause of events covered by the law, such as mass layoffs, relocations, and shutdowns. In these cases, companies will need to disclose which positions were affected, which tasks will be automated, and what type of technology was involved.
The requirement does not apply to every company that uses artificial intelligence, nor does it make every layoff subject to Cal/WARN. The key is the connection between technology replacing work and an event that already meets the criteria under the law.
What the Cal/WARN Act already requires of companies
Cal/WARN establishes advance notice requirements for certain operational changes at businesses in California. Before the new AI requirements, the law already required 60 days of advance notice for specific events at covered establishments.
According to the Ogletree Deakins article, this obligation applies to three main situations:
- Termination of operations: a complete or substantial shutdown of operations at a covered establishment.
- Mass layoff: the layoff of 50 or more employees at a covered establishment.
- Relocation of operations: the move of all or substantially all employer operations at a covered establishment to a location 100 miles or more away, or about 161 kilometers.
A covered establishment also has its own definition. It includes industrial or commercial facilities, or portions of them, that employ or have employed 75 or more people at any point during the preceding 12 months.
These numbers address different aspects of the law. The 75-person threshold helps determine whether an establishment is covered. The 50-employee threshold relates to the definition of a mass layoff presented in the original article. Confusing the two can lead to a misunderstanding of the scope of the rule.
Who must receive the notices
Notification is not limited to affected employees. Notices must also be sent to the Employment Development Department, or EDD, the local workforce development board, and certain local officials.
Failure to meet the notice requirement can result in liability for wages and benefits owed to affected employees. The article also notes a potential civil penalty of up to $500 per day of violation. These consequences are part of the existing Cal/WARN framework and should not be presented as a new penalty specifically for using AI.
What information SB 951 adds to the notices
The amendment described by Ogletree Deakins expands the content of notices when technology-driven job replacement or automation is the sole or substantial cause of a covered event. The new information is required in addition to what the law already mandates.
The practical goal is to make the connection between the technology adopted and the work eliminated clearer. A generic description of a reorganization, for example, does not necessarily provide the details required under the new rules.
Receive the best innovation content in your email.
All the news, tips, trends, and resources you're looking for, delivered to your inbox.
By subscribing to the newsletter, you agree to receive communications from Método Viral. We are committed to always protecting and respecting your privacy.
Number of layoffs, job classifications, and affected locations
The notice must include the number of layoffs substantially attributable to replacement or automation by AI or other automated technology. It must also identify the job classifications or occupations involved and the affected work locations.
This distinction matters because a single workforce reduction can have more than one cause. The total number of employees laid off does not necessarily equal the number of positions eliminated through automation. The information must identify the portion tied to technology under the criteria described in the amendment.
Employee tasks that will be automated
Another required item will be the identification of job functions performed by affected employees that will be automated. Here, the focus moves beyond job titles to include what employees actually did.
A single position can involve a range of tasks, such as checking data, organizing documents, and responding to requests. Explaining which of these tasks systems will take over helps clarify the scope of the change without treating all responsibilities as interchangeable.
Category or type of technology involved
Companies must also disclose the category or specific type of AI system or other automation technology that substantially contributed to replacing the work.
The original article does not present this as a general obligation to disclose source code, training data, or every technical detail of a platform. The information described concerns the category or type of technology involved. The requirement should therefore not be expanded to include materials the source does not mention.
Required statement at the top of the document
In addition to details about positions and tasks, each notice covered by the new rule must include the following statement in English at the top:
This notice is for a technology displacement.
In plain language, the statement indicates that the notice concerns work being replaced by technology. This explanation helps clarify its meaning but should not be confused with the specific English wording identified in the article as mandatory.
When artificial intelligence becomes relevant under the rule
The decisive factor is whether technology is the sole or substantial cause of the covered event. That means the analysis goes beyond checking whether a company purchased an AI tool or started using an automated system.
A tool can support employees without eliminating positions. It can also reduce the time spent on a task while the team remains responsible for other activities. On the other hand, adopting a system can play a significant role in a decision to eliminate certain positions.
Using AI does not, by itself, mean laying people off because of AI. The connection between the technology and the elimination of work must be evaluated alongside the other Cal/WARN criteria.
