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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-02</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator Reyes</ns0:AuthorText>
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<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Reyes</ns0:Name>
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<ns0:Title> An act to add Article 3 (commencing with Section 1414) to Chapter 4 of Part 4 of Division 2 of the Labor Code, relating to employment. </ns0:Title>
<ns0:RelatingClause>employment</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Employment: technological displacement: notice.</ns0:Subject>
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<html:p>Existing law establishes the Labor and Workforce Development Agency, which is composed of various departments responsible for protecting and promoting the rights and interests of workers in California, including the Division of Labor Standards Enforcement, led by the Labor Commissioner (commissioner), within the Department of Industrial Relations. Existing law establishes the Employment Development Department (EDD), which is administered by the Director of Employment Development. Under existing law, the Director of Employment Development is vested with specified duties, purposes, responsibilities, and jurisdiction related to job creation activity functions, among other things.</html:p>
<html:p>This bill would establish the California Worker Technological Displacement Act, which would require a covered employer, as defined, to provide at least a 90-day advanced
written notice, as described, before any technological displacement or termination of contract affecting 25 or more workers or 25 percent of the workforce, whichever is less. The bill would require a covered employer to provide that notice to affected employees, the EDD, and specified state and local entities. The bill would also require a covered employer to provide a written technology hiring disruption notice to be provided to the EDD and specified local entities when it executes a technological reduction in hiring or cessation in hiring due to the adoption of artificial intelligence or other automating technology. The bill would impose various reporting requirements on the EDD.</html:p>
<html:p>For covered employers with more than 100 workers, this bill would entitle workers affected by technological displacement or termination of contract to a right of first bid on other positions with the employer and would prohibit discharge of those workers during a 90-day period from when
notice is provided.</html:p>
<html:p>This bill would require a covered employer that fails to provide notice to provide back pay and benefits to each affected employee, as described, for a maximum of 60 days or one-half the number of days the employee was employed, whichever period is shorter. The bill would also impose a $500 civil penalty for each day of the covered employer’s violation, except as provided.</html:p>
<html:p>This bill would set forth procedures for reporting violations to the commissioner and filing a civil action in court. The bill would provide enforcement authority and related powers to the commissioner. The bill would establish the Technological Displacement Act Fund, require all civil penalties recovered by the commissioner to be deposited in the fund, and make all moneys in the fund available to the commissioner upon appropriation. The bill would make its provisions severable.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_64A986AD-A1B0-45FA-ABD8-A5CF71B8C485">
<ns0:Num>SECTION 1.</ns0:Num>
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Article 3 (commencing with Section 1414) is added to Chapter 4 of Part 4 of Division 2 of the
<ns0:DocName>Labor Code</ns0:DocName>
, to read:
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<ns0:LawHeading type="ARTICLE" id="id_249D0522-49E4-4650-A0F8-29AB646C7019">
<ns0:Num>3.</ns0:Num>
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<ns0:LawHeadingText>California Worker Technological Displacement Act</ns0:LawHeadingText>
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<ns0:Num>1414.</ns0:Num>
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<html:p>This article shall be known, and may be cited, as the California Worker Technological Displacement Act.</html:p>
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<ns0:Num>1414.1.</ns0:Num>
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<html:p>For purposes of this article, the following definitions apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Artificial intelligence” or “AI” means an engineered or machine-based system that varies in its level of autonomy and that can, for explicit or implicit objectives, infer from the input it receives how to generate outputs that can influence physical or virtual environments.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Covered employer” means any employer that employs, or has employed within the preceding 12 months, any number of workers. A “covered employer” includes, but is not limited to, any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The state, including its legislative, judicial, and executive branches.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any city, county, or city and county, and other political subdivisions of the state.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Special districts, including, but not limited to, school districts.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Any authority, commission, board, agency, or instrumentality of any entity specified in paragraphs (1) to (3), inclusive.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Employer” means any individual who or entity that, directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, benefits, other compensation, hours, working conditions, access to work or job opportunities, or other terms or conditions of employment, of any worker.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Technological displacement” means the elimination of employment positions, or a reduction
in hours equivalent to 25 percent or more of total workforce time, within any 12-month period, caused in whole or in substantial part by the introduction of an AI system or other automated technology.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Technological termination of contract” means the termination of a contract for workers or services for the covered employer that is due to the use of AI or other automation that displaces or replaces human workers.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
“Worker” means an individual employed or contracted by an employer for at least 6 months of the 12 months preceding the date on which notice is required under this article. “Worker” includes, but is not limited to, full-time and part-time workers and independent contractors, but does not include a seasonally employed individual who was hired with the understanding that their employment is seasonal and temporary, a volunteer, or an
intern.
