Important 2027 Legal Updates for California Employers
Key Legislative Changes Impacting Businesses
Last year, California legislation focused on emerging trends such as new protections and notifications on immigration activities, pay transparency, artificial intelligence (AI) and data privacy. Local ordinances adopted separate minimum wage and predictive scheduling laws.
While California led on many of these trends, other states are increasingly adopting similar legislation. Multi-state employers can no longer relax with the two-prong approach of satisfying federal and California rules; an ear to the ground on all states’ legislation where employees live and work is necessary.
The trend toward resolving AI and data privacy concerns continues, along with increasing employee rights and protections in 2027. Following is a recap of some of the 2026 employment bills of particular interest to employers passed in this legislative session and signed by the Governor. These laws are effective on January 1, 2027 unless otherwise noted.
AB 1883 Workplace Surveillance
In a step toward protecting employees from AI invasiveness, misinterpretation and potential bias, this bill bans AI tools that recognize, infer, or predict an individual’s emotional state, or that collect neural data. Neural data is defined as information generated by measuring the activity of an employee’s central or peripheral nervous system, where that information is not inferred from non-neural information. The intention is to prevent inaccurate emotion recognition, protect privacy, and curb discriminatory algorithmic bias.
This includes video and audio monitoring, biometrics, geolocation, time tracking, or photo-optical systems. Exceptions for safety or compliance may be permissible. The penalties are up to $500 per violation, with potential exposure under PAGA.
AB 1331 Bathroom Surveillance Ban
In case you were even thinking about monitoring your employees’ restroom activities, think again. Effective 2027, there will be a prohibition on using video, audio, time-tracking, geolocation, biometric, or electronic monitoring devices to watch or track employees in workplace bathrooms. The penalty for this is $500 per violation, so a company-wide policy that allows for such monitoring can become expensive pretty quickly.
What this means is that employees have the right to leave behind devices when entering a bathroom. While it is not required that they exercise this right, they cannot record or monitor others in the bathroom.
SB 947 No Robo Bosses Act of 2026
The No Robo Bosses Act was originally written in 2025 but was defeated at that time. Since then, the use of Artificial Intelligence (AI) and Automated Decision Systems (ADS) has continued to grow in prevalence in the workplace. The Act has been revived and will become effective on July 1, 2027, giving employers more time to become compliant.
Specifically, the Act mandates human oversight when using ADSs to manage workplace discipline:
- • Bans automated firing;
- • Requires human corroboration when an ADS is the primary basis for a disciplinary action;
- • Requires mandatory written disclosure that must include a human contact;
- • Provides that workers have the right to receive the personal data accessed or processed; and
- • Restricts predictive behavior analysis monitoring that may infringe upon a worker’s civil rights.
SB 951 Employment Technological Displacement
This bill revises the Cal/WARN Act to also require employers giving notice of a mass layoff or relocation caused by AI or other automated technology to include certain information in the notice, including the job functions performed by displaced workers. Covered employers would include establishments with 75 or more employees, maintaining the standard 60-day notice period.
The information would be published by the state department (EDD). They would be required to publish a summary of the notices and provide quarterly reports along with a final impact report.
SB 1237 Increased Penalties for Failure to Report Annual Pay Data
California has increased its penalties for employers who fail to report annual pay data as required by the state Civil Rights Department (CRD). Affecting employers with 100 or more employees, this raises the maximum civil penalty for subsequent failures to file the report from $200 to $1,000 per employee. First-time violations remain at $100 per employee.
This is the first report subject to the requirement to report 23 categories rather than the 10 EEO-1 categories. Because the bill is effective on January 1, 2027, this will affect the May 2027 reporting deadline.
AB 2563 Standardizes Statewide Definition of “Sex Discrimination”
Currently, different jurisdictions and legislation have dissimilar definitions of what is covered under “sex discrimination.” This legislation establishes a uniform, statewide legal definition across all California legal codes:
- • Assigned Sex & Gender Category: Explicitly covers male, female, or nonbinary designations.
- • Gender Identity & Expression: Includes a person’s inner sense of gender and their outward expression, as well as their right to access and use gender-affirming care.
