California Governor Gavin Newsom late Monday vetoed the much-watched “No Robo Bosses Act” (SB 7), a measure that would have placed strict limits on how employers use AI in discipline, termination, and scheduling decisions. While the Governor acknowledged the growing risks of automated workplace tools, he concluded the bill was overbroad, duplicative of existing regulation, and potentially harmful to California businesses. This move will have an impact on employers not only in the Golden State but across the country as regulators from coast to coast struggle with how – and whether – to regulate artificial intelligence in the workplace. Here’s a review of the veto and what it means for employers.
1. Overly Broad Notification Requirements
Newsom’s veto letter emphasized that SB 7 imposed “unfocused notification requirements” on any business using even the most routine digital tools.
- The bill would have required employers to disclose virtually any use of an “automated decision system,” even for businesses using “the most innocuous tools” such as software designed for basic scheduling, workflow management, or productivity.
- Newsom said this approach failed to distinguish between high-risk algorithmic tools (like AI-driven discipline systems) and low-risk administrative technologies.
2. Duplicative With New CPPA Rules
The veto letter points directly to California’s new Automated Decisionmaking Technology (ADMT) regulations, recently finalized by the California Privacy Protection Agency (CPPA).
- Those rules already regulate many aspects of automated workplace decision-making, including notice, access rights, and opt-out requirements for employees.
- Newsom said SB 7 overlaps with and could conflict with the regulatory regime already in place. “Before enacting new legislation in this space,” he said, “we should assess the efficacy of these regulations to address these concerns.”
3. Costs to Businesses – Especially Small Employers
Industry groups argued SB 7 could cost employers more than $1 billion in compliance. Newsom has previously voiced concerns that AI regulation could discourage innovation.
- The California Chamber of Commerce and Consumer Technology Association both warned the bill could discourage tech adoption and harm economic growth.
- Newsom appears to be signaling a balancing act: ensuring worker protections without crushing smaller employers who use digital management tools.
4. Labor Concerns Remain Front and Center
Although Newsom rejected SB 7, he acknowledged concerns about employers misusing AI and harming workers. But he said that future legislation should address specific concerns and employer actions, not creating an overly broad regulatory scheme.
- Labor unions backing the bill stressed that “bosses should have souls” and warned against “robo-bosses” making unchecked decisions.
- Massachusetts and other states are already considering similar measures, which could keep momentum alive elsewhere.
What This Means for Employers
- SB 7 may be dead, but regulation is not. California’s CPPA rules now stand as the critical set of regulations that employers will need to follow, and other states may move forward with “No Robo Bosses”-style legislation.
- Review your AI use now. Make sure you understand which tools fall under the ADMT rules and confirm compliance with notice, opt-out, and access requirements.
- Conduct bias audits of AI tools used to make or facilitate employment decisions.
- Stay ahead of workplace scrutiny. Train managers on appropriate AI use in discipline and scheduling, and be prepared to address questions at the bargaining table.
- Monitor the national trend. Massachusetts and other jurisdictions may act, and federal agencies may also explore algorithmic bias in employment. And we’re all but certain to see California lawmakers take another run at AI workplace regulation in 2026.