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<ns0:LawSection id="id_997AA48C-96EE-4911-AA91-2564B46C03C7">
<ns0:Num>1414.2.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
A covered employer shall provide at least a 90-day advanced written notice before any technological displacement or termination of contract affecting 25 or more workers or 25 percent of the workforce, whichever is less.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The notice shall be provided to both of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The workers of the covered employer affected by the order.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The Employment Development Department, the local workforce investment board, and the chief elected official of each city and county in the state within which the technological displacement, reduction, or termination of contract occurs.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The notice shall contain all of the following information:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The name and address of the employment site and the name, email, and telephone number of a company official.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A statement indicating whether the planned action is permanent or temporary.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The expected date of the first separation and the anticipated schedule for subsequent separations.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The number, classification, and work location of layoffs that are substantially due to the replacement or automation by AI.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The job functions performed by those workers that will be automated by AI.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The AI system or other automating technology that substantially resulted in technological displacement, including the entity or entities that developed, sold, or leased the product.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
The justification for, and purpose of, the use of the AI tool.
</html:p>
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<ns0:LawSection id="id_78619B09-DCCC-4A6B-8F5A-746F1AF4F15B">
<ns0:Num>1414.3.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
A covered employer shall provide a written technology hiring disruption notice when it executes a technological reduction in hiring or cessation in hiring due to the adoption of AI or other automating technology.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The notice shall be given to the Employment Development Department, the local workforce investment board, and the chief elected official of each city and county within which the AI hiring disruption occurs.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The notice shall include all of the following information:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The name and address of the employment site and the name, email, and telephone number of a company official.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
A statement indicating whether the planned action is permanent or temporary.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The number of positions of the covered employer that were occupied at any point during the prior quarter for which the covered entity has decided not to fill based on a reason that is substantially due to the technological displacement or the technological termination of a contract of the functions of those positions.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
The occupational classification and work location of positions that will no longer be filled by humans due to the replacement or automation by AI.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The job functions performed in these positions.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
The AI system or other automating technology that resulted in the reduction or cessation
of hiring.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
The justification for and purpose of the use of the AI tool.
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<ns0:LawSection id="id_011DEB26-93C3-40D5-AE93-D05671081D97">
<ns0:Num>1414.4.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For covered employers with more than 100 workers, each worker affected by a technological displacement or termination of contract shall be entitled to the right of first bid on other positions at the employer.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
A covered employer with more than 100 workers shall not discharge a worker affected by a technological displacement or termination of contract during the 90-day period from when the notice in Section 1414.2 is provided to the worker.
</html:p>
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<ns0:LawSection id="id_E911DA21-0465-4BD3-A5E3-D73227BD7365">
<ns0:Num>1414.5.</ns0:Num>
<ns0:LawSectionVersion id="id_0804E3B4-91D4-4DCC-B423-DF9F58D974D6">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The Employment Development Department shall compile a quarterly report using notices received pursuant to Sections 1414.2 and 1414.3 to present a statewide summary of worker displacement due to AI and automation. The report shall include a link to a public database of individual notices received from covered employers.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The Employment Development Department shall submit the report to the labor and budget committees of the Assembly and Senate. The report submitted to the Legislature pursuant to this subdivision shall be submitted pursuant to Section 9795 of the Government Code.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The Department of Industrial Relations shall annually and publicly post the reports, as
specified in this section, on its internet website.