- • Sex & Gender Stereotypes: Prohibits discrimination based on an individual’s degree of conformity to traditional stereotypes.
- • Pregnancy & Reproductive Care: Covers pregnancy, childbirth, lactation, miscarriage, fertility, and contraception. It also specifically protects an individual’s right to healthcare decision-making, including the use of reproductive healthcare services or drugs (such as abortion).
- • Sexual Orientation: Standardizes protections regarding a person’s physical, romantic, and/or emotional attraction to others.
- • Variations in Sex Characteristics: Protects intersex traits and medical differences in natural sex development.
While this change doesn’t expressly require employers to change their policies, managers and employees do need to be trained on the expanded definition, and materials updated to match.
AB 2495 Immigration-Related Retaliation
This bill aims to strengthen protections for workers by making it illegal for employers to use immigration-related threats or coercion to stop employees from reporting workplace violations. An immigration-related threat is defined as any threat related to immigration status designed to discourage workers from exercising their legal rights.
While it is designed to protect immigrant workers or those perceived as immigrants, it protects all California workers regardless of their immigration status. Violators face increased civil penalties of up to $10,000 per employee for each violation.
Penalties will be increased for retaliation in the form of threats, comments, or conduct tied to a worker’s perceived immigration status that discourages them from exercising labor rights. The new penalties will be up to $10k per employee, signaling enhanced commitment to protecting the rights of immigrant workers and those perceived as immigrant workers.
AB 1961 Expansion of Workplace Violence Restraining Orders
This bill allows for an employer to file a petition on behalf of all employees at a workplace location when a group of employees is targeted for harassment, unlawful violence, or a credible threat of violence. Previously, the petition applied only to an individual employee who was targeted; effective in 2027, the employer does not have to name an individual if the threat was not specific.
Employers can now file a petition more broadly to an affected group if deemed necessary. In addition to worksites, this includes public and private school/university campuses and government locations. Targeted scenarios include generalized threats made through social media, email, text messages, or anonymous sources.
AB 1697 Amended Training and Retention Repayment Provisions (TRAPs)
Originally made effective at the beginning of 2026, the TRAPs bill has been amended to an effective date of 1/1/2027. No action will be taken on violations that occurred during 2026. The original TRAP bill, also known as the “Stay or Pay” legislation, was designed to protect employees from having to pay back a benefit provided at hire if they leave within a certain amount of time. Examples of what this might look like would be retention bonuses, front-loaded PTO, or a training reimbursement.
The amended bill also provides additional clarification:
- • Retention Bonuses: The bill removes the requirement that bonuses be paid at the outset to be covered by this legislation. In addition, (1) there must be a separate contract from the employment offer; (2) employees have the right to consult with an attorney; (3) any repayment obligation must be prorated and not to exceed two years; and (4) separation before the retention period must be voluntary or due to serious misconduct.
- • PTO Advances: New requirements for repayment of this benefit would be: (1) there must be a separate contract from the employment offer; (2) the obligation cannot exceed 40 hours of accrued PTO; and (3) the repayment is not subject to interest accrual.
The civil remedies for violation are actual damages or $5,000, whichever is greater, in addition to attorney’s fees.
AB 1149 Bereavement Leave
This expands the definition of family member to include a “designated person.” This now includes, as a family member, any individual related to the employee by blood or whose association with the employee is the equivalent of a family relationship. Originally, a family member was defined as a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law.
This designation is limited to one person per 12-month period, although an employer is permitted to be more generous. Employees may identify the designated person in advance or at the time of the leave request.
Next Steps
It’s crucial to review your communications, recruitment processes, and employee handbook to ensure compliance with the latest legal requirements. At SDHR Consulting, we specialize in creating compliant job descriptions, job postings, and employee handbooks for 2026.
It is always a good idea to ensure you are fully compliant in all areas by partnering with our HR experts for a comprehensive HR Audit/Gap Analysis. We also offer Leadership Training for your supervisors, equipping them with the knowledge and best practices they need to navigate legal compliance and drive success within your organization.