The analysis provided does not specify a numerical percentage for what constitutes a substantial contribution. It would therefore be incorrect to say, for example, that the requirement applies when automation accounts for half of the job cuts. That threshold does not appear in the source.
Examples help distinguish support from replacement
In one hypothetical example, a customer service team might use AI to organize requests and draft initial responses. If employees remain in their positions, using the tool alone does not demonstrate a technology-driven layoff.
In another hypothetical scenario, a company might eliminate positions because a system has taken over tasks previously performed by those employees. If the change meets the statutory criteria and technology is the sole or substantial cause of the event, the new disclosures will be relevant to the notice.
These examples illustrate the distinction but do not replace an assessment of a specific case. The number of employees, the establishment involved, and the nature of the change remain important factors.
The definition of AI goes beyond chatbots
SB 951 adopts a broad definition of artificial intelligence. According to the Ogletree Deakins analysis, it includes engineered or machine-based systems with varying levels of autonomy that can infer from the inputs they receive how to generate outputs capable of influencing physical or virtual environments, for explicit or implicit objectives.
In simpler terms, the concept is not limited to tools that write text or interact with users. The analysis warns that the definition may cover workplace software that employers do not typically recognize as AI.
The amendment also mentions other automated technologies. This matters because not all automation depends on artificial intelligence. Systems based on fixed rules can also take over tasks previously performed by people.
The commercial name of a tool is therefore not enough to understand its role. What it does, which tasks it takes over, and how its adoption relates to eliminated positions are central questions when assessing the situation.
EDD will publish summaries of technology-driven job displacement
SB 951 also requires public disclosure of information. The EDD must publish a summary of the technology displacement notices it receives on its website, along with a quarterly statewide summary of reported events.
There is a difference between this requirement and publishing every document submitted by companies in full. The original article refers to summaries. It therefore does not support the claim that every notice will be made publicly available in its entirety.
These records may help track which occupations and locations appear in reported events. They may also provide insight into how automation relates to employment changes across different parts of California.
Still, the data will not represent a comprehensive census of all AI effects on the labor market. It will be tied to notices received within the scope of the law. Uses of technology that do not eliminate positions, as well as situations that fall outside the coverage criteria, will not necessarily appear in these records.
A report on AI and hiring is due in 2028
In addition to the periodic publications, the EDD must submit a report to the Legislature by January 1, 2028, on the effects of artificial intelligence on business hiring practices.
The report must include impacts on industries and occupations at both the statewide and regional levels. This focus extends monitoring beyond layoffs, since it also addresses how companies hire.
The requirement to submit this report will be repealed on January 1, 2029. That date applies to the specific legislative reporting obligation. It should not be interpreted as the automatic expiration of all technology displacement notice requirements.
Ogletree Deakins suggests that the report could signal broader AI-related reporting requirements in the future. That is a possibility raised in the analysis, not a new obligation that has already been established.
How companies can prepare for January 2027
For employers planning workforce reductions, relocations, or closures in California, the analysis highlights three areas of preparation: reviewing notice templates, documenting the role of technology, and coordinating the teams involved.
Reviewing templates allows companies to add fields for the number of layoffs attributable to automation, occupations, work locations, tasks, and technology categories. It also helps ensure that covered notices include the required statement at the top.
Documentation should make it possible to assess the extent to which AI or automation contributed to eliminating specific positions or job functions. Distinguishing an automated task from an eliminated position is an important part of this work, since one change does not automatically lead to the other.
Coordination among legal, human resources, technology, and communications teams also becomes more important. According to the analysis, the reasons given in notices should align with workforce reduction records and internal and external communications.
What changes for workers
For affected employees, the main change is access to a more detailed explanation of the connection between technology and job losses. The notice must identify not only the occupations affected but also the tasks that will be automated.
This information may help workers understand how jobs are changing and support discussions about training and reemployment. However, the amendment described does not, by itself, create a guarantee of a new job, additional compensation, or continued employment.
SB 951 centers on transparency for events already covered by Cal/WARN when technology is the sole or substantial cause of work displacement. When the law takes effect in January 2027, that connection must be explicitly stated in notices and reflected in the public summaries required by the legislation.
