Employers operating in California should take note of several key provisions and prepare accordingly.<\/p>\n
Artificial intelligence continues to dominate the conversation for employers in California. On May 21, 2026, California Governor Gavin Newsom signed Executive Order N-6-26<\/a>, directing a sweeping set of state-level actions aimed at studying, managing and mitigating the workforce impacts of artificial intelligence and other emerging technologies. While the new executive order does not impose direct new mandates on private employers at this time, it signals a clear regulatory direction and establishes timelines for policy recommendations that could materially affect employer obligations in the near future. Employers operating in California should take note of several key provisions and prepare accordingly.<\/p>\n Background and Purpose<\/p>\n This executive order follows on the heels of updated regulations<\/a> issued by the California Civil Rights Council addressing the use of AI in making employment-based decisions. Further, the order builds upon California’s prior AI-focused executive actions\u2014including Executive Order N-12-23 (2023) and Executive Order N-5-26 (March 2026)\u2014and reflects the state’s position that rapid AI adoption, while fostering economic growth, must be paired with proactive measures to protect workers and the broader economy. Governor Newsom framed the order against the backdrop of California’s existing robust worker protection laws, including anti-discrimination protections, layoff and closure notice requirements and existing programs such as Work Share that provide alternatives to layoffs.<\/p>\n Notably, the executive order does not create any rights or benefits to employees, nor does it impose any new legal obligations on employers. However, the studies and recommendations it directs will likely inform future legislation and rulemaking.<\/p>\n Key Provisions Relevant to Employers By August 19, 2026, the California Employment Development Department (EDD) must launch a public dashboard showing AI’s impact on employment across various sectors using unemployment insurance data. As part of the California Labor Market Review, the EDD must include a summary of feedback from businesses about “the role of technological adoption in determining hiring or workforce decisions,” with reporting occurring twice a year through the end of 2027.<\/p>\n Research on AI Labor Market Impacts<\/p>\n By August 19, 2026, the Labor and Workforce Development Agency (LWDA), the Governor\u2019s Office of Business and Economic Development (GO-Biz) and the Department of Finance must deliver a review of academic research potential workforce impacts of technological shifts, including AI\u2019s impact on the California Labor market and disproportionate effects on specific demographic groups and “early economic warning signals of future labor disruptions.”<\/p>\n Collective Bargaining <\/p>\n By October 15, 2026, the LWDA must review how the collective bargaining process is incorporating and addressing new technologies such as AI, “including how worker voice is incorporated in adoption of emerging technologies.” The order cites existing collective bargaining agreements that include “measures to ensure consultation, consent, and compensation with respect to the adoption of new systems, standards, and technologies.” This provision signals growing expectations for employer engagement with workers on technology deployment decisions.<\/p>\n Potential WARN Act Updates<\/p>\n By November 17, 2026, the LWDA must review and recommend revisions to the California Worker Adjustment and Retraining Notification (WARN) Act \u201cin a manner that is responsive to, and effectively provides early warning data on, emerging industry trends.\u201d Employers should anticipate potential changes to notice requirements for layoffs and plant closures, particularly where workforce reductions are driven by AI adoption or automation.<\/p>\n Study of Workforce Displacement \u2013 Safety Nets, Severance and Stock<\/p>\n By November 17, 2026, the LWDA must submit a review of policies and practices that provide displaced workers with a safety net, “including severance and other forms of compensation such as stock or other forms of equity,” along with recommendations for incorporating or strengthening such programs. The review will include a comparative analysis of policies and common practices in other countries. This suggests the state may consider new guidance or requirements around separation benefits in AI-driven displacement scenarios.<\/p>\n Workforce Training Program Review<\/p>\n The LWDA must review existing workforce training programs to ensure they are “fit for purpose and targeted towards growing industries and professions.” The EDD is directed to develop an “AI playbook” to expand dislocated worker strategies and provide local workforce development boards with technical assistance on Workforce Innovation and Opportunity Act resources for AI literacy programs.<\/p>\n Worker Ownership and Broad-Based Capital Growth<\/p>\n GO-Biz and the Office of the Small Business Advocate are directed to evaluate opportunities to expand and enhance worker ownership models and “build wealth from productivity gain among workers,” including exploring regulatory barriers to employee-owned company structures.<\/p>\n Pending Legislation Also Implicates AI Use in the Workplace<\/p>\n Separate from this executive order, the California Worker Technological Displacement Act (SB 951<\/a>) is currently pending in the Legislature. The bill, if passed in its current form, would require certain employers to provide at least 60-day\u00a0advanced written notice before any technological displacement affecting 25 or more\u00a0workers during any 30-day period.\u00a0The bill would require an employer to provide that notice to affected workers, the EDD and specified\u00a0local entities. The bill would also require an employer to provide a written technology hiring disruption notice to the EDD\u00a0when it executes a technological cessation in hiring caused in whole by\u00a0the adoption of AI\u00a0or other automating technology. The bill continues to be amended.<\/p>\n What This Means for Employers<\/p>\n Although this executive order does not create immediate legal obligations for private employers, there are foreseeable practical implications:<\/p>\n WARN Act Compliance May Change<\/p>\n Between the order and SB 951, revised notice requirements could apply to technology-driven workforce reductions, even if such reductions do not meet the current thresholds for the state or federal WARN Acts.<\/p>\n Severance and Displacement Benefits Are Under Review<\/p>\n Employers making AI-related workforce decisions should document their rationale and consider existing best practices around separation packages. Moreover, employers should conduct adverse impact analyses on workforce reductions, whether or not AI is used.\u00a0<\/p>\n AI-Related Hiring Decisions May Face Increased Scrutiny<\/p>\n Reporting requirements around technology’s role in hiring and workforce decisions suggest that employers’ use of AI in employment decisions will be subject to closer state-level monitoring. As such, employers should carefully document all decisions and rationales.<\/p>\n Conduct AI Audits<\/p>\n Employers are encouraged to audit their AI-related workforce tools and maintain a clear business rationale for AI adoption decisions that affect employees. Employers should also audit their AI vendors to confirm that the tools they use are in compliance with current law.<\/p>\n We will continue to monitor developments as the various state agencies issue their reports and recommendations in the coming months.<\/p>\n For More Information<\/p>\n If you have any questions about this\u00a0Alert, please contact Lorraine Ocheltree<\/a>, Brooke B. Tabshouri<\/a>, any of the\u00a0attorneys<\/a>\u00a0in our\u00a0Employment, Labor, Benefits and Immigration Practice Group<\/a> or the attorney in the firm with whom you are regularly in contact.<\/p>\n
\nEDD Public Dashboard and Reporting on Hiring and Technology Decisions<\/p>\n