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<ns0:LawSection id="id_1E1B5C9A-DB88-4ACF-B0A5-B412A9843689">
<ns0:Num>1414.6.</ns0:Num>
<ns0:LawSectionVersion id="id_21166BB8-35BB-4BFD-9875-68A3ED84C6D2">
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<html:p>
(a)
<html:span class="EnSpace"/>
A covered employer that fails to give notice as required by paragraph (1) of subdivision (b) of Section 1414.2 before ordering a technological displacement or termination of contract due to AI or automation, is liable to each worker entitled to notice who lost their employment. The covered employer shall be liable for all of the following for each worker:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Back pay at the average regular rate of compensation received by the worker during the last three years of their employment, or the worker’s final rate of compensation, whichever is higher.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The value of the cost of any benefits to which the worker would have been entitled had their employment not been lost, including
the cost of any medical expenses incurred by the worker that would have been covered under a worker benefit plan.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Liability under this section shall be calculated for the entire period of the employer’s violation up to a maximum of 60 days, or one-half the number of days that the worker was employed by the employer, whichever period is shorter.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The amount of an employer’s liability under subdivision (a) shall be reduced by all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Any wages paid by the covered employer to the worker during the period of the employer’s violation. For purposes of this paragraph, “wages” shall exclude payment equivalent to leave or vacation hours accrued before the period of the covered employer’s violation.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any voluntary and unconditional
payments made by the covered employer to the worker that were not required to satisfy any legal obligation.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Any payments by the covered employer to a third party or trustee, such as premiums for health benefits or payments to a defined contribution pension plan, on behalf of and attributable to the worker for the period of the violation.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
A covered employer that fails to provide notice as required by paragraph (1) of subdivision (b) of Section 1414.4 shall also be subject to a civil penalty of not more than five hundred dollars ($500) for each day of the employer’s violation. However, the covered employer shall not be subject to a civil penalty under this section if the employer pays to all applicable workers the amounts for which the employer is liable under Section 1414.4 within three weeks from the date the employer orders the technological displacement or termination of
contract. The civil penalty shall be recoverable by the Labor Commissioner.
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<ns0:LawSection id="id_ACE4E35B-707F-4C15-8DB4-A208D91B869D">
<ns0:Num>1414.7.</ns0:Num>
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<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Any person, including any third or uninterested parties, may report to the Labor Commissioner that an employer has failed to comply with the requirements of Section 1414.2 or 1414.3. Any such person shall provide documentation to substantiate their allegations, including, but not limited to, public statements by employer officials, United States Securities and Exchange Commission filings, and shareholder reports, before the Labor Commissioner considers the report.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The Labor Commissioner shall collaborate with relevant agencies to evaluate the report made pursuant to subdivision (a).
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<ns0:LawSection id="id_3B5DC98B-9CA8-4BC0-AE83-85F384BC90F4">
<ns0:Num>1414.8.</ns0:Num>
<ns0:LawSectionVersion id="id_986BCC6A-0F49-486E-9D63-9FFFAE2AE5F9">
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<html:p>
(a)
<html:span class="EnSpace"/>
A person, including a local government or a worker representative, seeking to establish liability against an employer may bring a civil action on behalf of the person, other persons similarly situated, or both, in any court of competent jurisdiction.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The court may award reasonable attorney’s fees and costs to any plaintiff who prevails in a civil action brought under this article.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
If the court determines that an employer conducted a reasonable investigation in good faith and had reasonable grounds to believe that its conduct was not a violation of this article, the court may reduce the amount of any penalty imposed against the employer under this
article.
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<ns0:LawSection id="id_964AC181-A300-4417-B7AA-E703DD8AFCEB">
<ns0:Num>1414.9.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
In any investigation or proceeding under this article, the Labor Commissioner has, in addition to all other powers granted by law, the authority to examine the books and records of an employer.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The Labor Commissioner may enforce subdivision (a) and the notice requirements of Section 1414.2 through the procedures set forth in Section 98.3 or 1197.1, including, but not limited to, by investigating an alleged violation, ordering appropriate temporary relief to mitigate the violation pending the completion of a full investigation or hearing, and issuing a citation against an employer that violates this article. If a citation is issued, the procedures for issuing, contesting, and enforcing judgments for citations and civil penalties issued
by the commissioner shall be the same as those set forth in Section 1197.1, as appropriate.
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<ns0:LawSection id="id_1BAB37FC-655D-49B0-902E-F9DC17114995">
<ns0:Num>1414.10.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
There is hereby established the Technological Displacement Act Fund within the State Treasury.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Notwithstanding any law, all civil penalties recovered by the Labor Commissioner pursuant to this article shall be deposited in the fund.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
All moneys in the fund shall be available to the commissioner, upon appropriation by the Legislature, for purposes of enforcing this article.
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<ns0:Num>1414.11.</ns0:Num>
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<html:p>The provisions of this article are severable. If any provision of this article or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.</html:p>
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