California’s Recent and Pending AI Laws Affecting Employers: Will the Federal Government Preempt California’s Laws?

The Biden administration put in place civil rights guardrails on AI, which included a Blueprint for AI Bill of Rights and an EEOC technical assistance manual that confirmed that long-standing legal principles under Title VII would apply when employers use AI in employment-related actions. Now, neither can be found hosted on federal government websites.

On January 20, 2025, President Trump rescinded Biden-era EO 14110 (entitled the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence).  The new EO 14179 is titled: Removing Barriers to American Leadership in Artificial Intelligence.  It includes this statement: “To maintain [U.S.] leadership, we must develop AI systems that are free from ideological bias or engineered social agendas.”  

Since then, Congress has been working on legislation that would preempt state regulations on AI, stopping local enforcement of AI regulations for the next 10 years. West, Darrell M. “The Coming AI Backlash Will Shape Future Regulation.” Brookings, 27 May 2025.  On May 22, 2025, the House of Representatives narrowly passed a budget reconciliation bill containing a provision that bans states and local governments from enforcing AI laws for 10 years. 

The Senate’s version of the reconciliation bill dropped the 10-year moratorium on the enforcement of state and local AI regulations. Instead, the Senate’s text conditions a jurisdiction’s ability to receive funding from the $500 million allocation for artificial intelligence on pausing any AI regulations. 

For Now – Until or if Federal AI Preemption – California is Still Different

While the federal government pulls back on AI regulation, California pursues its same charted employee-friendly path. A list of California’s new employer-related AI laws, rules, and proposed laws includes the following:

• Assembly Bill 2885 (effective 1/1/25) Updates AI definition for legislation.
• Assembly Bill 2602 (effective 1/1/25) Protects individuals from unauthorized use of their digital replicas in personal or professional service contracts. Enforcement by the Divisions of Labor Standards Enforcement (DLSE).
• Senate Bill 1223 (effective 1/1/25) Amends the California Consumer Privacy Act of 2018 (CCPA) to categorize “neural data” as sensitive personal information with new limits on its use.
• Assembly Bill 1008 (effective 1/1/25) Clarifies the CCPA, stating that AI-generated data is treated as personal information, and further recognizes that AI can create “personal data” by learning from existing information.
• The California Civil Rights Council (CCRC) proposed modifications to existing employment and hiring regulations regarding automated-decision systems. With final regulations adopted (3/21/25), once effective, these modifications would impose liability on employers using AI tools that have a discriminatory impact, unless shown to be job-related and consistent with business necessity (anticipated to take effect July 1, 2025, after Office of Administrative Law approves and the Secretary of State publishes the regulations).
  • Prohibits employers and their agents including third parties who develop automated decision-making systems (ADS) from:
    • Discriminating based on protected characteristics (such as age, sex, and disability);
    • Engaging in unlawful recruitment practices; and
    • Making unlawful pre-hiring inquiries.
  • Reinforcing California’s Fair Chance Act (the “ban the box” legislation), employers may not use an ADS to consider an applicant’s criminal record until after making a conditional offer of employment. Decisions to withdraw a job offer must be based on an individualized assessment – whether the decision was made by a human or an automated tool.
  • Provides that an employer’s prospective efforts to avoid bias may be a defense to discrimination claims.
  • Employers are also required to maintain employment records, including automated decision-making data, for at least four years.
• California Privacy Protection Agency (CPPA) has proposed rules that would require employers to conduct detailed risk assessments for certain uses of HR data, including the use of automated decision-making (ADM) tools. CPPA voted unanimously (5/1/25) to initiate public comment on its Regulations on Cybersecurity Audits, Risk Assessments, and Automated Decision-Making Technology, with the comment period open until June 2, 2025.
• Senate Bill 7 (the “No Robo Bosses” Act – Introduced 3/6/25) is union-backed legislation that prohibits employers from relying primarily on ADS for significant employment-related decisions and requires human involvement in the process. Its sponsor says, “SB 7 does not prohibit ADS in the workplace, rather it establishes guardrails to ensure that California businesses are not operated by robo bosses — by putting a human in the loop. AI must remain a tool controlled by humans, not the other way around.” The bill grants workers the right to access and correct data used by ADS, and gives workers the right to appeal ADS employment-related decisions, with a human reviewer evaluating the appeal.
  • Human oversight mandated.
  • Prohibited uses:
    • Predicting worker behavior or assessing intentions, personalities, or emotional states.
    • Collecting or inferring sensitive personal data, e.g., immigration status, sexual orientation, credit history, religious beliefs, criminal records, etc.
    • Relying primarily on customer ratings or similar AI-generated metrics for employment decisions.
  • Requires advanced notice before introducing ADS.
  • Requires post-use notice on how ADS influenced an employment decision.
  • Provides for an appeal process.
• Assembly Bill 1018 (introduced February 2025) seeks to regulate ADS tools  if used for “consequential decisions in employment,” with strict oversight over ADS in an attempt to prevent workplace  and other discrimination, e.g., housing and healthcare.
  • Human review required.
  • Employers must provide applicants and employees with disclosures on ADS decisions.
  • Applicants and employees can opt out of ADS-driven decisions.
  • “Consequential” decisions not only covers hiring and termination but wages, scheduling, promotions, performance evaluations, access to training, and workplace safety.
  • Employer-modified AI systems assume liability assigned to AI developers.
  • Large employers (affecting 6,000 or more persons over three years) must undergo third-party audits.
  • Strict data management and retention rules – 10 years, including audits.
  • Must designate AI compliance officer.

California and Other Attorney Generals Expected to Push Back on Federal AI Preemption

On May 16, 2025, while the House of Representatives was considering the budget reconciliation bill,  California Attorney General Rob Bonta joined a coalition of 40 attorneys general[1] in sending a letter to Congressional leaders opposing the proposed 10-year ban on states enforcing any state law or regulation addressing AI. “As the fourth largest economy in the world — built in large part on technological innovation and a commitment to protecting our residents — California knows that consumer protections and innovation go hand in hand. Allowing states to be responsive to AI and adopt new protections while still nurturing innovation serves both industry and consumers,” said Attorney General Bonta. “I strongly oppose any effort to block states from developing and enforcing common-sense regulation; states must be able to protect their residents by responding to emerging and evolving AI technology.[2]

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[1] The nonpartisan coalition of attorney generals are from American Samoa, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, U.S. Virgin Islands, Vermont, Virginia, Washington, and Wisconsin.

[2] https://oag.ca.gov/news/press-releases/attorney-general-bonta-congress-california-must-retain-its-ability-protect

[1] The nonpartisan coalition of attorney generals are from American Samoa, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nevada, New Jersey, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, U.S. Virgin Islands, Vermont, Virginia, Washington, and Wisconsin. [1] https://oag.ca.gov/news/press-releases/attorney-general-bonta-congress-california-must-retain-its-ability-protect